LIHU‘E — The median cost of a home on Kaua‘i reached nearly $1 million last month.
Milo Spindt, a broker-in-charge and in property management at Elite Pacific, said the median sales price for a residential home on Kaua‘i was $975,000 in February, compared to $802,500 the same month last year, an increase of 21.5%.
There were 49 home sales in February 2021 with a total volume of $81,781,100, compared to 33 sales and a total volume of $44,097,500 in February of 2020. These numbers indicate a significant increase in high-end-home sales, he said.
“We need more new housing options,” Spindt said.
“While COVID-19 has had a cooling effect on Kaua‘i’s economy, the combination of low housing inventory and low-interest rates has served to significantly increase pressure on housing demand for the islands.
“While we would all like to preserve Kaua‘i the way it was when we were born here or when we arrived here, without a significant increase in housing supply many of our children will never be able to afford to live here,” Spindt said.
Karen Ono, chief executive officer of the Kaua‘i Board of Realtors, has been working for KBR for 40 years, and said the major obstacle to developing housing on Kaua‘i is infrastructure: water, sewer and transportation needed to permit housing.
“There’s a need to better educate our residents of how they can become a homeowner,” Ono said.
Spint, who was first licensed as a real estate agent in Hawai‘i in 2001 and moved to Kaua‘i in 2011, said residential rental rates on Kaua‘i are generally much higher than in most of the rest of the nation, with the exception of bigger cities like Seattle, San Francisco and New York.
But compared to other counties in Hawai‘i, Kaua‘i’s residential rental rates are lower than most of the other islands. Based on an informal survey of property managers at Elite Pacific, LLC, Kaua‘i is the least expensive, followed by Hawai‘i Island, Maui and Honolulu. The other counties seem to be very close in average rent rates, he said.
Since the pandemic started, many residents have felt the pressure of finding ways to pay their rent. However, Spindt said an emergency proclamation preventing evictions should have helped ease the burden over the past several months.
Unless there was a pre-COVID rental increase agreed upon by the tenant, residential rent rates should not have been increased for existing tenants. Vacant units may have seen some small increases in rental rates, as vacancy rates remain low and demand remains high, he explained.
Spindt said the average rent for a three-bedroom home on Kaua‘i is about $2,400 per month, but there is a fair amount of variation depending on the size of the home, amenities and location.
“Families that are still unemployed continue to have challenges competing in the rental market,” Spindt said. “With low rental inventory and high demand, owners continue to have a selection of well-qualified applicants to choose from. The need for an increased inventory of housing has never been clearer.”
Regarding the commercial rental market, Jim Mayfield, president and principal broker of Island Business &Commercial Brokerage in Lihu‘e, said businesses are at risk of failure, especially those dependent on visitors.
“As we all know, those portions of the commercial real estate most closely aligned with specific tourist/visitor areas are more likely to have been affected than the non-visitor districts of Kaua‘i,” Mayfield said.
When business expenses rise, price increases can follow, he said.
Island Business Management Hawai‘i, founded in 2007, in its February report, the “3rd Hawai‘i Commercial Rent Survey,” showed a consistent need for commercial rent assistance in Hawai‘i and across the United States.
Many businesses permanently closed their doors and laid off employees in 2020 due to the burden of commercial rent compounded with the costs of doing business in the new normal.
And many businesses do not expect to survive through the end of 2021 without government-funded rent relief.
Mayfield had been in commercial banking for 30 years and in commercial-only real estate for the last 14 years.
“I am not familiar with commercial rents in locations other than Kaua‘i,” Mayfield said. “In Kaua‘i, office and industrial rents have not been affected much in the past 12 months.”
He explained that commercial warehouse and office rents on Kaua‘i have gone up 1.5% to 3% in the past 12 months, which is about the same rate of change as in prior years.
Mayfiled said although there has been public perception that the COVID-19 “hit” to Kaua‘i was going to result in a substantial reduction in the need for warehousing/office space, that hasn’t happened either, for two reasons.
First, there was not a large surplus of vacant space prior to the onset of COVID. Second, most of the existing tenants were required by their lease to continue occupying their rental space and continue paying rent.
“I do not expect warehouse vacancies/rental rates to change,” Mayfield said. “Perhaps in the next year, as office leases start to mature and as business owners have sufficient time to come to understand the consequences of Zoom meetings and additional e-mail communication, there may be some reduction in office-space usage.”
Stephanie Shinno, education, business and community reporter, can be reached at 245-0424 or firstname.lastname@example.org.