LIHU‘E — Condominium sales have increased over 55% over the past five years, Kaua‘i Realtors say.
Steve Latham, a Realtor and broker at Oceanfront Sotheby’s International Realty, said in the first five months of 2016, the average condo sale was $436,144. In the first five months of 2021, the average sale is $688,051.
That’s a 58% increase in prices over the past five years, according to the Kaua‘i Multiple Listing Service of all Realtors on Kaua‘i.
“I do not see this demand and price increases due to a bubble like we saw in 2008 and the subsequent crash in prices by more than 30% declines,” Latham said. “The increased demand resulting in higher demand is a combination of several factors, starting with high inflation, especially for lumber and materials.”
Latham said the pandemic fueled demand for buying a home in a safer place because people can work from home due to platforms such as Zoom.
Kaua‘i Broker in Charge Paul Roy of Corcoran Pacific Properties did some additional research, and said Kaua‘i is not alone in housing shortages and rising prices.
From May 1 to June 10, 2016, there were 35 closed condo sales, according to Hawai‘i Information Service.
The lowest prices were around $69,000, the highest sales price at $890,000, the average at $432,856, and the median price at $399,000.
From May 1 to June 10 of this year, there were 85 condo sales. The lowest price was around $89,000, a $20,000 increase from 2016. The highest price was $1.95 million. The average price was $723,132, a $270,276 increase, while the median price was $629,000. That’s a $230,000 increase from 2016.
According to Roy, the U.S. housing market is currently experiencing a severe shortage, unlike anything most of the nation has ever experienced before.
Roy said housing shortages occur because of supply and demand for any particular location changes. The market always reacts by trying to reach equilibrium, but in the case of housing, a balanced market doesn’t happen overnight. If there’s an oversupply, it takes time to sell the excess properties. If there’s a shortage, it takes time to get more housing built.
Roy said Kaua‘i is notorious for its stringent zoning ordinances and building-infrastructure challenges. This is part of the reason Kaua‘i has a severe housing-affordability problem. With a median selling price of homes over $1 million, Kaua‘i will continue to undergo an affordable-housing crisis.
“In this latest housing shortage, the coronavirus pandemic also played a role,” Roy said. “When Kaua‘i first locked down in March of 2020, people feared another housing crisis, similar to what happened in 2008. And for about a month or two, demand for housing was low, and sellers were waiting to see what would happen.”
A couple of months after the lockdown began, Roy said there was pent-up demand for housing, and many people were taking advantage of record-low mortgage rates. But there were fewer properties available for sale during this time of increased demand.
“Besides lack of new construction, there’s also less inventory of existing homes coming on the market,” Roy said. “One reason is people’s reluctance to sell because they’re concerned about not being able to purchase another home in this market. If people can’t sell and find another home they don’t sell.”
Roy said government mortgage forbearance policy and foreclosure moratoriums keep homes that would otherwise enter the market off, at least temporarily in many cases.
“The idea, however, is to prevent homelessness, always a problem to be avoided, but even more pressing during the pandemic when health outcomes are of grave concern,” Roy said.
“We have yet to see what will happen once these moratoriums are lifted. There will be more challenging times ahead for those who can least afford the challenges a housing shortage and affordable pricing crisis brings.”
On Kaua‘i, there are different types of condos that offer different amenities for all walks of life, according to Roy.
“Too many unique features, locations, size and a number of bedrooms,” Roy said. “There is something for everyone. Most condos are located in resort/vacation districts, yet there are others that are non-vacation areas. We have owners living in both districts and others who rent out their properties per county rental laws.
He continued: “Anyone considering moving, buying or selling, should talk to their trusted Realtor or find one to talk to about the ever-changing real-estate marketplace. This is likely the biggest financial decision of someone’s entire life, and you need a Realtor if you want to do it right. Like doctors, attorneys, musicians, not all are created equal. Some are way better than others, so interview and look until you find the one for you.”
Stephanie Shinno, education and business reporter, can be reached at 245-0424 or firstname.lastname@example.org.