LIHU‘E — Slipping property values and home sales could negatively impact the island’s economy in 2010, as the county’s revenue is largely derived from real estate taxes, Kaua‘i officials said. Residential median sales prices fell more than 25 percent and
LIHU‘E — Slipping property values and home sales could negatively impact the island’s economy in 2010, as the county’s revenue is largely derived from real estate taxes, Kaua‘i officials said.
Residential median sales prices fell more than 25 percent and the number of home sales are off by some 26 percent on Kaua‘i, according to September’s year-to-date statistics released last week by Multiple Listing Services.
Already “anticipating that next year will be down,” the county has been “frugal” with its spending, Kaua‘i County Councilman Tim Bynum said Sunday.
“We’ve been thoughtful in preparing for a reduction in revenue by being careful about how we spend,” he said.
Layoffs and furloughs have been avoided thus far, but some 50 county positions were recently “frozen” in order to help maintain the roughly $150 million operating budget and make up for projected declining revenue, he added.
While home values have obviously declined, it’s difficult to judge just how much because Kaua‘i residences can cost anywhere from around $200,000 to millions of dollars, Bynum said.
“The impression is that sales prices, although down, haven’t had a precipitous drop,” Bynum said. “Sales prices are down clearly, but not as huge as on the Mainland.”
Even though property values are sliding and tax revenue could fall short next year, Council Vice Chair Jay Furfaro said that’s not his only concern.
Some $12 million to $14 million in county operating costs is obtained from transient accommodations taxes each year, according to county Economic Development Director George Costa.
“Losing that, and a decrease in property value, could be very concerning,” Furfaro said Sunday.
If the state chooses to eliminate the TAT and other revenue sources continue to decline, “we would need to look at internal budget reductions to make up the difference,” Costa said.
Real estate has picked up for some agents on the island, including Kaua‘i Board of Realtors President Karen Agudong, who has been “very, very busy” in recent weeks.
Agudong attributes the boost in activity mainly to low interest rates, foreclosure sales and the $8,000 first-time homebuyers tax incentive being offered through Dec. 1.
“Things are definitely moving. It’s still a tough market, but things are picking up,” she said between meeting clients Sunday.
“I think there’s some merit to what’s going on; I don’t think it’s just a spurt.”
There are currently 61 single-family residences, 37 condos and 24 lots under contract, she said. Since it takes about 45 to 60 days to close, a spike in real estate could occur as early as the end of the month.
Kaua‘i Board of Realtors’ Executive Director Karen Ono said she’s also seen an increase in sales recently and agreed it could be due to the first-time homebuyers tax credit.
Everyone is moving quickly to close by Nov. 30 in order to qualify for the credit, Agudong said.
The Kaua‘i Board of Realtors has held the same number of agents, Ono said, likely because license renewals and fees are not due until the end of 2010.
“At that time, the number of agents could drop,” she said.
Keeping a positive attitude, Kaua‘i Chamber of Commerce President Randy Francisco said, “We’ve been through this before, but the question is how much longer.”
As far as real estate agents are concerned, he said those who have endured slower times typically have other “business ventures” to “keep them going.”
“They know the news is grim, but it eventually will turn around,” Francisco said Sunday. “The sales may be down, but those in the industry are hanging in there. We’re down, but we’re not out.”
Real estate market over past 6 years
Median residential sales prices for September:
2004 2005 2006 2007 2008 2009
$535,000 $750,000 $730,000 $675,000 $525,000 $532,000
Number of residential sales for September:
2004 2005 2006 2007 2008 2009
50 70 39 34 21 14
Median residential sales prices year-to-date:
2004 2005 2006 2007 2008 2009
$479,000 $639,000 $680,000 $662,000 $632,500 $471,000
Number of residential sales year-to-date:
2004 2005 2006 2007 2008 2009
529 521 354 333 226 167
Source: Multiple Listing Services
• Coco Zickos, business and environmental writer, can be reached at 245-3681 (ext. 251) or czickos@kauaipubco.com.
