Saturday, October 9, 2004

High prices prompting
caution on home sales

Record neighbor island sales push
buyers to be more "picky"

Neighbor island real estate fetched record-high prices last month but Realtors warned that the sticker shock is weighing on the mainland buyers who've driven those markets.

"A change is coming. The market is gonna swing," said Fred Haywood of Paia-based Fred Haywood Realty, who said buyers who would have rushed to lock up purchases of Maui property earlier this year are now getting "picky."

If so, many are still willing to pay an arm and a leg for a slice of paradise.

Kauai's median single-family home price hit a record high of $535,000 last month, while Big Island condominium prices touched a record $325,000, according to figures released yesterday by Hawaii Information Service.

On Maui, single-family home prices came in at a near-record $600,000, the second-highest monthly median ever, according to the Realtors Association of Maui.

However, the strong neighbor island prices came against a backdrop of slowing sales volume, which raises the likelihood that a few higher priced sales can skew the overall figures.

There were 372 single-family homes sold on the three islands last month, down 9 percent from 409 in September 2003.

Condo sales volume slipped 21.2 percent to 248 units, compared with 315 a year earlier.

The strong median prices on Maui appeared due in part to an increase in the number of homes sold in higher priced areas like Haiku, Kaanapali and Kula, where the median approached or exceeded $1 million.

Haywood said Maui's market, which has risen higher and faster than others, was now in a transition period in which prices had neared the breaking point, but a summer drop in mortgage interest rates was propping up buying.

"(Buyers are) worried about prices and you can hear a little more fear in their voices," he said. "The rates are the last thread holding the market up there."

Ninety-seven Maui homes changed hands last month, down from 134 in September 2003.

There were 127 Maui condos sold, down from 185. The median condo price was $330,000, just shy of August's record high of $339,000.

The median price is the point at which half the sales were higher and half were lower.

The number of mainlanders seeking second homes on Kauai also has "slacked" a bit as prices have soared, said Ken Kubiak, broker-in-charge with Century 21 All Islands in Kilauea. But low inventory following the buying spree of the last couple of years was underpinning the market, he added.

"Nobody's come up with any new inventory for us," he said.

Though Kauai home prices reached a new record, it came amid sharply lower sales volume of 46 homes, compared with 68 the previous September.

Kubiak says a number of new housing projects around the island are planned and should ease the supply shortfall eventually but the market should remain bouyant for the time being since most of those developments are at least a year away from ground-breaking.

"We've still got a long way to go before stuff starts changing here," he said.

However, the supply of single-family homes will likely stay tight even after the new product is available because most of the planned developments are for condos, which are more popular with offshore buyers and offer developers a higher rate of return, he said.

Kauai condos in September fetched a median $415,000, just shy of a record, on sales of just 41 units. There were 50 units sold in September 2003.

The record Big Island condo price came amid flat sales of 80 units, the same as the previous September.

Big Island single-family homes, meanwhile, showed an uptick in sales to 229 from 207 a year earlier, coming in at a median $270,000.



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