Tuesday, July 12, 2005

Big Isle’s home
costs going up

Darrell and Kathleen Stephens, formerly of Alaska, just bought their sixth lot in Puna last month for about $60,000 more than they paid to enter that market three years ago.

But in the midst of Hawaii's frenetic real estate market, the Stephenses say they still consider the price of paradise reasonable -- at least in portions of the Big Island, where half of the house prices remain less than $400,000, according to figures released yesterday by the Hawaii Information Service.

Still, those prices represent a 42 percent increase over last June.

Baby boomers like the Stephenses, who are looking to purchase homes in Hawaii where they can vacation or retire, continue to drive the neighbor island markets, along with kamaaina and offshore investors. Realtors say the strength of the market on the Big Island and Kauai has buyers participating in price wars for properties that have holes in the floor, and making purchases in as little as one day, sometimes sight unseen.

In Kauai, even though prices keep rising, the pace is still hot, said Marilyn Mach, a Realtor/broker with O'Connor Realty LLC.

Half of the homes sold last month on Kauai went for $699,500, nearly breaking the $700,000 benchmark, according to the Hawaii Information Service. The median price was a 29.5 percent gain from the year-earlier $540,350. The median price for a condominium rose 15.4 percent, to $450,000, up from $389,900.

"The market is a combination of crazy, insane and the best deal in all of America," said Mary Begier, principal broker of Mary Begier Realty, which specializes in residential real estate in the Hilo and Honolulu markets.

While Big Island home prices rose 42 percent from last June, half of the houses sold for less than $397,750. The median price for a condominium jumped 36 percent, to $395,000.

The number of Big Island single-family home sales increased to 288, two more than changed hands in June 2004. Condo sales fell 13 percent, to 99, from the year-earlier 114.



"We don't know when the market will start leveling off, but this is still an investor's market," said Darrell Stephens, adding that he has already made $10,000 on the Big Island lot that he purchased last month. Eventually, the couple plans to cash in a couple of lots to build their dream home, he said.

In certain regions of the Big Island, niche markets made up of gays, environmentalists and hippies are also creating new business opportunities for Realtors, said Howard Dinits, who is known as the Big Island's "Bio-Friendly Realtor" because he takes clients around in a car that runs on biodiesel, which is made from cooking oil.

"We're called Punatics," said Dinits, whose specialty has been the Puna district since the cost of living in California enticed him to move to Hawaii three years ago.

Since January, Dinits has sold 13 homes, which retail for $260,000 to $319,000, in the Hawaiian Shores/Hawaiian Beaches subdivision where he lives.

"Now, I couldn't buy here," Dinits said, adding that despite his price limitations, there are obviously others who can.

Strong demand for Kauai also has created a shortage of land, homes and condominiums that has resulted in higher prices but has not stumped the market, Mach said.

While the number of condo sales rose 45 percent, to 74, the number of single-family home sales on Kauai fell to 68 last month, a 12.8 percent decrease, as real estate agents struggled to supply buyers with available properties.

Last month, Mach and another Realtor in her office sold Princeville listings in less than a day, she said.

"I got an offer as soon as it came on the market," said Mach of the condo she sold to the vacationing mainland family that rented it.

Kauai has been discovered by a broad mix of people ranging from second-home buyers to investors, Mach said. Kamaaina buyers, whose homes or condominiums have appreciated, also are upgrading, she said.

Demand has kept price points strong across all markets on Kauai and has begun to fuel the higher-end market, which strongly appeals to baby boomers, Mach said.

"The baby boomers are out there, and they are buying," she said. "We are starting to see very high-end properties sell. In the last few weeks, we've had two sales at Anini Beach that were right under $7 million."

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