Resort home market levels off

Hawaii's market for resort homes, which has seen steady price growth through the third quarter of this year, could be at its tipping point, according to a study released yesterday by real estate analyst Ricky Cassiday of Data@Work.

While sales dropped 13.4 percent for the overall resort residential during the first three quarters of last year, strong demand for the Hawaii lifestyle and steady sales at the upper end of the market bolstered prices 18.6 percent during that same time period.

"However the market has probably reached the tipping point, in terms of prices; from here onward the trend in prices will be downward," Cassiday said, adding that it remains to be seen if the baby boomer market will support the market at current levels.

North American buyers are coming from key visitor source markets such as Southern and Northern California, Canada, Seattle, Portland and Colorado, Cassiday said. The weak dollar has also caused more foreign spending, he said.

International buyers were predominant in the mix of second-home buyers and investors who bought more than $76 million of property during the recent release of the first phase of Koloa Landing, a luxury resort condominium project in Kauai, said Roxanne Loughery, senior vice president of marketing for S&P Destination Properties.

All islands saw price appreciation during the first three quarters of 2007. However, Kauai and Oahu led the pack, Cassiday said. High prices on the Big Island and Maui in 2007 may have caused some buyers to look to other islands, Cassiday said.

"Buyer confidence is a little down, but it's amazing how able everyone is," said Josh Rudinoff, sales manager for the Waipouli Beach Resort & Spa on Kauai, which sold out its initial release before the property was built.

Mid-range luxury property, as defined by prices ranging from $1.5 to $1.75 million, was the best performing resort segment for the first three quarters of 2007, Cassiday said, adding that the biggest decline in market activity occurred in the lowest three price segments.

"For sales under $1 million it is a buyer's market," he said. "For sales over that -- particularly as the market climbs, it is a seller's market."

But there is still plenty of activity -- at least on Kauai -- from higher-end buyers, he said. Some wealthy owners have even bought three or four units at the Waipouli Beach Resort & Spa, where residences range from $700,000 to $2.89 million, Rudinoff said.