High-end homes Like other sought-after neighbor island vacation areas, high-end single-family home sales led Kauai's real estate recovery, particularly on the north shore and in Poipu on the south shore.
drive recovery
KAUAI / FINDING MIDDLE GROUND
During the 1980s, property values on Oahu and parts of the neighbor islands shot sky high as wealthy speculators from Japan bought up real estate. As the decade closed, the Japanese bubble burst and property prices started to slide. Hawaii residents who bought homes as prices soared were trapped with real estate worth less than they had paid. But many neighborhoods are beginning to make a comeback. This is part six of a seven-day look at home prices and sales volume in the state of Hawaii.
By Lyn Danninger
ldanninger@starbulletin.comBut unlike Oahu, Kauai's real estate slump for much of the '90s was related to a natural cause -- Hurricane Iniki in 1992 -- rather than a human phenomenon.
"We were set back big time by the hurricane so we had a pent-up situation and our prices were held back by the memory of the hurricane. But then we came back in 1997," said Michael Schmidt, broker with Coldwell Banker Bali Hai Realty.
Today, the median price for a single-family home on Kauai's north shore runs around $500,000 and condominiums go for about $250,000, Schmidt said.
Moreover, with supply dwindling, good deals are increasingly hard to come by, he said.Any properties that do come on the market are snapped up and followed by back-up offers, he said.
Schmidt said homebuyers in the area are mostly baby boomers who originate from the U.S. West Coast and are looking to secure a home in anticipation of future retirement.
Ken Kubiak, Century 21 All Islands vice president of Kauai operations, notes that any new development in that market is purchased quickly.
Kubiak was part of a recent townhouse development in Princeville called Villas on the Prince. The average price was $443,000. All were sold before any ground was broken.
On the island's south shore, Poipu area Realtor Frank Supon, owner of Pacific Ocean Properties, noted median prices and sales volume are already ahead of last year. In the Poipu/Koloa area, the median price so far this year for a single-family home is $275,000. For condominiums it's $259,000. Total sales volume for the same period last year in single-family homes in the area stood at $11 million. This year, it's already up to $16 million, he said.
Supon attributes much of the buying in the area to a change in people's priorities after Sept. 11, as well as new attitudes about investments among the baby-boom generation. Steady appreciation of real estate in recent years, combined with low interest rates, has also been a driving force.
"I think people have advanced their timetables," he said. "I also think that Enron and the declining credibility of the stock market has had an impact."
On Kauai as a whole, the median price for a single-family home this year stands at $255,000, a drop from 2001's median price of $300,000.
Supon attributes the difference this year to fewer choices and lower-priced inventory now on the market.
But for condominiums, the year-to-date median price has moved up considerably, to $217,000 at the end of April vs. $160,000 for all of 2001. The jump is likely because most condominiums sold so far are in Kauai's pricier resort areas, Supon said.
With tightening inventory in many areas of Kauai, developers have also begun to take notice.
Alexander & Baldwin has indicated it will move forward with a long-planned development of mostly high-end housing in the Poipu area, and recently partnered with an Arizona-based development company.
"They have about 1,100 homes already zoned and zoning entitlement for 1,000 multi-units and 500 to 600 residential units in the Poipu-Koloa area, Supon said.
Schuler Homes is also working on two projects. One of the projects, close to Lihue, will cater to the middle-income local buyer, said Mike Jones, president of Schuler Homes Hawaii division.
"There are 60 duplexes in the $170,000 to $200,000 range," Jones said. The company had owned the property for some time but had put any development on hold until the market returned, he said.
While demand for low- to middle-income development is there, most Kauai development is on the higher end, said Century 21's Kubiak.
More properties are being converted to vacation rentals, creating a rental shortage for residents, he said.
"There is a need for it and the rental market is really short," Kubiak said. "Anything that comes up gets rented."