Neighbor islands
go condo crazyMainland investors generate a
near frenzy in real estate sales
An $895,000 condominium might not seem like a bargain, but it was to Tim Markison.
The patent attorney in Austin, Texas, plunked down that much for a three-bedroom unit in Kapalua, Maui, that he's going to use only a few weeks out of the year. And he's happy he did.
"Before we even closed, an identical unit down the hall sold for $100,000 more," said Markison. "I call that good timing."
That Markison considered his condo a steal illustrates the amazing dynamic that continues to drive neighbor island real estate activity.
With an erratic stock market offering little enticement to mainland investors, they continued to pile into Maui, Big Island and Kauai real estate -- favored over urbanized Oahu by paradise-seeking malihini. April marked more buying at prices that make many locals cringe.It's a trend that neighbor island brokers say is intensifying before an expected interest rate increase this summer.
Condo sales were up 29.9 percent to 203 units on Maui in April compared with April 2003, according to home resale data from the Realtors Association of Maui. The sales rate was the highest for any month since the recent market run-up began in the late 1990s.
On Kauai, condo sales grew 70 percent to 51 units sold, while Big Island sales increased 31.6 percent to 100 units, according to data from Hawaii Information Service.
Single-family home sales saw similar growth, up 28.5 percent on Maui to 117 units and up 29.6 percent and 24.7, respectively, on Kauai and the Big Island.
Earlier this year, Maui Mayor Alan Arakawa said 90 percent of home purchases on the island were by out-of-state buyers.
"They're coming in droves," said Dave Lucas, a broker with C&H Properties on the Big Island. "People are bailing out of mainland assets in huge numbers."
Lucas said many of his clients, particularly Californians, have reaped so much on the sales of their mainland real estate that they "don't even flinch" at paying the prevailing sky-high prices for a slice of paradise.
On Maui a condo fetched a median $310,000 in April, up 24 percent from $250,000 a year earlier, while single-family home prices increased 14.4 percent to $500,000 from $436,739. The Big Island saw comparable price increases.
Kauai saw the most price growth, with condo prices jumping 48.2 percent to a median $389,000 from the previous April's $262,500. Single-family homes on the Garden Isle commanded $477,500, a gain of 46.3 percent from the year earlier's $326,495.
Mark Sheehan, a property broker and board member of the sustainable-development group Maui Tomorrow, said the spiraling market has pushed the shortage of affordable neighbor island housing to "beyond a crisis," noting that Kauai and Maui home prices are now far higher than Oahu, even though the latter has more job opportunities for locals.
Sheehan estimated 4,000 to 5,000 affordable homes are needed on Maui, blaming mainly big resorts and developers that promised to build affordable housing units as a condition of their development permits.
"Many have just flat refused and it hasn't been enforced," he said, estimating that the undelivered affordable units number around 3,000.
But signs are emerging that things might be leveling off. Roy Sakamoto, president of Sakamoto Properties on Maui, said he has seen more available inventory recently as some homeowners try to lock in profits from the recent price run-up.
"A lot more owners seem to be capitalizing on the rising market, so the market may be peaking as people get out," he said.
Even so, sellers had little trouble finding buyers in April. Condos and single-family homes spent a median 78 and 111 days, respectively, on the market on Maui, both near historic lows.
For rich malihini like Markison, it was a no-brainer. His Kapalua condo has now already gone up more than a stock market investment would have, plus he and his family have a home in paradise.
"We love Maui, and going there once or twice a year for three to four weeks wasn't cutting it," he said.
