Kauai home prices
hit record

Home prices on Kauai skyrocketed 76 percent last month from a year earlier to a record $580,000 as buyers continued to bid up neighbor island real estate.

Also, the median price for condominiums on the Garden Island jumped 41 percent to $388,000, according to data released yesterday by Hawaii Information Service.

Prices are continuing to be driven by wealthy mainland baby boomers preparing for retirement by securing a second property in resort areas, said Jim Pycha, principal broker at Re/Max Kauai.

"They like to buy something now that they can use when they retire," Pycha said, "and in the meantime they'd like it to generate income."

But sellers have gotten savvy, too, and have been boosting their asking prices to account for expected appreciation, he said.

As a result, sales are closing at just below the asking price, rather than being bid to levels well above, as had recently been the case.

The high prices are forcing mainland buyers to subsidize the purchases of their second homes rather than being able to let rental income pay the entire mortgage, Pycha said.

Many see the properties as investments.

"At least they've gotten on the appreciation elevator," he said. "When it comes time for them to move here maybe they'll trade up into something different or larger."

The mainland market is keeping prices in the resort areas higher than other areas. The median sales price for a single-family home in Princeville was $690,000 last month, Pycha said, and $482,500 for condos.

The number of single-family homes sold on Kauai last month was up 15 percent from a year ago, to 70, while the number of condos sold fell by a third to 34.

Prices on the Big Island rose less dramatically. The median sales price for single-family homes rose nearly 29 percent to $329,000 from $256,000 in October 2003. The median price for condos jumped more than 38 percent to $312,000.

Though prices in both categories posted solid gains, sales volume dipped slightly in October, with 227 single-family homes and 89 condos changing hands.

Interest from mainland buyers has been moderating, said Kauai's Pycha.

But, he said, that may have more to do with sellers increasing their asking prices than buyers losing interest.