Big Isle, Kauai
home prices fly high

Investors are scooping up land
as the supply of homes decreases

A slew of second-home and investment buyers drove condo prices higher than single-family homes on the Big Island last month.

More than half the condominiums sold on the island netted more than $397,450, a 72.8 percent gain from a year earlier, according to Hawaii Information Service data released yesterday.

The $370,000 median single-family home price was a 34.06 percent rise from April 2004.

A preference for high-end inventory in April as well as activity from buyers looking for tax-advantaged property exchanges, investors and second-home shoppers drove up Big Island prices, said Frank Goodale, a broker with Clark Realty Corp. in Kailua-Kona.

"We've had a number of sales at high price points," Goodale said, adding that second-home and investment buyers typically can afford more home than first-time buyers.

The pace of sales also continued rising as offshore and local investment buyers continued to raid inventory, Goodale said.

The number of single-family home sales rose 9.78 percent to 247 in March, while condo sales rose 18 percent to 118.

"We used to have a glut of inventory in Puna and South Point but now even it's all dried out," Goodale said.

Puna, on the rural southeast side of the Big Island, used to be considered a less desirable locale, but that's changing as a broader range of buyers are coming into that market, he said.

"As prices have risen, it's the only place some of them can still get into," Goodale said.

The high cost of homes has resulted in more land sales, said Robyn Bagley, a Realtor with the Land Office Inc., which mainly handles inventory in Kau.

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"In the past, I rarely sold land, but in the last six months demand has pushed the price of lots up," Bagley said.

A lack of affordable homes on Kauai and rising interest rates caused a bias toward condo purchases in April, said Bob German, owner and principal broker of Aloha Island Properties in Lihue.

"The rise in interest rates and prices has started to scare some buyers away from single-family home purchases," German said.

While the number of condo sales rose 23.53 percent to 63, single-family home sales on Kauai fell 8.7 percent last month as real estate agents struggled to supply buyers with available properties.

"This market is still really strong," German said. "I've been in this business for 30 years and it just seems to keep going up. I'm not seeing any leveling off in prices."

Half the homes sold last month on Kauai went for more than $540,000, nearly 13.68 percent higher than a year earlier, according to Hawaii Information Service.

The median price for a condominium hit $418,000, 7.46 percent above the year-earlier median of $389,000.

More housing is in the works for Kauai, but the projects can't keep up with the demand, German said.