Kauai median price hits $750,000

One analyst says the numbers are skewed by a lack of homes for sale on the lower end of the market

CORRECTION Thursday, October 13, 2005 » The median price of a Kauai single-family home hit a record $750,000 last month. A story on Page C1 on Tuesday incorrectly said the median was $780,000. The Honolulu Star-Bulletin strives to make its news report fair and accurate. If you have a question or comment about news coverage, call Editor Frank Bridgewater at 529-4791 or email him at corrections@starbulletin.com.

The pace of home sales and prices on Kauai showed no sign of an after-summer slowdown and stayed hot into fall.

On Kauai, there were 70 sales of single-family homes in September, up 40 percent from the same month last year, according to a report released yesterday by the Hawaii Information Service. The number of condominium sales rose to 54 for the month, an increase of 35 percent over the 40 sales in September 2004.

Single-family home prices on Kauai jumped 40.2 percent to a record median of $780,000 last month. Condominium prices rose a scant 1.9 percent to $405,000 from $397,500 a year ago.

Strong demand for the limited number of homes available for sale on Kauai has sent median prices through the roof, but Phillip Fudge, one of the owners of Kauai Landmark Realty in Kapaa, said he thinks September's record rise is a bit deceptive. "There's not a lot of things on the lower end of the market for sale so that distorts the market," he said. Average single-family home prices on Kauai are probably closer to the mid-$500,000s, he said.

"Summer is usually one of our strongest times because it's when the investors are here on vacation," Fudge said. About 75 percent of his business is investor based.

The median price for a single-family home on the Garden Isle in August was $649,000, a 27.8 percent increase over the year earlier. The median price for a Kauai condominium reached $467,500, an increase of 33.7 percent.

Economist Leroy Laney, in recent speech on Kauai, said rising home prices and limited inventory on the island are troubling.

"One wonders about the future of an economy in which those who make it run can't afford to relocate or stay here," Laney said.

More homes are being built on Kauai, but real estate professionals have said that the projects, which include the Regency Huleia near the Kukui Grove Shopping Center, the redevelopment of Coco Palms and several condominium developments in Lihue, cannot keep up with demand.

The Kauai Beach Resort, a hotel-to-condominium conversion of the former Radisson Kauai, already has attracted its share of investor frenzy, Fudge said.

"It'll be interesting to see how quickly these units go," he said.

But while investors, especially those who have seen their portfolios improve in California, are still grabbing inventory, there are signs that some of the frenetic pace may be leveling off, Fudge said.

"I'm starting to see resistance to high prices. Many of the buyers are really taking a step back -- there seems to be some hesitancy about speculation," he said.