October 2020 Market Update
Positive News For Sellers!!
The Island of Hawaii real estate market continues to churn out sales in lessor numbers and volumes than 2019 but Median Sales Prices have not declined, Year over Year, for the first 9 months of 2020 despite the virus pandemic which is limiting travel to Hawaii. This is positive news for sellers! Sellers who choose to sell to the limited number of buyers in the market are not experiencing any price declines. It is a seller’s market in the resort areas for condominiums +/-$1m.
If you do not read past this point in my blog post, look at the Year over Year stats for South Kohala. All classes of Real Estate median sales prices are positive. Check out the South Kohala Land sales stats, they are extremely positive. I have always said to my clients that South and North Kohala land is a bargain and it looks like it is finally due for a positive run.
Typically this signals that buyers are not finding value in already constructed residential product and they buy land in order to build and create value for themselves. I suspect our local building industry will be well supported in the future as these buyers will now build new homes for themselves. This can also signal a peak in the market place as land is usually the last class of real estate to accelerate in a real estate sales cycle.
If you are reading this and want to discuss listing your property for sale, I look forward to hearing from you!! This is a great time to sell all classes of real estate!!
The month of September, 2020 and first 9 months of 2020, year to date median prices are generally positive for home and condo values even though unit volume and sales volume are down compared to 2019.
Condominium median sales prices for the month of September 2020 compared to September 2019 were up +15.66% for condominiums and +7.94% for Homes. Vacant land was down -12.24%. These median sales prices are positive for condominiums and residential but only represent a low volume of sales and are only compared to one particular month in 2019. A better measure is the year to date stats.
Median Sales Price-Year Over Year, first 9 months-2020
For a better perspective, the first 9 months of 2020 compared to the first months of 2019, produced generally positive results for property values. The median sales price, island wide, for Condos were up +5.91%, Residential up +3.95% and Vacant Land is down -23.44%.
Year Over Year Sales Volume
2020 sales volume, Year Over Year, for the first 9 months of 2020 is generally negative which we know now reflects a lack of inventory not lack of buyer interest since prices are increasing. The Sales Volume of Residential closed sales in September which reflect the closing of the previous 60 days was down for all classes.
Residential volume was down -5.45%. Condominium sales volume is down -18.33%, Vacant land is down -37.04 %.
Year Over Year Unit Volume
Residential down -7.89 %, Condominiums down -26.32%, Vacant land down -18.75%.
Year Over Year Median Sales Price
Residential up +14.46%, Condominiums up +6.01% and Vacant land up +1.54%
South Kohala District including Resorts
The positive stats for the South Kohala district which includes the 3 major resorts is impressive regarding Sales Volume and Median Sales Price for all categories of real estate. Even though there is a reduced number of sales except land transactions, prices are holding steady.
Year Over Year Sales Volume
Residential (+36.72 %), Condominiums (+9.00%), and Vacant Land (+24.94%)
Year Over Year Unit Volume
Residential (-7.35 %), Condominiums (-27.85%) and Vacant Land (+20.41%)
Year Over Year Median Sales Price
Residential (+8.59%), Condominiums (+14.39%), and Vacant Land (+31.91%)
CoreLogic, a data and analytics company. Report Highlights:
U.S. Home Price Insights Through August 2020 with Forecasts from September 2020 and August 2021
COVID-19 Impact on Home Prices
Despite the continued pressures of the pandemic, consumer home-purchasing power has stayed strong as mortgage rates remain at record lows. Meanwhile, for-sale inventory has continued to dwindle, dropping 17% year over year in August, which created upward pressure on home price appreciation as buyers compete for the limited supply of homes.
Home price growth is expected to slow as greater availability of new and existing homes are placed for sale in 2021 and elevated unemployment saps buyer demand. The HPI Forecast shows prices will start to downshift in early 2021, with annual U.S. HPI gains slowing to just 0.2% by August 2021 and many locations experiencing a decline in prices.
Nationally, home prices increases 5.9% year over year in August. No states posted an annual decline in home prices. The states with the highest increases year-over-year were Idaho (10.8%), Arizona (9.7%), and Maine (9.6%).
The imbalance between homebuyer demand and for-sale inventory is particularly acute for lower-priced homes. Because of this imbalance, homes priced more than 25% below the median were up 8.6% in price over the last year, compared with the 5.9% price increase for all homes.
– Dr. Frank Nothaft
Chief Economist for CoreLogic
Grigg’s Report Highlights:
The purpose of the Griggs Report is to provide the reader with accurate market data that gives an up-to-date view of the real estate market trends in N. Kona and Hawaii Island. Price Direction and Rate of Price Change are important indicators most are looking for. However price data is based on past sales. Current market inventory levels and pending sale trends show more current trends and give clues as to future price direction and rate of change. The report uses the “Pending Ratio”, the ratio of Pending Sales to Active Listing Inventory as a measure of this current supply/demand dynamic. By following the Pending Ratio’s over time the report uses charts to illustrate the trends. The higher the ratio number, the tighter or stronger the market demand versus supply.
- The latest data from Hawaii Information Service for N. Kona residential market continues to show a tightening market. Inventory is at the lowest level for this date in 23 years. Pending sales are strong and probably would be higher if it weren’t for the lack of inventory. This has caused the Pending Ratio to reach a new recovery. It is likely that the record low interest rates plus the relatively virus free environment has contributed to this tight residential market. This is a nation-wide trend with Kona being above average.Median price is up an unsustainable +12% compared with the same 12 month period a year ago.
The price range data at the top of page 2 shows prices ranges up to $1.5M are in the PEAK demand category. There are only 20 homes now listed below $700,000.
The Hawaii Island Residential Pending Ratio has rebounded sharply since April. East and West Hawaii both increased. The island wide pending ratio is approaching the PEAK demand level.
The Charts 5 and Chart 6 related to the distressed property shows very low levels of distressed properties on the market.
The Condo stats are showing the effects of lack of tourist traffic. Year/Year Sales are off 22%. The good news is the situation is improving. There is an increase in Pending Sales. Prices are increasing.
The Land stats are following the trend of the improved residential market with sharp decline in inventory and increased Pending Sales. So far this improved demand does not appear to have affected prices as dramatically.
- The price range data at the top of page 2 shows prices ranges up to $1.5M are in the PEAK demand category. There are only 20 homes now listed below $700,000.
- The Hawaii Island Residential Pending Ratio has rebounded sharply since April. East and West Hawaii both increased. The island wide pending ratio is approaching the PEAK demand level.
- The Charts 5 and Chart 6 related to the distressed property shows very low levels of distressed properties on the market.
- The Condo stats are showing the effects of lack of tourist traffic. Year/Year Sales are off 22%. The good news is the situation is improving. There is an increase in Pending Sales. Prices are increasing.
- The Land stats are following the trend of the improved residential market with sharp decline in inventory and increased Pending Sales. So far this improved demand does not appear to have affected prices as dramatically. However , a closer look does show steep increase in the past month.
- Page 6 is the Pending Ratio Summary page. This page offers a quick glance of the Pending Ratio trend for N. Kona Res., Condo, Land and Hawaii Island. This table shows improvement from last year and also since last month. The higher price ranges of the Residential market appear to be the most improved.
- The Page 7 Kona Residential Price chart since 1972 is updated with the new 2019 data. This is based on a data pool of similar homes many of which are either new sales or resales over the years. The total number of sales that make up the data pool is over 7,644 in the 23 subdivisions in the study. The result shows the 2019 average price was (plus six percent +6%) or $650,900.
If you distribute material from the Griggs Report online, on your website or blog, etc., please include appropriate attribution. An example is provided below.
The Griggs Report is published semi-monthly by Michael B. Griggs, PB, GRI
Michael B Griggs PB, GRI, RB-12532
73-1201 Mahilani Dr.
Kailua-Kona, HI 96740
Direct PH: 808 936-8134