Hawi North Kohala Real Estate Market – 2012 Report

In June 2012, I reported an active first half in the Hawi, North Kohala residential real estate market. In that period, sales outpaced the same period in 2011 by 50%, and the market was no longer dominated by distress sales. Overall, as the year ended home sales for 2012 were about the same as for 2011, in both number and distribution. The big increase was in the demand for raw land…an increase that has continued in the first weeks of 2013.

The big news in Hawi Kohala real estate for 2012 was the number of vacant land sales – ocean and Maui view especially

Summary for 2012: Hawi – Kapaau Residential Market Steady, Kohala Vacant Land in Demand

Looking at the full year, the number of homes sold in 2012 turned out to be exactly the same as in 2011. From Puakea to the end of the road at Pololu (and excluding the lower Kohala communities like Kohala Ranch and Kohala By the Sea), there were 32 residential properties sold in each year. The percentage of these that were short sales or foreclosures stabilized at around 38% (12 distress sales in 2012 versus 13 in 2011).

Sales of vacant land – from 15,000 sq. ft. residential building lots to larger ag-zoned acreage – were the big story in 2012. Seventeen sales were completed, versus ten parcels sold in 2011.

Kohala Home Sales and Prices Stable

Looking at the affordable end of the market, 14 out of 32 home sales in Kohala in 2012 were under $300,000 – and 8 of these sold for less than $200,000. These resale figures do not include new homes built at the Kumakua mutual self-help housing project in Hawi. The good news is that we are seeing local first time buyers in the market, with USDA, FHA, VA or conventional financing.

Some of these lower priced sales are homes bought by investors, who play a role by fixing up properties that in today’s conservative market will not be eligible for mortgages, but that can be restored to keep the character of Hawi and Kapaau intact.

Two attractive starter or investor homes side-by-side in Hawi, asking $229,000 (MLS# 248642) and $249,000 (MLS# 248647)

In the middle range of the market, seven homes were sold at prices above $300,000 but below $500,000. These are mostly homes that are slightly off the main roads and somewhat larger than the entry level homes, in neighborhoods from Halaula to Hanaula and Kokoiki.

The market for homes near Hawi in the $500,000 – $900,000 price range was strong, with 10 sales in 2012 lifting the median or average price of homes sold. Typically, these are homes on acreage. Two homes sold in Maliu Ridge II, the ungated subdivision above Hawi where lots are typically 1 – 3 acres. Three of the homes sold in this price range were lovingly-restored plantation era properties, including the Union Mill plantation managers house on the State Historic Register, which sold for $875,000.

Lowest priced home for sale at Maliu Ridge has mature landscaping and view asking $695,000 (MLS# 256055)

Distressed properties – either “short sales” where the listing agent assists the homeowner in negotiating with their lender to sell at less than is owed on the mortgage, or “REOs” which are bank-owned after foreclosure – represented a significant segment of the residential real estate market in Kohala in 2012. For each of the last two years, about two out of every five Kohala home sales involved a bank.

The most notable Kohala home to go through foreclosure and be sold in 2012 was the oceanfront estate on 20 acres in the Pahoa Beach subdivision makai of Hawi. Originally on the market for $17 million in 2009, an investor group purchased the property for $1,195,000 as a REO. This was the only residential sale above $1 million in 2012.

Vacant Land Prices Down, Sales Up

The 17 vacant land parcels sold in Kohala in 2012 ranged in price from $137,500 to $3.2 million!

Two sales of smaller home sites show that while there are houses being sold for land value (especially the bank-owned properties), some buyers find it easier to start with a blank slate. The first lot sold in the new Kapua six-lot subdivision next to Takata Store for $137,500. A vacant lot of $15,000 sq. ft. in Halaula sold for $165,000, with some site work including a cesspool already completed.

Lots of 1-3 acres with some ocean view found a level price point of $250,000. There were four of these sold…a similar lot entirely in a gulch changed hands for $175,000 and a 10-acre parcel at Puakea Bay Ranch set a new low by also selling at $250,000.

43 acres of ocean view land could be a farm or horse property, asking $795,000 (MLS# 255759)

Twenty-acres of vacant land also found a price range last year at which demand was healthy. Five parcels of 15-25 acres sold in a range of $465,000 – $625,000. With the exception of the lowest sale, which was a REO (foreclosure) at Puuepa Ranch (Lincoln Avenue makai), each of these properties took a major price reduction, then received an acceptable offer within days!

The level of pent-up demand for raw land outside of gated communities in the Hawi to Kapaau corridor was confirmed when Surety Kohala released 7 lots at the top of Kapaau Rd. (Waterworks) in December. As of this writing, 6 out of 7 have accepted offers.  Prices ranged from $180,000 to $600,000 for one to 44 acres.

Hawaii Real Estate Rule # 1: There is only so much oceanfront

The exception to the rule of declining land prices is in the case of oceanfront parcels. A 20-acre oceanfront lot at Ranch at Puakea, one of the west-facing gated communities around the corner from Hawi, sold in 2012 for $3.2 million.

Oceanfront 35 acres for sale for $3.9 million; adjacent parcels have been purchased for conservation (MLS# 258319)

With many North Kohala coastal properties being purchased for conservation, there are fewer opportunities for private individuals to purchase oceanfront land. The basic law of supply-and-demand in efficient markets tells us that puts upward pressure on prices for oceanfront parcels.

A hui hou,

Beth Thoma Robinson, R(B)
Direct: 808.443.4588
Email: beth@hawaiilife.com