Our Most Current Real Estate Market Insights

6/1/2019

The Mike Griggs Report has been researched and published for years by my friend Michael B. Griggs, R, PB, Graduate of the Real Estate Institute and with real estate appraisal experience, to provide the reader with a unique comprehensive market driven up-to-date micro and macro view of our real estate market trends here in West Hawaii.

This report is different from most, as it includes; Price Direction, Rate of Price Change, Current Market Inventory Levels and Pending Sales Trends which together show the most current market activity information to give as many clues to price direction, volume of sales activity as possible. The “Pending Ratio”, is, the ratio of Pending Sales (those in escrow not yet closed) to the Active Listing in Inventory, as a measure of the current supply/demand dynamic.

From a MACRO PERSPECTIVE, the buyer or seller strength over all in the market is generally steady and positive for both buyers and sellers. There are however differences between residential, condo and land sales, which must be factored in depending on your particular interest.

An important factor in the housing market has been the steady march of rising prices for the last decade in the affordable end of the market, which is surpassing the upper limits of the average buyers income ability to buy. This is in large part is due to lack of vision and leadership of County Government as they’ve missed and are missing the opportunity to aggressively address the need for zoning changes to preempt the problem by increasing zoning capacity for the affordable alternatives such as creative duplexes (i.e. half a house for a young family) and apartments for the entry level buyers as well as prefabricated and tiny homes. This in conjunction with the very low issuance of building permits over the last 10 years, has created the crises of extremely low affordable inventory which naturally puts great upward pressure on those prices. That said comparing real estate prices state wide, the Big Island still offers the best values in the state and some of the most extradentary surroundings. —-  I just wish we could do better at fulfilling our potential. ——–Greg

___Mike’s Report for 6/1/2019 more the MICRO VIEW___

1. The latest data from Hawaii Information Service for N. Kona residential shows Pending Sales numbers a little lower than two weeks ago. Keep in mind the higher the ratio number, the stronger the market demand is versus supply. This is to be expected this time of year after the busy winter selling season. The 30-day sales number is at the highest level we have seen since 2005. This is a reflection of the busy winter market activity. Median prices have been showing slight declining trend since February. The number of homes sold in the past 12 months is off (-7%) which is an improvement from last report of (-10%).

2. The price range data at the top of page 2 of the full report and graphs shows the number of annualized sales is off in the under $500,000 residential price range due to lack of inventory. The opposite is true in the over $900,000 price ranges. Here we see too much inventory for too few buyers. Sales are off approximately (-25%). It is still unclear if the new vacation rental rules have hurt the appeal of owning such properties.

3. The overall Hawaii Island Residential Pending Ratio is now showing a slight declining trend, as West HI is now showing decline while East Hawaii continues to show improving trend since the eruption stopped. The West Hawaii decline is a seasonal change that started a little later this year. Page 2, Table 3 Note: The year to date median residential sale price for Hawaii Island as a whole was $368,000 in 2018 vs $639,900 in North Kona for that periods and now stands at $628,800.

4. Overall for the Island the percentage of REO listings or Short Sales on the market average is down 2% from a year ago. Kamuela is showing the greatest improvement with less than 6% of the listing being distressed properties.

The REO numbers in Chart 6 show an average decline in properties owned by Fannie Mae, Deutsche Bank, Wells Fargo and Bank of America. The numbers have fallen from last year’s 89 to the current 68. It had been 250 in 2010.

5. The Condo sales continue to be strong with a Pending Ratio in Sellers’ Market territory at 68. Median Prices had been showing +7%. year/year increase for some time. That has backed off to a more sustainable +5%.

6. Land sales do show continued improvement in Pending Sales. This is helping improve the 12-month sales numbers. Median Price shows marked improvement from its declining trend. The indication is that the improved Pending Sales numbers will continue. This trend appears and then generally improves in a “residential sellers’ market with rising prices when inventory is low. At the present time land sales are still in a “Buyers’ Market” condition.

7. Page 6 is the Pending Ratio Summary page. This page offers a quick glance of the Pending Ratio trend for N. Kona Res., Condo and Land as well as Hawaii Island. Page 6 Hawaii Island ratio is probably the best indicator of the residential market trend. In this report we see nice continued improvement for Hawaii Island recently but still off from a year ago.

8. The Page 7 Kona Residential Price chart since 1972 has been updated with the new 2018 data. This maintains a data pool of similar homes many of which were new sales or have resold over the years. The total number of sales that make up the data pool now stands at 7,644 in the 23 subdivisions in the study. The year/year price change for this Mid-level housing group for 2018 is $615,100, up from 2017’s $587,100. This represents a 5% price increase for 2018.

9. The Kona vs. West Coast is up through March 2019. Kona Residential Median price settle back some in March but still shows prices + 2.25% year over year. San Diego on the other hand is showing an improving trend, now at +2.56% up from +1.1% a month earlier.

Michael B. Griggs, R, PB, GRI

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For an email copy of the full report and charts, simply request them via: GMG@Hawaii.rr.com or call me; Greg Gerard @ 808-987-7720.

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