Resort real estate sales see rebound
December 13, 2010 – By HARRY EAGAR, Staff Writer
Ricky Cassiday of Data@Work in Honolulu publishes an analysis of the market, released last week. He said sales statewide through three quarters indicate that total sales are “up almost 50 percent from a year ago.”
“This strong rebound comes at a price – more precisely, it comes thanks to falling prices,” he said.
The drop in resort residential prices over the past two years, about 30 percent, is the greatest fall in the history of Hawaii resort real estate, even greater than in 1977, he said.
Average prices touched $800,000 in mid-2007 and fell below $600,000 earlier this year.
Resales give a somewhat smoother view because new inventory comes into the market in uneven pulses, Cassiday said. Looking just at resales, activity has now risen for four consecutive quarters, and “average prices appear to have stabilized around the $1 million mark.”
There was a decided down-market trend among people still able to buy resort homes, often second homes, in Hawaii after the prices started going down.
At the peak in 2007, the lowest price class ($250,000 to $499,000) was comparatively sluggish, with 145 closings, while the next step up ($500,000 to $749,000) was nearly three times as active, with 446 sales.
Total sales for the two cheapest classes dropped by half the next year, to 308, but the balance started moving toward the cheapest class. (Since prices were falling, it is probable that buyers were getting next-to-bottom units at rock-bottom prices.)
The next year, sales numbers recovered to 450, and the two classes were closely matched – 205 cheap places and 245 not-quite-so-cheap places.
This year, the total of sales in those classes will exceed 2007’s total, but the cheapest class will slightly outnumber the next-cheapest.
Meanwhile, the most expensive class in Cassiday’s analysis, $3 million-plus, peaked at 162 sales in 2007, dropped as low as 87 in 2008 and is expected to recover to 121 this year.
These are statewide figures, and year-end 2010 numbers are extrapolated from the first three quarters.
In Maui County, resort residential sales peaked at 588 in 2005 but have now broken the 600 barrier and should reach 629 this year. The recent low point was 217 last year.
In Maui County, average prices peaked at more than $2 million in 2008, fell to $1.5 million last year and are predicted to fall below $1.4 million this year.
Foreclosures make up only about 10 percent of resales, Cassiday finds, and even less on Maui, where he expects 25 forced sales this year, compared with 434 market sales.
But foreclosures force prices down by much more. Foreclosure auction sales result in prices about half those of undistressed properties.
The spread is even greater on Maui, where foreclosure sales average $630,000 and market sales $1.4 million.
Harry Eagar can be reached at email@example.com.