Winter Condos on a Tropic Isle

December usually calls for a lot of year-end closings, many of which are driven by tax considerations. Were there a lot of sales in December? Not statewide: resales were off 7 percent from December 2000 (although they were up 9 percent from November 2001, again thanks to tax planning).

The largest market, Oahu, held up (1 percent), but every other island took a holiday. The simile is useful, because it appears that the only ones with enough money to buy houses are those not on holiday: local residents. The holidaymakers — offshore buyers — appear to have saved their money and/or stayed home. For instance, sales on Maui, Kauai and the Big Island were down 27 percent, 22 percent and 9 percent.

This viewpoint is clarified by looking at the Speculation Index: which basically went into cold freeze in December. Sales were down 12 percent overall, but Kihei shrank 58 percent. Kona and Poipu shriveled up by 26 percent and Waikiki contracted by 11 percent. Only Kaanapali avoided catching this cold: it showed no change. The view of the market gets a bit muddy, however, when we turn to look at the trend in average prices: on Oahu, where people appear to have money for basic housing, prices went down 3 percent for single-family homes and 2 percent for condos. That’ll fly: when prices are going down, buyers get all hot to trot. What doesn’t fly, or flies in the face of logic, is that the prices on the other islands are skyrocketing.

If market seers are discontented, outer-island sellers are anything but: Condo prices on Maui boiled over 55 percent, with Kauai condos rising 16 percent. Single-family home prices have heated up some 32 percent on Kauai, 18 percent on the Big Island and 5 percent on Maui. Only Big Island condos refused to erupt: they fell 37 percent.

Looking, finally, at the interest-rate picture, discontent rears its ugly head again: short-term rates are moving down, while long-term rates are brimming. That figures: all that money the Fed pumped into the economy has professionals concerned about inflation, so they want a bit higher return from bond-issuers. Is this bad? It makes financing real estate a bit more expensive ... but inflation also promises rising prices for real estate.

	Latest month	Previous month	Year previous	Percent change from a year ago
HAWAII BUSINESS REAL ESTATE INDEX
Index (1972 = 100)	224.2	230.9	236.0	-5.0%
Components:
Resales number	574	547	568	+1.1%
Avg. resale price/$	$254,932	$276,165	$266,957	-4.5%
Avg. time on market/days	114	114	74	+54.1%
New residential permits/number	105	158	88
Avg. single-family rents/$month	1,680	1,699	1,694	-0.8%
HAWAII BUSINESS SPECULATION INDEX
Index (1972 = 100)	105.3	100.5	138.7	-24.1%
Components:
Waikiki condo resales	50	45	61	-18.0%
Kihei condo resales	28	21	66	-57.6%
Kaanapali condo resales	14	14	14	0%
Kona condo resales	25	19	34	-26.5%
Poipu condo resales	6	8	8	-25.0%
Total Hawaii condo resales	431 .8	393	487	-11.5%
SALES INDICATORS
Oahu single-family and condo resales	574	547	568	+1.1%
Maui single-family and condo resales	123	104	169	-27.2%
Big Island single-family and condo resales	163	131	179	-8.9%
Kauai single-family and condo resales	43	50	55	-21.8%
State S.F. & Condo Resales	903	832	971	-7.0%

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