West Coast Buyers Make Big Splash on Kaua‘i and Hawai‘i Island

As on Maui, mainland buyers of local homes had a bigger impact on both islands than they did on O‘ahu. Meanwhile, the number of transactions is declining statewide and prices continue to rise.
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These three vacant lots along the Kona Coast were purchased in a sale that closed last week for a price of $33.75 million. The price included plans for a nearly 30,000-square-foot home designed by architect Paul McClean of Los Angeles. | Photo: courtesy of Mphotoi

A trio of vacant oceanfront lots, near where the Kona Village Resort is being renovated on Hawaiʻi Island, sold last week to a California buyer for just under $34 million. On Kaua‘i, a North Shore estate sold at auction in the first quarter for more than $36 million, and the unnamed buyer may be from the West Coast as well.

Kaua‘i and Hawai‘i Island have some of the priciest real estate in Hawaiʻi, and those properties tend to attract wealthy buyers from the West Coast, an allure reflected in buyer statistics for 2021 compiled by Title Guaranty Hawaii.

While differences in median prices are stark – $515,000 for a single-family home on Hawaiʻi Island and $1.2 million on Kaua‘i – the real estate markets for the two islands have more in common with each other than with Oʻahu.

On O‘ahu, 76% of home sales last year were to local buyers, who also are more likely to be owner-occupants. But on Kaua‘i and Hawai‘i Island, local buyers accounted for only about 60% of all homes and condominiums sold.

Sales and inventory of homes for sale on Kaua‘i and Hawai‘i Island tend not to be as impacted by life events such as marriage, divorce or death, since a large percentage of those properties are second, third or fourth homes.

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Matt Beall, CEO, owner and principal broker of Hawaiʻi Life. | Photo: courtesy of Hawaiʻi Life

“So much of real estate on the Neighbor Islands is discretionary,” says Matt Beall, CEO, owner and principal broker of Hawaiʻi Life. “The same life events can happen, but it’s less impactful” on overall sales since they don’t affect a primary residence as often as elsewhere.

California homebuyers accounted for nearly a third of the total sales volume on each of the two islands last year – $1.1 billion of the $4 billion spent purchasing Hawaiʻi Island homes, and $495 million of $1.6 billion on Kauai.

Here are some interesting details inside those overall numbers.

  • Double 2019: Hawaiʻi Island’s sales volume of just under $4 billion last year was double the sales volume for 2019, the last full year before the Covid-19 pandemic. More homes were sold on Hawaiʻi Island last year, too – 5,724 homes and condos traded hands, a 47% jump from 2019, according to Title Guaranty statistics.
  • Kohala Coast: More than three-quarters of Hawaiʻi Island’s total sales volume in 2021 – $3.1 billion, or 78% – was generated on the Kohala Coast district, which in Title Guaranty Hawaii’s data also includes the North Kona coast. The 2,450 sales in that district were 43% of the island’s total.
  • Local vs. mainland buyers: While 48% of the individual sales in the Kohala Coast were to Hawaiʻi buyers, they accounted for just 28.5% of the dollar volume in that area. Only 22% of the buyers were from California, but they accounted for 31% of the dollar volume. Similarly, 8% of buyers were from Washington state and accounted for 12% of the volume.
  • Garden Island: The sales volume of $1.6 billion on Kaua‘i in 2021 was nearly double the $823.1 million in 2019. Meanwhile, the number of transactions grew last year to 1,406 homes, 22% more than in 2019.
  • Hot spots: Two areas on Kaua‘i accounted for 72% of the island’s total sales volume: Hanalei, which encompasses the whole North Shore, including Kīlauea, with $630 million, or 39% of the total Kaua‘i sales volume; and Kōloa, which includes Poʻipū Resort and Kukuiʻula, with $527 million, or 33% of the islandwide volume.

The statewide market is already starting to shift this year, with the number of transactions declining as prices rise, Beall notes.

While prices are increasing across the board, those increases are more pronounced for price points below $1 million. For example, some homes that were priced at $700,000 a few years ago may now sell for more than $1 million, while others that may have sold for $300,000 may now sell for more than $600,000.

“Going from the high hundreds to $1 million is less significant than doubling” the price, Beall says. “There’s a lot of that happening on the Big Island.”

With fewer homes on the market and rising interest rates – the average rate nationally for a 30-year mortgage rose to 4.72% last week, according to Freddie Mac – buyers should look for a good listing agent to get a jump on properties, as a Hilo agent recently told Beall.

“Everything is selling immediately,” he says. “You want someone who sees it coming” or any house that you may want will be sold before you even see it.



Categories: Real Estate