WEST HAWAII REAL ESTATE UPDATE JULY 2024

Condo sales drop 52%

Recent Market Shift

One of the most significant changes we’ve observed is a market shift that began around May and has continued into June and July. This shift has resulted in varying trends in different segments of the market.

Key Highlights

Condo Market

• Sales Drop: Condo sales have experienced a dramatic 52% drop year-over-year for June. This decline was anticipated due to low inventory levels observed in the previous months.
• Current Inventory: As of now, there are 127 condos available, which is approaching a normal market level of about 135 units.
• Price Trends: Despite the drop in sales volume, the median price for condos increased by 8%, from $548,000 to $592,000.

Single-Family Homes

• Sales Increase: Unlike condos, single-family home sales have increased by 5% last month.
• Price Trends: The median price for single-family homes decreased slightly by 8%, from $1.25 million to $1.17 million.
• Inventory: There are currently 104 single-family homes available, indicating a stable market.

Impact of Insurance Costs

One of the critical factors affecting the market is the significant rise in insurance costs. Following natural disasters and an overall increase in insurance claims globally, insurance premiums have skyrocketed. This increase has particularly impacted HOA fees for condos, leading to higher overall costs for owners.

• Insurance Increases: Some complexes have seen insurance costs increase by up to 700%, causing many owners to reconsider their holdings.
• HOA Fees: Higher insurance costs have led to substantial hikes in HOA fees, sometimes doubling or tripling the monthly costs.

Absorption Rates

Absorption rates help us understand how quickly properties are being sold. Here’s a breakdown:

• Condos: The absorption rate for condos is currently at 30%, indicating a strong seller’s market.
• Single-Family Homes: The absorption rate for single-family homes is at 24%, also favoring sellers.

Market Insights

Buyer Behavior

• Condo Buyers: Many buyers are looking closely at the condo market due to the current high inventory and potential deals, especially in complexes with short-term vacation rental (STVR) permits.
• Home Buyers: Single-family home buyers are motivated by lifestyle choices and are less influenced by interest rates, which have remained relatively stable.

Seller Strategy

• Pricing: Sellers need to be mindful of pricing their properties correctly to attract buyers in a market with increasing inventory. Overpricing can lead to extended days on the market and missed opportunities.

Future Outlook

As we move forward, it’s essential to keep an eye on the following:

• Insurance Costs: Continued monitoring of insurance cost trends and their impact on HOA fees and overall affordability.
• Market Adjustments: Potential adjustments in condo prices as the market reacts to increased inventory and insurance costs.
• Interest Rates: While interest rates remain stable, any future changes could influence buyer behavior and overall market dynamics.

Conclusion

The West Hawaii real estate market is undergoing significant changes, with varying trends in the condo and single-family home segments. Higher insurance costs and increasing inventory are key factors to watch. Whether you’re a buyer or a seller, staying informed and working with experienced real estate professionals is crucial in navigating this dynamic market.

If you have any questions or need personalized advice, don’t hesitate to reach out. Aloha and happy house hunting!

FAQ: West Hawaii Real Estate Market Update - July 2023

1. What is the current state of the condo market in West Hawaii?

The condo market has seen a significant drop in sales, with a 52% decrease year-over-year for June. Despite this, the median price of condos has risen by 8%, indicating that while fewer units are selling, the value of those that do is higher.

2. How is the single-family home market performing?

Single-family home sales have increased by 5% compared to the previous year. However, the median price for these homes has decreased slightly by 8%, from $1.25 million to $1.17 million.

3. What is causing the changes in the real estate market?

One of the main factors influencing the market is the significant rise in insurance costs, which has impacted HOA fees and overall affordability. This increase is a response to global natural disasters and higher insurance claims.

4. What are HOA fees and why are they increasing?

HOA (Homeowners Association) fees are monthly or annual dues paid by homeowners in a community for the upkeep of common areas and amenities. These fees are increasing due to higher insurance premiums, which have risen dramatically in response to recent global natural disasters.

5. What is the absorption rate, and why is it important?

The absorption rate indicates how quickly properties are being sold in a specific market. A rate below 15% indicates a buyer’s market, above 20% indicates a seller’s market, and 15-20% is a balanced market. Currently, condos have an absorption rate of 30%, and single-family homes are at 24%, both indicating a seller’s market.

6. How do higher insurance costs affect buyers and sellers?

Higher insurance costs increase the overall cost of owning a property. For buyers, this means higher monthly expenses. For sellers, it can affect the marketability of their property, especially if HOA fees are significantly impacted.

7. Are there any opportunities for buyers in the current market?

Yes, there are opportunities, especially in the condo market where inventory levels are higher. Buyers should closely monitor the market and consider working with experienced real estate agents to navigate these changes.

8. What should sellers consider in the current market?

Sellers should be mindful of pricing their properties correctly to attract buyers. Overpricing can lead to extended days on the market and missed opportunities. Listening to your realtor and being flexible with pricing strategies can help.

9. How can I stay informed about the West Hawaii real estate market?

Staying informed through market updates, working with knowledgeable real estate professionals, and following local real estate news are excellent ways to stay updated. You can also watch detailed market analysis videos on our YouTube channel.

10. Who can I contact for more information?

You can reach out to Julie Ziemelis, REAL Broker, at Julie@Ziemelis.com or call 808-333-1004 for personalized advice and information about the West Hawaii real estate market.

John Doe

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