Kona Kohala Blog

Reports out today show existing home sales are up 2.7% and median price is down 3.7%, nationally.  Distressed sales make up 37% of all sales today.  Another surprise is that cash buyers make up 32% of the market when traditionally they would only be involved in about 10% of all sales.  The investors are here and they're looking for the good deals and waving cash in the face of sellers.

Historically, the investors would be buying with the intent of selling in the near future but today, it's different.  Today's investor knows there isn't going to be a quick turn around in the market and that to make an appreciation profit, they're going to have to hold onto the property for a year or two so what would make them buy now?

With high unemployment and tight loan restrictions very few people, compared to a few years ago, are able to buy a home but still need a place to live.  The housing rental market is a growing business with more people needing a place to live everyday.  Investors are looking at a little or a lot of rental income during their holding period then a nice cash payback when it comes time to sell.

Once the government gets off the backs of small businesses hiring will resume.  Once that happens and the unemployment rate begins to drop, people will again qualify for loans.  It may take two or three years but it will happen making now the ideal time to own rental property.  As a Realtor telling you this I have to qualify it somewhat.  Any time you're buying investment property you're taking a risk.  You will always have to factor in a vacancy factor when looking at rental returns.  I don't encourage my clients to make such an investment unless they have the money to support that investment for a year.  That includes a mortgage payment (if they have one), taxes, insurance, regular maintenance and the myriad other details that crop up with home ownership.  If you're in that position then home ownership is a great idea, in my mind.

The north Kona housing market is actually showing price increases albeit small ones.  We are defying the national trend of declining median prices and our sales are still on the way up.  I don't think we're in a recovery yet but I do think investors and some first time homebuyers are jumping into this market snapping up lower priced properties.  As long as the distressed properties continue coming on the market we'll see this foreclosure driven market continue which is not a sign of health.