Kona Kohala Blog

We are either at the bottom or so close it will be hard to decide how close to the bottom today is.  The most commonly used measure of market health is the number of months of supply for homes and condos on the market.  This is determined by looking at the number of sales in a 12 month period then dividing that number by 12 to get an average number of sales per month for the last year.

That number is then divided into the number of active homes or condos to get a monthly supply.  Most analysts use a 6 month supply as a healthy and balanced market.  For the past few years, since the housing bubble popped or degassed, we've seen housing supplies of close to two years, 24 months.

Today, we're seeing supplies closer to the magic 6 month number; remembering that these sales numbers reflect what happened a couple of months ago since the average escrow for a non-short sale property is 45 to 60 days.

In North Kona mainly the Kailua Kona area, we have a 10.1 month supply of Single Family Residences (SFR's) and a 10.7 month supply of Condos.  In South Kohalal which is the Waikoloa Beach Resort and the Waikoloa Village along with the Mauna Lani Resort, there is an 11.7 month supply of SFR's and a 16.4 month supply of condos.

Both Kailua Kona and Waikoloa are on track to a balanced market perhaps as early as next summer.  If we look at sales year to date for mid December we see that SFR's in North Kona are up 23.5% over the same time in '09 and median price for those SFR's are down <5.1%>; activity is increasing and prices are declining but no where as near as they were.  We see an even more exaggerated spread in condos in North Kona where year to date sales are up 72.1% over '09 and median price is down <18%>.

South Kohala shows a similar trend with SFR sales activity down just <2.9%> year to date and their median price down <9.7%>.  Condos in Waikoloa and Waikoloa Beach Resort show a 23.5% increase in sales while the median prices has dropped <12.9%>.

That's a lot of information but what it comes down to is market activity remains brisk while median prices are leveling off; we're not seeing the 20% per year drops we were seeing a while ago.  At the same time we're seeing our inventories drop as the increase in sales is eating away at the active listings out there.

It's too early to say we've reached the bottom but with interest rates beginning to climb, now at the highest point in 6 months, and talk of inflation at the national level, who knows where prices may go soon.  If you're in the market now is a good time to get serious and decide whether you want to commit or walk away.