Kona Kohala Blog

For almost two months the median price of Single Family Residences (SFR's) and condos in North Kona have slowed their free fall.  Until January we were watching prices drop at about 20% per year but not anymore, at least not for now.  Most recently, the median price of a SFR is down just 3% and condos are near 3% from 4% last month.  While these may not be huge numbers they are large degrees of change in a short time.

In South Kohala, they could only hope for such things.  There, prices continue their tumble still running around 20% per year.  One reason may be that the buyers we're seeing in North Kona are soon to be retirees.  These are people who are looking ahead a few years and deciding to buy now rather than wait for either higher interest rates (they are coming) or higher prices.

These are the people who were smart enough to stay out of trouble; they didn't refinance their home just because there was equity to be gained.  They didn't buy with some dark alley, no down, no show of income or ability to repay loan that so many fell for.  Greed is a bad thing in any form but these were not the people who got sucked into it.

These people are looking more towards Kona for residential neighborhoods rather than the vacation areas so prevalent on Kohala's Gold Coast.  With the new FHA rules that no longer prohibit "flipping" property, we may see the return of the investors in South Kohala.  As prices continue their slide towards yesteryear they may become attractive enough that investors will begin buying the foreclosures and start the recovery there.  At some point, prices do become attractive regardless of the economy.  There are lots of people out of work or working for less than their worth but there are also those who aren't in that situation.  There are those still working, those with strong savings and balanced portfolios.  Watch for those wise ones to engineer any recovery in real estate in Hawaii.  It's not going to be some government program that brings back our island, it's going to be conservative, smart, deal seeking individuals who grew up knowing the value of a dollar.