Home sales on the Big Island continued to decline through the first quarter of 2023 as higher interest rates chill the market nationwide.
According to multiple listing service data, single-family home sales in Hawaii County are down by more than 40% this year so far compared to 2022, with every district on the island seeing drops in activity.
Through the end of March, 430 Big Island homes have been sold this year, down from the 728 that were sold by the same point last year.
Sales in South Hilo and Puna have been particularly tepid. Through March, 59 homes were sold in South Hilo, little more than half of the 104 that were sold in the first three months of 2022. And while Puna saw 289 homes sold in the first quarter of 2022, only 175 sales have been completed by the end of the first quarter.
Meanwhile, West Hawaii sales have fared little better. North Kona had 79 sales by the end of March, compared to 131 sales during the first three months of 2022.
The median sales price for a Big Island home is approximately $520,000, which is roughly a 1% drop from the same point last year. However, last year’s first quarter median sales price was 15% higher than 2021’s.
“I’m telling sellers that if they get an offer that’s even slightly acceptable, they should take it,” said Jen McGeehan, Realtor with Coldwell-Banker Island Properties.
McGeehan said rising interest rates for 30-year mortgages — currently at nearly 7%, the highest since 2007 — is the greatest chilling factor on the market, pricing out a significant number of prospective buyers.
“Right now, it’s still a strong seller’s market, but we haven’t seen the same amount of buyers, mostly because of the interest rates,” McGeehan said. “My sellers are starting to price themselves a little bit better, but they’re not hungry enough yet to set a price that will move within 30 days.”
Kona Realtor Stephen Proski said investment buyers have been spooked away by the rate increases, and added that the frenzy of buyers taking advantage of low rates between 2020 and 2022 will probably never return. But he added that the lack of buyers has not led to a significant depreciation in home values.
“They’re probably still going to appreciate, actually, but not at the same pace,” Proski said. “There’s been a slowing of inventory, but there’s still interested buyers. But they’re able to take their time, they’re not as rushed. If someone else snaps up a property before them, they’re willing to wait for the next one to come up.”
Proski said Big Island residents have unfortunately become increasingly priced out of the market for single-family homes and condos, while the market for mainland residents — many of whom moved to Hawaii to take advantage of pandemic-era work-from-home practices — is still robust.
“There’s been such a big shift since COVID, people on the island moved out to be with family on the mainland and people on the mainland moved out here,” McGeehan said. “It’s hard to predict where that leaves us.”
Proski was more optimistic, saying that the second and third quarters of the year could see a rebound in the market if mortgage rates drop slightly.
“People follow trends,” Proski said. “If the rates drop to just maybe 5.5% or lower, I think things could start picking back up this year.”
McGeehan said the current high interest rates are difficult, but she often tells her clients that they aren’t as high as they could be. On the other hand, she said that the future of the market is especially opaque this time around.
“I don’t know what the government’s going to do. Everything could change tomorrow,” McGeehan said. “I don’t think they’re going to raise the rates much more, but are they going to go down? If they do go down a point or two, is that going to cause a big change? I don’t know.”
Email Michael Brestovansky at mbrestovansky@hawaiitribune-herald.com.