Big Island houses are staying on the market for longer as sellers stand firm on their asking prices while the real estate market cools nationwide.
According to multiple listing service data, 200 homes were sold on the Big Island in June, bringing the total number of sales during the first half of the year to 983 — a 34% decline in sales compared to the first six months of 2022.
Despite the reduction in sales volume, prices have continued to rise.
The islandwide median sales price for the first six months of the year sits at about $515,000, which is an increase of about 8% from the first half of 2022.
That trend is reflected throughout the island. Only two districts — North Hilo and North Kohala, districts which regularly have single-digit sales for entire months — saw the median price of a single family home decrease compared to the first six months of 2022. Every other district had price increases, in some case substantial ones.
In Puna, where 78 homes were sold in June, the median sales price was $410,000, a jump up from the $382,000 median price in June 2022. And in North Kona, the median price for the 39 homes sold in June was $1.2 million, up from the $990,000 the previous year.
South Hilo recorded only a minor increase in price, from last year’s $537,000 to $539,000 this year.
At the same time, homes are taking longer to sell. The average single-family home spent 32 days on the market last month, nearly triple the 12 days it took to move a house in June 2022.
All this is happening while high interest and mortgage rates, as well as fears of ongoing inflation and a possible recession, have a cooling effect on the housing market nationwide.
Despite all this, real estate agents say that Hawaii will always be somewhat insulated from the broader impacts of the market simply by being Hawaii — although that may be of little comfort to residents who are increasingly being priced out of the home market.
“Hawaii is still highly desirable, it always has been,” said Ed Torrison, principal broker at Hilo Bay Realty. “And the Big Island is, right now, the most desirable of the islands, and Puna is the most desirable place on the Big Island. Puna’s the last frontier. It’s affordable, it’s always been.”
Torrison said most home buyers he encounters these days are from the mainland, and added that vacant land sales in Puna are still strong — 125 vacant parcels were sold in Puna last month, a decrease from the 143 sold in June 2022, with median prices also dropping from $42,000 to $35,000.
Dave Lucas, broker at Koa Realty in Holualoa, said that with interest rates rising, inventory is contracting as would-be sellers choose to sit on what they have rather than take a gamble on the market. And for those houses that do enter the market, the only people with the money to buy are coming from the mainland.
“The local buyers have cooled off entirely,” Lucas said. “We’re seeing entry-level prices around here at $600,000, $700,000. That’s nuts. Anyone who’s sitting on a low mortgage payment right now is holding onto that for dear life.”
Torrison said that while the market is “not as hot as it was a year ago,” he added that the post-pandemic surge in activity was caused by a perfect storm of factors unlikely to be repeated in the foreseeable future. He said home prices will inevitably fall somewhat later this year, but other improvements to the market are dependent on whether the Federal Reserve lowers interest rates.
“I think if buyers are patient and wait it out, they’ll find more buying power next year,” Torrison said. “But if you have buyers who are still willing to pay higher prices even with these interest rates, then sellers don’t have to drop prices.”
But Lucas added that, between the interest rates, a collapsing commercial real estate market, inflation, the resumption of student loan payments, and general cost of living increases, a conservative approach makes the most sense.
“I have no idea what’s going to happen,” Lucas said. “Some people are saying that surely the Fed will drop the interest rates to bail us out, and prices won’t have to drop. And if you want to gamble your savings on that, be my guest.”
Email Michael Brestovansky at mbrestovansky@hawaiitribune-herald.com.