A very active market
Active Market, but for how long?
Breaking down the numbers, our sales for the first six months of the year reached a total of 421. This is similar to our performance in 2007, indicating that we may expect around 800 sales by the end of the year. In comparison, the total number of closings in 2021 was 1,522, showing a nearly 50% difference.
June stood out as a particularly successful month, with a record-breaking 88 sales. More than half of these sales were properties under a million, consisting of 16 houses, 33 condos, and 6 plots of land. This accounts for over 62% of our overall sales. Interestingly, 26 out of these 55 sales were made in all cash transactions, making up 47% of the total.
We’ve seen a slight increase in house inventory, now at 77 in all price ranges. However, condos showed a significant jump from 28 in May to 52 in June, possibly indicating a trend for the future. The number of pending sales dropped back down to the low 60’s, with only 38 condos pending. Given that we typically close half of our pending sales each month, we can anticipate very low closing numbers next month.
Looking ahead, it’s important to note that interest rates are projected to reach 8%. This will have a significant impact on closing numbers, leading to lower figures each month and increased inventory. As a result, pricing wars may erupt as some owners are forced to sell and are willing to negotiate on their initial sales prices. Financing will become more expensive and challenging, making cash deals the preferred option.
# of Sales on The Big Island of Hawaii – July 2023
152
147
45
New Report Reveals Median Income and Housing Costs in UHERO Study
According to a recent UHERO report, the median income in the area is $81,000. The study also highlights that homeowners typically spend 27.8% of their income on housing costs, while renters allocate 33.8% of their income for the same expenses. It’s worth mentioning that some homeowners may have purchased their properties many years ago.
Now, let’s consider the scenario of someone earning the median income and interested in purchasing a house. In the report, the median house price is listed as $975,000. Assuming this individual has no other debts and a good credit score, with a 20% down payment ($200,000) and a current interest rate of 7.25%, their monthly mortgage payment would amount to $5,321. Additionally, they would need to factor in property taxes and insurance, bringing the total monthly expense to $6,000. However, their income falls short by $40,000 to meet these costs.
Alternatively, if they were looking to buy a condominium at the median price of $550,000, they would need a down payment of $100,000 and face a monthly expense of $3,800. Despite the lower price point, they would still fall short by $27,000 in income to qualify for the loan.
To look at UHERO findings, feel free to click on the link below
News and Economy
July Updates
Rock and Crab Kona
There is a new restaurant in town 😀 @rockncrabkona offers a unique, memorable, and enjoyable seafood experience. Their menu, which includes dishes such as shrimp po’ boy, mozzarella sticks, chicken nuggets, sweet potato fries, seafood fried rice, and the popular boil, caters to various palettes and dietary preferences. ❤️
Property Highlight
Orchid Land Estate
Purchase Price: $550,000
This home is surrounded by Ohia Trees in 3 acres of land!
TAR REGISTRATION
The TAR fourth draft is out, packed with updates for hosted vacation rentals. While the document may be lengthy, here are the key highlights you won’t want to miss:
Great news for homeowners renting to healthcare workers! There is now an exemption for those renting as guests for less than 180 days, and best of all, no permit is required!
If you have a cesspool and fall within Priority Zone 1 or 2, you’ll need to convert to septic earlier than the state deadline of 2050. Ensure your conversion is completed before 2028/2030, depending on your zone.
Attention management company users: under this draft it is propose to make it mandatory for your management agent to have a real estate license. They are tying to eradicate unlicensed managers.
On this new draft, hosted rentals must be renewed annually for ongoing compliance.
Don’t miss out on these important updates – dive into the fourth draft to learn more about all of these proposed changes.
”Thought of the date: What is your definition of Aloha?
Maly RomeroReal Estate Consultant
