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The Griggs Report: North Kona Real Estate Market Update for July 2013

  |  Big Island: Market Trends, Mortgages/Economy/Market

North Kona Residential Real Estate Market Trends to $4M

July 2013 North Kona market trends

Neutral Market = Pending Ratio from 30 to 50 | Peak Market = Signals end of real estate cycle

Excerpts from the July 2013 Griggs Report:

INVENTORY: North Kona’s residential inventory (active listings) resumed its declining trend over the past two weeks and now stands at 153. This is likely due to seasonal increase in visitor traffic and buyers perception that the interest rates will be heading up. Rates shot up when the Fed announced plans for bringing an end to bond buying stimulus program. Seeing the negative reaction in the market place the Fed toned down their rhetoric causing rates to back down a bit and giving a  temporary reprieve to buyers searching for loans. Buyers now have seen what will happen when the Federal Reserve does bring an end bond and mortgage back securities buying. This should be quite a motivator to act before those changes do take place.

MEDIAN PRICE: The median sold price is continuing at a level of 15% above the price of the previous 12 months sales. In the full report, there is a new chart (#2, page 7) that compares Kona, San Diego, LA and San Francisco appreciation trends. Currently, Kona is mirroring the same price appreciation pattern as the CA cities, but at a slower a rate. For example, San Francisco prices are currently up 24.5%  compared to Kona at 15%. As this chart shows, for the first time since data was first collected in 1998, the four markets are appreciating at the same time. Previously, Kona had lagged behind.

Inventory below the $400,000 price level does not seem to want to go away. Month after month the number has remained in the 20’S. Because the inventory is so low the number properties for sale in this price range the percentage sold continues to shrink. Where sales in this under $400,000 price range dominated the market at 55%  in 2012 the percentage now is down to 39%.  Last year, the price ranges of $400,000 to $900,000 represented only 34% of sales. Today that price range represents 49%  of sales. This trend should be expected to continue as the real estate cycle continues on its upward arc.

DISTRESSED PROPERTIES:  REO and short sale activity as a percentage of MLS listings are showing a leveling off from its previously declining trend. Waikoloa and Waimea are showing an increased percentage. This is likely due to the increase in foreclosure filing that showed up in data in the first quarter 2013. It is unfortunate that the Act 48 has caused such a delay in clearing the market of delinquent loans, but this is more like a burr under the saddle. It does not appear to be slowing down price appreciation or overall improvement in sales  in the higher price ranges.

Chart 6 (which shows the REO inventory of Fannie Mae, Deutsche  Bank, Wells Fargo and Bank of America) shows a decline of 27% in total number from last year. The decline pattern has slowed in recent months. North Kona is at 19 properties compared with 21 a year ago. As mentioned above, we see from the data that the distressed properties are still with us and currently declining at a relatively slow pace. They do sell quickly once they hit the market, but are often replaced by another.

NORTH KONA CONDOS:  Kona condo data shows a continued decline in inventory. Currently there are only 109 condos priced under $1,500,000 on the market in Kona. Yikes! Tight inventory is showing up in condo prices with an increase of 23% from the previous 12 month sales period.

LAND SALES:  Land sales are on the move now and showing significant improvement from a year ago. The decline in inventory and increase in Pending Sales still doesn’t appear to be enough to raise prices. The median price has fluctuated right around $180,000 since 2011. Median price is actually at a new low of $177,000 in this report. This is largely due to the release of lower priced inventory into the market.

Download the full report:  Griggs Report July 31, 2013

*Pending Ratio is the ratio of listings in escrow (pending sales) compared to the number active listings for sale multiplied by 100. The Pending Ratio can be used as measure of the demand versus supply dynamic in the market place. The higher the ratio the stronger the demand versus supply balance.

The Griggs Report is published bi-monthly by Michael B. Griggs, R(B) of Clark Realty’s Kailua Kona office. Please contact Mike directly to be added to his email list. 

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