Buyer demand for Hawaii homes broadly rebounded last year, and a new report shows that the same was true for one segment of the state’s housing market: resort residences.
Sales of condominiums and single-family homes — new and previously owned — as well as house lots at master-planned resorts such as Wailea on Maui, Mauna Lani on Hawaii island and Princeville on Kauai ended a four-year slide with a 42 percent surge to 1,473 properties last year from 1,040 the year before.
The surge was in line with home sale increases for all homes on the neighbor islands, where gains last year ranged roughly from 20 percent to 60 percent. Most resort home sales were on the neighbor islands as opposed to Oahu, where the rebound for all home sales last year was closer to 10 percent.
The report by local market researcher Ricky Cassiday of Data@Work said the rebound in resort home sales was aided by improved confidence among buyers and the slow economic recovery, though the big driver appeared to be lower prices.
"No way around it," Cassiday said in the report. "This strong rebound in activity is thanks to dramatically falling prices."
The average sale price was $1.1 million last year, down 14 percent from nearly $1.3 million the year before.
Cassiday’s report said the average peaked in 2008 at nearly $1.6 million, which put the cumulative decline since then at 29 percent.
It’s uncertain whether prices will rebound this year. The 2009-10 price decline was a record. The previous record drop for resort home average prices in Hawaii occurred in a single year, 1977, when the average fell 27 percent, according to Cassiday.
Cassiday said Hawaii’s resort home market this year likely will either see prices stabilize, which could slow sales, or further price drops that would help sales continue rising. He said he’s betting more on prices rising slightly.
Last year, many resort home sellers were dropping prices. In other cases, lenders were pricing property attractively after foreclosure.
Cassiday’s report said 9 percent of resort home sales last year were foreclosures that sold for an average $737,343 compared with an average $1.35 million for nonforeclosure resort home sales. A report by RealtyTrac released earlier this year said 11 percent of all home sales in Hawaii were foreclosures last year.
Another factor in the average price decline has been developers cutting back on building high-end homes amid the economic downturn.
Developers sold 371 new resort homes last year, an 11 percent decline from the year before, the report said.
The divergence helped pull down the average sale price for all resort homes last year, as the average new home sold for $1.5 million compared with $971,277 for the average previously owned home.
Cassiday expects developers will have a smaller share of resort home sales this year if buyer demand grows ahead of home production by cautious developers slowly resuming construction.
In some cases, developers are offering incentives to spur sales.
Earlier this year, Castle & Cooke tried auctioning all its unsold inventory of resort property on Lanai. The company offered 11 homes and three lots, and ended up selling five condos at Manele Resort for close to $1.2 million each on average, or about 80 percent of the price for the most recent previous sale at Manele last year.
Last month, Brookfield Homes Hawaii publicized efforts to sell three golf course homes in its KaMilo subdivision at Mauna Lani with prices starting at $799,000. Last week, Brookfield announced an incentive of up to $50,000 in free designer furnishings for buying select KaMilo homes before May 15.
According to Cassiday’s report, there were 386 sales last year at the least expensive end of the market, between $250,000 and $499,000. At the high end, there were 358 sales for properties of more than $1 million.
Near the height of the market in 2006 and 2007, there were about 150 sales under $500,000 in each year compared with about 800 sales over $1 million.
$1.1 million. The Valley Island has held the top spot since at least 2006. The average on the Big Island was $704,328, followed by $465,369 on Oahu and $428,690 on Kauai.
Maui also had the most sales at 562. Hawaii island was next at 401, followed by Kauai at 345 and Oahu at 162.