Record tourism and a strong housing market in Hawaii finally appear to be producing a rebound in a sector of the local residential real estate market aimed at visitors: vacation homes.
Sales and prices for residential property within resorts statewide rose during the first half of this year, according to a new report by local housing market researcher Ricky Cassiday.
Hawaii’s resort home market had been stuck in a slump through last year despite two years of record visitor arrivals and a rebound in the state’s primary housing market last year. Now the downward cycle for resort residences appears to be turning around.
"Last year, 2012, was frustrating," Cassiday said in the report, which covers new and previously owned single-family homes, condominiums and residential lots at master-planned resorts such as Wailea, Princeville, Hualalai and Ko Olina. "The national and international economy overall had seen the storm clouds parting and the sun coming out, but this market had not."
How the resort home market performs during the second half of this year will determine a turnaround or not, though the improvement from January to June was robust.
The number of sales is up 17 percent in the first half of the year compared with the same period last year. For all of last year, sales slipped 7 percent. The average sale price this year through June is up 18 percent after falling 12 percent for all of last year.
There were 778 resort home property sales during the first half of this year. That topped 667 for the same period last year and 720 in the first half of 2011. Sales in the first half of 2010 were still a bit higher at 797, suggesting the market has a ways to go before a full recovery.
The average price this year through June was $1.18 million. That compared with $1 million in the comparable period during the previous two years and $1.22 million in the first half of 2010.
Cassiday’s report said higher sales and prices are being driven by transactions of existing homes as opposed to new homes because developers are having difficulty launching big new projects.
Production of new resort homes last year sank to its third-lowest level in 30 years, and only topped the volume of 1993 and 1994 right after a long recession. This year through June there has been some recovery, but not in condos, which typically represent most resort property sales, the report said.
Developers sold 88 new condos this year through June. That compares with 125 for all of last year but still lags behind full-year totals between 300 and 900 for most of the past decade.
"Condo unit production is at an all-time low, and will continue to shrink until 2015," Cassiday said in the report.
Single-family home production has been fairly steady since 2006, while house lot sales have rebounded somewhat and are expected to continue recovering over the next few years, according to the report.
Resales of existing condos represent the biggest driver of Hawaii’s resort housing market, with about 475 of the 778 sales during the first half of this year.
By island, Maui accounted for the most resort home property sales at 273 during the first half of the year. There were 234 sales on Hawaii island, 219 on Kauai and 52 on Oahu.
Hawaii island had the highest average price at $1.65 million. The average was $1.38 million on Maui, $730,464 on Kauai and $575,411 on Oahu.
