Home sales in Puna plummeted nearly 23 percent in September after Tropical Storm Iselle blew through Hawaii island — and they continue to remain sluggish as a river of 2,100-degree lava cuts its way toward Pahoa.
The drop in sales for the vast Puna District helped drag down the rest of Hawaii island’s overall real estate market, which saw an almost identical decline of nearly 23 percent in September compared with the year before, according to data from Hawaii Island Realtors, an industry organization that tracks sales and represents 546 members.
"You’re seeing some panicked sellers," said Realtor Howard Dinits, who is based on Maui and represents both sellers and buyers in Puna. "Some people are putting up properties that are really inexpensive, thinking it’s better to get something than nothing."
On the other end, Dinits said "the phone’s starting to ring with buyers who want to make land grabs to buy really, really cheap real estate."
But the calls — typically from the mainland — end quickly once Dinits explains that Puna is still recovering from Iselle and faces the prospect of more damage from an active volcano.
"A good 50 percent of consumers have no idea Iselle ever came or that lava is coming," Dinits said. "I have to disclose all of that. Then they go, ‘I don’t want that.’"
September’s sluggish home sales represent another blow to Hawaii island’s economy in the aftermath of Iselle and the ongoing threat from the lava flow from Kilauea Volcano that began June 27.
Hawaii County alone is racking up overtime personnel costs on top of the $3 million estimated expense to rebuild two emergency evacuation routes out of lower Puna. County officials are also paying the upfront, estimated $10 million cost to restore lava-covered Chain of Craters Road, which also would be pressed into emergency service once lava cuts off the main road into lower Puna, Highway 130.
Hawaii Island Realtors only tracks overall sales for the entire Puna District, so it’s difficult to measure the true scope of the combined impact that Iselle and Kilauea had in September in lower Puna, where more than 8,200 people coexist with the persistent threats of hurricanes, tsunamis and volcanic eruptions.
But agency President Susan E. Lee Loy reviewed the sales data for September compared with the year before and said the connection between disappointing sales in Puna and the rest of the island is unmistakable.
"It’s telling me that Puna had an impact on that decrease, and it’s also telling me that the rising value of property in general is having an effect on people’s ability to purchase," Lee Loy said. "That itself would cause a little decrease in unit sales."
While sales of both homes and vacant land fell across the entire island, home prices jumped in Puna from $175,000 in September 2013 to $210,000 last month.
"After Iselle there’s less people looking at properties than there were six months ago," said Heather Hedenschau, principal broker of Big Island Brokers, based in Pahoa. "But even though there’s lava pending, we’re still seeing buyer interest. Prior to those events happening, Puna was the lowest-priced community in the state, and it’s still a great bargain."
Tamara Norrbom certainly did her part for Puna’s real estate market in September.
Norrbom spent $37,500 each for two 1-acre lots in Puna’s Hawaiian Paradise Park subdivision so she could move two of her three rental homes from Nanawale Estates, which is closer to the lava flow.
One of the homes that she moved last month sustained $54,000 in damage in August when Iselle knocked an ohia tree through the roof of the two-bedroom, two-bath home, cracked support beams, destroyed the lanai and let stormwater in to ruin the floors.
Norrbom, who lives near downtown Los Angeles, had leaped at the opportunity in 1993 "to buy a house in Hawaii for $5,000."
She added, "As far as the hurricane goes, I drank the Kool-Aid that a hurricane had never made landfall and the mountains would protect us. I was aware I was in a lava zone in a very vague way. But I was told that lava hasn’t come here in 250 years. I figured it was a needle in a haystack that it would ever hit your house. When I think about it today, maybe my number was up."
So Norrbom got a deal from Keaau-based Makakoa Contracting to truck two of her rental houses to Hawaiian Paradise Park for $20,000 each, which included cutting down trees and widening her driveway to make room, said Makakoa partner Shawn M. Faulstick.
Makakoa normally charges a minimum of $25,000 to move a house. But the price easily can shoot up to $60,000 depending on a slew of variables that include the size of the home and how much preparation needs to be done to clear the house through traffic.
"She had two houses to move and maybe a third," Faulstick said. "So we gave her a better deal."
Norrbom was the first Makakoa Contracting customer to relocate her house after Iselle, and Faulstick has since gotten a "a lot of inquires" from other homeowners. But so far, Faulstick said, "nothing’s on the books yet."
Puna’s housing market also might be down because of persistent concerns that new buyers will not be able to purchase fire and flood insurance, which would affect their ability to get a mortgage.
There are also concerns that homeowners will not be allowed to renew their existing fire and flood insurance policies the state Department of Commerce and Consumer Affairs said would cover them in the case of tsunamis, hurricanes or lava.
"We have had a number of calls from people saying they’re worried insurance companies are not going to renew — or cancel — my policy," said Brent Suyama, spokesman for the DCCA, which includes the state Insurance Division. "We’ve reached out to those people and said they can’t cancel unless you stop paying. That’s against the law. And they have to send a letter 30 days in advance that they’re not going to renew."
DCCA has found no evidence that anyone in Puna is not being allowed to renew insurance.
"There was a medical center that faced possible nonrenewal, but the insurer ended up changing their mind," Suyama said. "We heard anecdotally about a water company that was facing nonrenewal, but that wasn’t true. We have not heard anybody who said, ‘Our insurance company gave us notice that they’re not going to renew us.’"
DCCA last month sent a letter to all of the companies that sell homeowners’ insurance in Puna to remind them that it is against state law to cancel policies.
Although it is legal to fail to renew a policy, Suyama said DCCA wrote letters to insurers that had the subtext, "We know it’s legal to not renew a policy. But let’s all be good neighbors."
Norrbom’s insurance covered all of her $54,000 in damage from Iselle.
And she’s keeping one of her two-bedroom, two-bath homes in Nanawale, hoping that lava will spare it and she can move back someday.
"This is my future retirement," said Norrbom, 57. "This is what I’ve been investing my money in. If I left all of them in place, it would be a very uncertain future."
