In early 2010, we saw the market reach its turning point… will 2011 be the year where values follow volume like the tail of a kite? If the first two months of the year are any indication, I think I have an opinion….what do you think?
- Residential sales jumped in volume from 259 to 357 units sold and by the year end, the median price also jumped from $471k to $498k! This is the sector on the move and with very little new inventory being built, planned or even contemplated, I think this is the part of the market which will see the fastest return to positive numbers once the bottom has burned off.
- Vacant land sales jumped from 71 units in 2009 to 111 units sold in 2010, a 56% increase in volume but median prices remained flat at $275k. This indicates an inventory glut of vacant land that will take much longer to absorb before it has any effect on median values. Investors/spec builders made up a huge part of the last upward market cycle and as that market cooled down in ’08 many saw the writing on the wall and made the preemptive move to list the vacant land rather than build out a home that no longer could be sold for profit.
- Condo sales jumped from 158 in 2009 to 234 units selling in 2010 yet the median prices continued to fall from $330k in 2009 to $270k in 2010 representing 18% depreciation overall! So far this year activity in this sector is definitely snowballing. Another factor coming into play for the condo market is the ebb and flow of rental income. We all know a condo in Hawaii is not the best investment for the “number cruncher” but is certainly the first choice as a discretionary second home purchase. Regardless, rental revenue still writes into the analysis if for no other reason that to offset taxes and upkeep expense. Winter occupancy percentages once again have returned to the 90% range after two years of subpar performance. Perhaps this is the strongest indication that the condo market will soon follow the same cyclic trend as both residential and vacant land form types are now experiencing.
The kite’s starting to gain lift and the tail is giving it a direction!