The past two-plus years have seen the housing market boom like never before, both here on the island of Hawai’i and across the nation. However, if recent facts and figures released are any indication, the record-setting marketplace might be heading for a slowdown—and the cooling off may already be underway, even if the median sales prices don’t necessarily reflect it.
According to data released by multiple listing services (and as reported in the Hawai’i Tribune-Herald), the median sales price for single-family homes in May was $525,500—a decrease of only $3k from April, yet still more than $20k higher than back in May of 2021. The average sales price for May was $945k for single-family homes, a drop from last year’s figure of $1.06 million. As we’ve shared in previous blogs, many of the Big Island’s most-exclusive enclaves continue to sport both median and average prices far higher than the island-wide median/average, with the Kona side and Kohala areas continuing to lead the way (all figures per data pulled from Redfin on 6/9):
- Kailua-Kona: spring prices up 22% from April of 2021 ($778k)
- North Kohala: prices up 76.6% from April of last year ($1.4 million)
- South Kohala: prices up 40.9% from last April ($1.1 million)
Having said that, the total number of home sales has definitely declined in 2022 thus far, with an 8% drop in total unit sales and a 13% drop in total dollar volume of sales through the first three months of the year (and as compared to the first three months of 2021), according to Fidelity National Title & Escrow of Hawai’i.
Meanwhile, with the Federal Reserve raising interest rates in May to combat inflation, soaring mortgage interest rates and the sky-high selling prices have greatly contributed to the slowdown in total sales, both here on the island and across the nation. The declining number of total sales tracks with nationwide trends in the real estate market, as the increase in mortgage rates and ongoing, rising home prices have contributed to a 2.4% decline nationally in home sales. Economists are predicting that sales are likely to continue slowing in the near future, according to the National Association of Realtors
Furthermore, colloquial reports from various brokers and buyers in the field have shared that many homes that may well have enjoyed lines down the block for a showing and receiving dozens of offers have quieted, with many homes now receiving far fewer offers and fewer bid-ups instead.
Having said all that, it’s fair to ask whether or not the Big Island of Hawai’i is truly headed for the same kind of slowdown potentially awaiting the rest of our nation. While these things are inherently difficult to predict, you know what they say…location, location, location! Buyers the world over are enthralled with the possibility of settling down in paradise (who could blame them?), and it’s also a safe bet that this will continue to act as somewhat of a buffer to any precipitous drops in the median sales price or the total sales numbers.
Stay tuned for more analysis as the latest figures come in—and until next time, aloha!