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6 West Hawaii Real Estate | February 1, 2017 Kona’s real estate cycles A history of Kona’s real estate cycles suggests prices will climb higher. The basic pattern of residential real estate cycles in Kona seems to be in the process of repeating itself for the third time since the 1970s, according to data complied by Michael B. Griggs, Clark Realty Corporation broker. As shown in the graph, the market corrected quite quickly after the extreme bubble peak of 2006. “The unprecedented number of distressed properties resulting from the crash and recession will likely add a few years onto the current cycle,” said Griggs. “The trendline suggests that the current price level is below the trendline and previous market peaks, suggesting there is still much upside to this current cycle.” The graph also shows the bubble of the last market peak was over the top by a substantial amount compared to previous cycles, perhaps by as much as $100,000 or more. Then when the bubble burst there was a plunge in prices because of the absence of buyers. This resulted in a flood of foreclosures and short sales, explained Griggs. “The unprecedented amount of distressed properties probably caused prices to over-shoot the historical market bottom by something in the range of perhaps $60,000,” suggested Griggs. Vacant Land Loans cŅŞŅĜĹƋŸƵĜƋĘƚŞƋŅƀĂŢĀűĹÏĜĹčúÃà $QQXDO3HUFHQWDJH5DWH:LOOORDQXSWRRIWKHDSSUDLVHGYDOXHRUVDOHVSULFHZKLFKHYHULVOHVV7KUHHDQG¿YH\HDUWHUPVDYDLODEOH $¿QDOEDOORRQSD\PHQWLVGXHDWWKHHQGRIWKHWHUP0RQWKO\SD\PHQWLVFDOFXODWHGXVLQJD\HDUDPRUWLDWLRQ$OOORDQVDUHVXEMHFWWR FUHGLWDSSURYDO5DWHVDQGWHUPVZLOOEHGHWHUPLQHGEDVHGRQLQGLYLGXDOFUHGLWZRUWKLQHVV0DLPXPORDQDPRXQWIRUSURSHUWLHVORFDWHGLQ /DYD+DDUG=RQHVDQGXSWR0XVWEH\HDUVRIDJHWRTXDOLI\IRUDORDQ0XVWEHDPHPEHUWRSDUWLFLSDWH 5HY )HGHUDOO\LQVXUHGE\1&8$ 930-7700 hicommfcu.com 5.25% e{à With rates as low as: In earlier market cycles, the peak prices normally double from previous peak. Market low prices also doubled from previous lows. Times change and every cycle will be different, but the cyclical pattern should continue in West Hawaii and Hawaii Island as long as the high population growth rate continues, Griggs said. Demographics are the key to understanding current and future trends. Areas of high population growth rates typically have more volatile price swings in their real estate cycles as has been the case in Kona. “The trendline suggests that the price trend over the next several years will be higher prices and eventually the next market peak,” explained Griggs. NOTE: The price data is based on Kona home sales in 22 mid price range subdivisions with 3,900 single family residences. The data source is Hawaii Information Serv ice and tax records. As of the end of 2015 there have been 7,117 home sales and resales in these subdivisions. The price range of the 211 home sales in 2015 was $260,000 to $680,000 and the average price was $538,100. MLS Statistics


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