2011 Second Quarter Kauai Real Estate Market Update
Summer is in full swing, and I hope this finds you and your family healthy, happy and staying cool. I just can't emphasize enough how awesome it is to live on Kauai. There is no better place to be.

We still are finding ourselves in uncharted waters compared to the past. Global, national and local factors all play in to the market conditions here and on the mainland as we know them today. Below is some information I hope you will find useful about our real estate market as we see it today.

In This Update:
Absorption Rates
Kauai Real Estate Market
Mortgage Delinquencies Declining
Kauai Real Property Tax Rates

Absorption Rates - What are they? It occurred to me that you may have heard the term "absorption rate" but may not know what it is or how it applies to our real estate market. The Absorption Rate is the ability of the real estate market to absorb or sell all of the houses for sale in a given amount of time. For example, if 20 homes are sold every month and there are 240 homes for sale, it will take 12 months to sell all of the homes currently for sale. It does not take into count the number of houses which will eventually come on the market in addition to those already for sale. The absorption rate in this example would be 12 months.

This is a good example of the basic law of supply and demand. A 6 month inventory is generally understood to be a balance of supply and demand and market prices are stable. Less than that and property values typically would be on the rise. Here is a look at Kauai's current absorption rate over the past 12 months (6/23/10-6/23/11) for single family homes. As you can see, Princeville narrowly has the best single family home absorption rate on the island at the moment followed closely by Kawaihau on the east side. It is also lower than the island wide rate.

Kauai Total
Sales = 361 = 30 sales per month
Listings = 473 = 15.76 month absorption rate

Kauai separated into the 5 districts (Plus Princeville shown separately)

Hanalei (includes Haena, Kilauea, Waipake and Hanalei)
Sales = 98 = 8 sales per month
Listings = 154 = 19.25 month absorption rate

Princeville (normally included in Hanalei but shown separately here)
Sales = 50 = 4 sales per month
Listings = 52 = 13 month absorption rate

Kawaihau (includes Kapaa, Wailua, Anahola, Moloaa and Kealia)
Sales = 118 = 9.81 sales per month
Listings = 130 = 13.26 month absorption rate

Lihue
Sales = 36 = 3 sales per month
Listings = 43 = 14 month absorption rate

Koloa (includes Poipu Beach and Koloa)
Sales = 86 = 7 sales per month
Listings = 105 = 15 month absorption rate

Waimea (includes Hanapepe, Kalaheo, Hanapepe, Kekaha and Waimea)
Sales = 23 = 1.91 sales per month
Listings = 41 = 21 month absorption rate

Kauai Real Estate Market Can you believe it..summer is already in full swing? Kauai may be the best place to be in the whole world during summer. The temperature highs are usually in the mid 80's and the trade winds keep things very comfortable. We are still seeing a downtrend in property values consistent with the majority of the country. Condominiums have experienced this more than the other sectors due largely to inventory levels. On the other hand, this is driving sales as total unit sales island wide are up 25% from the same period last year. Remember when you look at the median price #'s below, this reflects the price points that have sold and not the overall market which means the lower end condos are the ones in greatest demand. As inventories decrease, prices will get closer to stabilization. We're getting there. Single family home total unit sales YTD and median prices are pretty much unchanged from last year through June.

As you can see from the single family home absorption rate scenario above, we still have a bit of an inventory surplus, but the foreclosures may be slowing down for while reducing inventory. Hawaii Act 48 was recently voted on and approved by the state house and senate providing an option for an owner occupant to convert a non judicial foreclosure to a judicial foreclosure. What this means is that if an owner occupant of a distressed property doesn't feel the lender has given them proper opportunities to modify their loan, they can take them to court which can significantly prolong the time it will take the lender to foreclose. It creates a mortgage dispute resolution program which must be offered to owner occupants of the property being foreclosed.

We are expecting brisk activity this summer as Kauai real estate prices are now generally equivalent to 2002 levels. 30 year fixed rate financing is still below 5% making it a very attractive combination for potential buyers. Below is out island wide activity through June compared to the same period last year.


Mortgage Delinquency Rates Decline It appears that the # of people falling behind on their mortgage payments is continuing to decline. This is certainly a good sign indicating there may be some relief in sight going forward for distressed properties. Time will tell. Kauai typically has a lower % of distressed properties than the mainland. Fannie Mae reported that the serious delinquency rate decreased to 4.14% in May, down from 4.19% in April. This is down from 5.15% in May of 2010. The Fannie Mae serious delinquency rate peaked in February 2010 at 5.59%.

Freddie Mac reported that the Single-Family serious delinquency rate decreased to 3.53% in May from 3.57% in April. This is down from 4.06% in May 2010. Freddie's serious delinquency rate peaked in February 2010 at 4.20%.

The serious delinquency rate is falling as Fannie and Freddie work through the backlog of loans and either modify the loan, foreclose, short sale, or the loan cures.



2011-2012 Kauai Real Property Tax Rates Below are the Kauai real property tax rates for the period of July 1, 2011 through June 30, 2012. Notice how affordable these rates are compared to other parts of the country especially for single family homes.


I wish each and everyone of you a wonderful summer. Please contact me if I can help you or a friend or family member buying or selling real estate here on Kauai. The values are incredible and remember, they don't call this the garden island for nothing!

August 2011

Larry Barton, REALTOR ® (S), SFR, CENTURY 21 All Islands Kauai
P.O. Box 223700, Princeville, HI 96722
(808) 639-7532 Cell   /   (808) 826-9884 Fax   /   Email Larry