Direction of Housing Market Taking Shape

Paying attention to mainstream media regarding the perils of the real estate market is certainly entertaining these days. There is a lot of doom and gloom being reported, some well founded and some not. The number of mainland and Kauai home sales are off by as much as 50% and prices have fallen due to excess inventory, less demand and the rising cost of living among other factors. On the other hand, tremendous buying opportunities are fueling a slowdown in this downward trend. Interest rates, new housing starts, the average % of income needed by each homeowner to pay his mortgage, total housing inventory for sale, etc. are among many contributing factors.

On Kauai we are beginning to see an increase in buying activity. While our market is driven by the mainland 2nd home and investment buyer, we have returned to affordability levels not seen since the early 2000’s when it took 19% of average monthly income to service a conforming mortgage on the average home purchased. Conforming loan fixed interest rates are still below 6%. Median sales prices on combined single family and condo sales year to date (totaling 121) through May 2008 were down 18% from the same period in 2007. Prices are expected to soften further in to 2009, although a strong summer here could halt that trend downward.

Current Kauai housing inventory sits at about a 9-10 month supply. A 5 month supply typically signals tightness in the housing market. There are now more than 1.1 million homes in foreclosure across the United States representing 2.5% of all mortgages. Foreclosures are an uncommon sight here on Kauai, but sellers are increasingly motivated and aggressive. As a buyer, the balance of 2008 is your time to buy. Sellers, if priced right you can sell your property quickly since the buyers are there! Feel free to contact me to discuss how the timing may effect your future buying and selling decisions.


June 2008

Larry Barton, RA, CENTURY 21 All Islands Kauai
P.O. Box 223700, Princeville, HI 96722
(808) 639-7532 Cell   /   (808) 240-2417 Direct line   /   (808) 826-9884 Fax   /   Email Larry