Quoted straight from an email I opened this morning
Posted: January 31, 2021 by Dani Dooley
I'm hearing this more and more from agents about their CONDO listings. Some are blatantly including this in their marketing and others are just whispering it to me on the side at the showing, essentially begging an offer.
This year we have seen phenomenal growth in our residential market. I'm sure wherever you are in the US you've heard about skyrocketing prices as people scramble to find a safe harbor from the pandemic on Kauai. Our median single family home sales price in 2020 was $810,000, up from $659,900 in 2019. Increased demand for HOMES = Seller's market.
By contrast, the median CONDO sales price in 2019 was $575,000, and in 2020 that dropped to $555,000. Yes, you read that right: condo prices on Kauai have dropped. And to make matters worse (or better depending on your viewpoint) more condos are being listed for sale each week. With more available condos than ready buyers I expect that those prices will continue to be sluggish.
Why is this happening? Due to the pandemic and subsequent government mandates and vacation rental restrictions, the majority of our island's rental pool is sitting vacant and has been since last March. Most of our vacation rental pool is condos. Investors are in no rush to buy and maintain condos they cannot rent. Also, investment property lending is becoming very difficult to get. This leaves a very small pool of people who can purchase: cash buyers and owner occupants. This decreased demand for condos = Buyer's market!
Beginning in September 2020 I started telling my condo clients that they should be prepared to sit back and wait until early spring 2021 and to pounce ONLY if the perfect property came up. A few of my clients have found the perfect condo this winter and are very happy with their purchase and are enjoying their new places. But there are a bunch of you that are waiting in the wings, and I promise those deals you've been waiting for are coming. Owners with mortgages and HOA fees, and no income from their property, are becoming more and more motivated to sell. This week we saw two $60,000 price drops and I'm wondering if we will see more.
Now what? Get your finances in order! You are not the only person watching this market like a hawk. You need to be prepared to move fast when that perfect deal comes across your screen. Have your full purchase price (or full down payment if financing) in an accessible account. If you are financing, talk to your lender now about how their underwriting will affect you and what hoops you need to be prepared for--and get pre-approved. Know which complex or area you are interested in and pay attention to the trends there so you can recognize a good deal quickly. Prices will drop but I don't think they will fall far or for long so be ready.
You probably have more questions about what is going on on Kauai and how it will affect your personal situation. Don't be shy about dropping me an email, text, or phone call. I'm happy to answer your questions about buying sight unseen, coordinating a sale remotely, market expectations, the changing business environment, or just checking in on the surf and weather. I look forward to talking with you again real soon!