[The following is an advance copy of an article to be published in the March/April 2022 issue of THE KAHALA NEWS.]
Luxury Real Estate Market Update
As many of you probably know, the real estate market has started 2022 right where it left off in 2021, with the “perfect storm” of low inventory, high demand from both local and mainland buyers (thanks to the new normal where “work from anywhere” is the mantra), historically low but-beginning-to-rise mortgage rates spurred by a tightening Fed which is trying to control inflation, and the resulting volatility in the financial markets which had an unprecedented run. The relative stability of Hawaii real estate is looking quite attractive to many.
However, the velocity of transactions has slowed down in recent months. Some argue that the market was overheated at unsustainable levels and is due for a correction. Others say it is simply that there is nothing to buy. As of 2/14/22, in Kahala/Black Point/Diamond Head there are 17 single family homes for sale (currently not in escrow), with more fixer uppers hitting the market after completion of the other fixer upper projects in the neighborhood. There have been only 10 closed transactions in the past 60 days, as compared to 20 closed transactions in the past 60-120 days.
It is worth pointing out that all of this is taking place without much participation by international buyers, many of whom still face significant restrictions upon their return to their home countries. Taking Japan as an example, while restrictions are easing after an Omicron-induced tightening, it is likely to take some time for meaningful travel to resume, since less than 10% of the population has received a booster shot (as of 2/14/22). Beginning in March, Japan plans to shorten the quarantine period for all arrivals, according to a 2/16/22 article in The Japan Times. The current optimistic hope is that people will be able to travel more freely come summertime. Fingers firmly crossed that this comes true.