Kauai Real Estate Update, Feds Lower Interest Rates, Southwest Flies From San Diego To Hawaii

Kauai Real Estate SOLD and NEW listings Island Wide! Comments Off on Kauai Real Estate Update, Feds Lower Interest Rates, Southwest Flies From San Diego To Hawaii

Kauai Real Estate Update
This past week the Federal Reserve cut the Fed Funds Rate for the third time this year, by .25%. Along with the rate cut, the Fed released a statement that suggested a “pause” in further cuts, but stated they will be ready to act again should “slowing global conditions” continue or if inflation declines further.
For a complete update on what Sold, was Just Listed and what went into Escrow last week on the island of Kauai click here: Kauai Real Estate Update October 28 to November 9, 2019

Poipu Beach Real Estate Update- For the latest news on all things Fee Simple in Poipu Beach since the beginning of this year click here: Poipu Beach Real Estate Current Market Analysis

Kiahuna Plantation Real Estate Update- A listing of mine, Kiahuna Plantation #56, was on the market for only 2 days before I negotiated a successful agreement between my Seller and my Buyer.  This ground floor corner unit sold for $180,000 and it was financed.  I get questions if the Kiahuna’s can get loans on them and yes they can.  For all the real estate news since the beginning of this year click here: Kiahuna Plantation Current Market Analysis

State Representative Asks For New York Homeless Program Investigation
State Rep. John Mizuno of Oahu has concerns that New York is shipping too many homeless to Hawaii with their “Special One-Time Assistance Program”.  He is calling for the U.S. Attorney General’s office to investigate these allegations.
Kauai’s Mayor Derek Kawakami issued a statement:  “While we have heard about homeless individuals receiving one-way tickets to Hawaii. I don’t believe any of us were aware that this was a formalized government program marketed as a ‘one-time assistance program.  It would be incomprehensible to think that sending a homeless individual thousands of miles away on a one-way ticket with absolutely no other form of support would qualify as assistance. While I can’t verify that such a program exists, if it does, I absolutely support further review.”

The smoke that started this fire is an article that appeared in the October 26, 2019 edition of the New York Post which had the headline:   “NYC secretly exports homeless to Hawaii.” The article alleges that New York Mayor Bill de Blasio’s “Special One-Time Assistance Program” has exported 12,482 homeless people to 32 states since its inception in August 2017.  Rep. Mizuno wrote a letter which in part asked for a “full investigation” into de Blasio’s program, which he described as “a recipe for disaster and inhumane to the homeless being exported out of New York.”

So far there has been no response to the letter.

Demand For Hawaii Direct Rentals Grows In September
I was very pleased to see these statistics released by the Hawaii Tourism Authority.  Often times we’ll get hotel stats but not direct rental statistics, which is a huge part of our market.  “Direct Rentals” would be the owners of homes and condominiums that rent by way of sites such as VRBO and Airbnb.
The Hawaii Tourism Authority (HTA) published the “Hawaii Vacation Rental Performance Report” which pulled data from Transparent Intelligence.
Statewide the supply of vacation rental units grew 13% to nearly 913,300, while demand grew 18% to more than 622,000. That resulted in a unit occupancy of 68%, marking an increase of nearly 3%.  The average daily rate (ADR) for vacation rental units throughout the state was $194, up nearly 13% year-over-year.

Oahu was the only one to experience a drop in supply and demand of vacation rental units but I’ll attribute that to the crackdown on their illegal vacation rentals, something that Kauai had already gone through.  On Oahu supply dropped 7.6% to nearly 242,000, while demand dipped slightly (down 0.5%) to nearly 176,000. Occupancy on Oahu, however, jumped 5 percentage points to nearly 73% — marking the highest occupancy of any county — while ADR rose 18.4% to $160.

Kauai had the largest increase in supply, which was up 35% to 139,000 units. The growth, however, outpaced demand, and the occupancy rate fell nearly 10 percentage points to 67%. Kauai also recorded the highest ADR of $241.  I don’t view the increase of supply as a negative, not with Southwest starting to fly here this month and their direct flights starting in January, 2020.  So far Kauai has not seen any of the Southwest bump that the other island have.

Maui County recorded the highest number of vacation rental units, with supply up 24% to nearly 313,000 units. Demand was also up 33% to more than 226,000, for an occupancy rate of 72%.

Hawaii Island also saw substantial increases in both supply which was 15% and demand which was 24%. The occupancy rate and ADR for Hawaii Island vacation rental units also both saw increases, but were still the lowest among the four counties.

Southwest Adds San Diego Routes
Southwest Airlines will fly to Hawaii from a fourth California city next spring with flights between San Diego and Kahului to begin April 14, 2020, and between San Diego and Honolulu on April 20, 2020.

Southwest CEO Gary Kelly said that other mainland gateways to Hawaii could be on the way.  The grounding of the 737 Max is hampering their expansion plans.  He also stated that Hawaii flights have been performing above the company’s expectations. Southwest is keen on keeping its existing market share and capturing more, which is why Hawaii flights were excluded from a recent system-wide fare raise.

Kauai Real Estate Year To Date- 2018 Compared To 2019
With the ending of October we can look back at where we are at today compared to this same time last year.
We are seeing a drop in the number of homes sold and the Median Price is down as well.  This is largely due to the higher end market dropping off.

Breaking down the Kauai Residential Market a little further:
Homes Sold Under $1 Million Year To Date
2018- 359 Versus 2019- 377

Homes Sold $1 Million To $2 Million Year To Date
2018- 97 Versus 2019- 88

Homes Sold $2 to $3 Million Year To Date
2018- 26 Versus 2019- 15

Call me to drill down on the details for the Kauai market that you are interested in.   For now here is a general graph:
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