The title of this post is the only description you need to understand what’s going on with real estate on Kaua’i these days. There is a real estate bubble pretty much everywhere in the U.S., and mortgage rates are rising, but prices on our little island have now left the stratosphere and entered unknown territory.
The lowest priced condos on the island are selling for around $250K right now. That’s for a one bedroom, one bath, 640 square feet place in a lovely resort setting. That sounds affordable . . . except the monthly HOA fee is $1,822! And, the condos are leasehold property, not fee simple, which means there’s a small monthly leasing fee to pay as well. The lowest HOA I could find on the island was $431/month, but that was for a 720 square foot condo (selling for $350K) in a complex with no amenities.
Buying a home here versus a condo might save you a ridiculous monthly HOA fee, but the current median home price on Kaua’i is $1.3 million. The lowest priced home for sale on the island is $480K for a 1,100 square foot leasehold home in the Hawaiian Homelands (blood quantum requirements must be met). The home pictured below, 916 square feet on a 10,000 square foot lot (located a very short distance up the road from us), is priced at $675,000. Out of 307 homes currently for sale on the island, there are only ten houses selling for that price or less.
It’s just plain nuts. And yet, people are buying property on the island hand over fist, not only to live here permanently, but as vacation homes and investment properties as well. Purchasers are remodeling like crazy too. It’s frankly mind boggling the amount money being spent.
A home bought in the $500K range in 2014, the year we first arrived on Kaua’i, is now most likely worth a million or more, or at least very close to it. Locals who bought their homes back in the 80s or 90s in the $50K – $60K ballpark are now holding millions worth of value in their property. There is also a building boom happening on the island as land is sold and divided, some of it given to children to build their homes with other lots sold as people cash in. Our friends told us the other day of a “view lot” on their street that had recently sold, with about 30 feet of flat land from the street before dropping down a steep cliff. The sale price was $300,000.
It doesn’t take much imagination either to guess what rental prices are like these days. We know we were very, very fortunate to find this place when we did. The owner is asking nearly $200 more per month for our apartment than what we’ve been paying . . . and will easily get it.
Could it all go bust? Of course – a deep recession, a huge storm, or some other unforeseen issue could cause housing prices to plummet. But for now, property owners and home buyers with money to burn are riding high and it truly seems not even the sky’s the limit any more.