Big Island real estate agents are optimistic about the market in 2024 as the Federal Reserve promises interest rate reductions next year.
After a year of rising interest rates and inflation, the Hawaii County housing market remains cool, with home sales still down substantially compared to previous years.
According to multiple listing service data, most districts on the island once again saw fewer sales in November 2023 than in November 2022, and total year-to-date sales also lagged markedly behind previous year totals.
Last month, the only district to have more single-family home sales than in November 2022 was South Kona, where seven sales in a month was a 133% increase from the previous year. In more active districts, like Puna or South Hilo, home sales were down by more than 20% from last year.
Islandwide, 1,796 homes have been sold this year as of Dec. 1, a 26% drop from the first 11 months of 2022. Condominium sales are similarly down, with a 23% decrease from last year.
At the same time, sales prices have wavered somewhat compared to last year. Islandwide, the median home sales price this year to date remains steady at about $500,000, the same as 2022. But in several districts, the median sales price was significantly less than it was last year.
For example, the median sales price in South Hilo this year to date was $515,000, slightly down from the $526,000 median price of last year. North Hilo’s $580,000 median price this year also fell far short of the $800,000 median of 2022.
Other districts, such as North Kona and North Kohala, had spikes in their median sales prices this year — in North Kona, $1.2 million in 2023 compared to $1.1 million in 2022; in North Kohala, $1.2 million in 2023 compared to $1 million last year. However, both districts typically have only a handful of sales per month, so that increase does not seem to be statistically significant.
But despite the decline in sales, island real estate agents are cautiously optimistic about 2024.
“It’s still a sellers market, definitely,” said Doug Powell, broker-in-charge at Hawaii Estates in Kailua-Kona. “But I think we’re going to see a lot of the people who got priced out of the market back in play next year.”
Realtor Rose Delfin said there remains a housing inventory problem on the island — “if you got locked into a good (mortgage interest) rate, you’re not going to want to sell right away” — but added the current high interest rates are not all that bad, historically speaking.
“I think there were some knee-jerk reactions to the rate increases,” Delfin said. “But life goes on, and people still have to buy or sell homes. The market’s not great, but it’s not terrible.”
Both Delfin and Powell acknowledged some future uncertainties in the market — in particular, the presidential election of 2024 could have unforeseeable ramifications on interest rates and other factors.
“Election years are hard to predict,” Delfin said. “Consumer confidence is so important for this industry, after all.”
Delfin also said that problems with insurance — such as the retreat of major providers from Lava Zones 1 and 2, leaving vastly more expensive state-set rates as many homeowners’ only option — will continue into next year, but added that for buyers, those additional costs will simply be factored into their initial sale calculations.
“If you can’t get good insurance, you have to ask if you have the gambler’s mentality to buy a home in Lava Zones 1 and 2,” Delfin said.
Earlier this month, the Federal Reserve indicated that it could cut interest rates multiple times in 2024, bringing it down from the current 5.5% rate.
Meanwhile, the average long-term U.S. mortgage rate last week dropped to its lowest level since May, dipping to 6.61%.
Powell said he wouldn’t be surprised if the Fed interest rates drop to 5% again by the third quarter of next year.
“I think it’s going to be a great year. I really do,” Powell said.
Email Michael Brestovansky at mbrestovansky@hawaiitribune-herald.com.
