Market Begins to Bounce Back and the Vacation Rental Bill Takes Shape!! 🏡August 2018 West Hawaii Real Estate Report

A Month Without Vog, Blue Skies in Kona

The last month has been the most amazing weather I have ever seen in Kona.  Most mornings you can see the top of Hualalai and if you have a view South, you can see all of Mauna Loa.  The volcano has been quiet for a month now, but that can all change.  It is not uncommon for events like this to pause and start up again before stopping for good.  In the last few days there has been a very small amount of lava visible in the bottom of the crater created by Fissure 8, but there has been no flow.

The North Kona market is still seeing a decrease in units sold, but it is nowhere near what we saw last month with nearly a 50% drop.  Also we can see that South Kohala had a GREAT month.  Remembering that these sales numbers are closings for the month of August, with contracts typically written 30-60 days beforehand, it appears that most of the buyers turned their attention North when Kona was experiencing its worst effects of the vog.  Looking at the West Hawaii house and condo market as a whole, August was a good month with a net increase of 15 units sold.

As I look forward, I am extremely optimistic.  I just can not explain how beautiful the weather has been over the last month.  Even the hurricane did very little in West Hawaii, with about one inch of rain and winds that never got above 10mph here at our condo on Alii Drive.  The ocean views have been great all day, pretty much every day.  The sunsets have been amazing too.  I know that some buyers look at Kona and also look at opportunities on other islands.  With our much lower prices, and now with our great views and sunsets, I think we have a very compelling opportunity with real estate here in West Hawaii when compared to the rest of the state.

Additionally, Bill 108, which is the County Bill dealing with Short Term Rentals, is still working it’s way through the system, but it will have an effect on our market.  The cliff notes version of this bill is that “Unhosted” rentals, those defined as having an owner who does not live on the property, will have to apply for an exemption if the property is not is a “resort node” or is not zoned with the letter V.  This means that most residential homes will have to apply for an exemption.  The annual exemption is supposed to run with the property and properties exempted can continue to apply for an exemption even after a sale, but properties not exempted in the previous year will be prohibited from new exemptions.  To put this another way:

If your long term plan is to buy a house and do a vacation rental, you need to buy a home NOW and establish your short term rental business and then apply for an exemption when the law takes effect, likely next year.
You will be limited to houses in the future which already have an exemption.  This supply of houses with an exemption will be more limited and the exemption will itself be an additional commodity which has value, meaning you will pay more for that property.

Posted on September 11, 2018 at 2:11 am
Mike Drutar | Category: Uncategorized

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