Californians fueling Kauai real estate boom

Record home-price appreciation lures investors, retirees
Inman News
An unprecedented boom in the Kauai real estate market is being led by California buyers, according to a study by Data@Work, a Hawaiian resort residential market research firm.

The study shows California residents as the largest buyer market for all resort properties (condos, single-family homes and vacant home sites) in Kauai, accounting for about 40 percent of all sales on the island.

Home prices appreciated 28.3 percent in the Hawaiian Islands in 2004, the second-highest rate in the country behind Nevada. The island of Kauai experienced the greatest gains of all the outer islands, with the average price of resort properties soaring 45 percent over the past two years.

According to Ricky Cassiday, president of Data@Work, real estate investments over the past five years in resort property on Kauai have appreciated by 21.5 percent annually, with the average residential price increasing from $300,229 in 1999 to $622,869 at the end of 2004.

The already striking appreciation rate is expected to go even higher this year as developers struggle to keep up with demand, according to a press statement, which also noted that inventory is tight, resales are brisk and new developments are selling out in record time.

Despite rising prices, Kauai is still a value in relation to the other islands, according to the press statement. A new beachfront condo priced at $800,000 on Kauai would easily sell for over $1.5 million on Maui, and Cassiday expects Kauai's values to continue to rise faster than the other islands.

"Californians come to Kauai to experience a less hectic way of life," said Danielle Fletcher, owner of the Windermere Carmel office, which is a California sales representative for the new Waipouli Beach Resort under construction on Kauai. "Post 9-11, people are looking for security and simplicity. Buyers who may have considered a home in Mexico or Costa Rica are finding Kauai more appealing for a number of reasons – personal safety, quality of health care and a lower 'hassle factor' that comes from sharing the same language and currency."