Most buyers who hire us to help them find the right Kona Kohala area home are looking for a vacation property that will eventually serve them in retirement. The west side of the Hawaii Island is a very attractive destination for vacation home buyers, but not because it has a relative low cost of living. It doesn’t. Our cost of living is about 60% higher than the US average. West Hawaii Island is an attractive vacation home destination, but not because it has great shopping and outstanding nightlife. Nope. We all fly to Honolulu for the much anticipated three day weekend to shop. The tiny handful of bars in Kona’s downtown waterfront area cannot be accurately described as nightlife.
However, West Hawaii Island’s Kona Kohala coast offers plenty of dependable sunny, warm tropical weather, lots of golf and tennis choices, outrigger canoe paddling, surfing, and an opportunity to escape from the world. Spend the whole day reading a book at the beach. Nap in a hammock on your lanai. Volunteer for baby turtle release day. Dress casually for an evening concert at the Kahilu Theater. Get used to home grown papaya and apple bananas for breakfast. Slow down to Hawaii time.
Honolulu once again beat San Francisco for having the country’s most expensive real estate. But resort area Kona Kohala condo values have fallen drastically. Prices have rolled back to 2003-2004. Assuming buyers can find financing, there are plenty of excellent buys in West Hawaii for those who dream of wintering and eventually retiring in the tropical Pacific.
So, where to start looking for your vacation home? That depends on your budget. Let’s identify a few areas and neighborhoods roughly by price band – Affordable; Upscale; Luxury; Ultra Luxury.
Ultra Luxury: Hualalai Resort, Kukio, 49 Black Sand Beach, The Bluffs at Mauna Kea, The Cape at Mauna Lani
Luxury: Kona Bay Estates, Holualoa, Pau’oa Beach, Mauna Kea Resort
Upscale: Waikoloa Beach Resort, Mauna Lani Resort, The Uplands at Mauna Kea
Affordable: Waikoloa Village, Kona Palisades, Ali’i Drive, Pua Lani Estates
This list is just a sample and is not comprehensive. But it is a good place to start.
What about financing? This can be a challenge. Since the September 2008 economic meltdown, banks have severely curtailed real estate lending. Yes interest rates are low for qualified buyers, but the properties must now qualify. With resort condominiums especially, lenders may refuse to lend if there is less than 50% owner occupancy, if nightly rentals are allowed in the neighborhood, or if the homeowner’s association is suffering delinquencies. Low down payments are also a thing of the past for vacation properties: 30% to 35% is now expected.
When is the best time to buy a vacation home? The best time to buy is when the purchase is comfortable. Assuming that, the next thing to consider is the real estate cycle. Obviously buying at the peak is not recommended. The problem with that is not being able top predict the peak. Buying at the bottom of the market sounds good, but again, we cannot see the bottom of the cycle until it is in the past. We do know the history of real estate values in this country have continued to grow over the decades. Yes there are peaks and valleys, but overall, values rise over time. Again, the best time to buy a vacation home is when the numbers work. Assuming the purchase will not be cash, interest rates are critical. They can change at the drop of a hat, and the change can seriously skew your comfort with the numbers. This is a good reason to pre-qualify early in the process. Your lender can help you monitor rates changes and how they effect your monthly payment.
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