Palolo Attracts Move-Up Buyers, Investors
By Lisa Scontras
With its relatively affordable prices, Palolo has gained popularity with homebuyers looking for the serenity of Manoa, the central locale of Kaimuki and the hefty price tag of neither.
In fact, of the 12 single-family homes currently on the market in Palolo Valley, several are listed for less than $600,000, including a fixer-upper, a tear-down and a starter home. There is one 3-year-old home on a 37,000-square-foot lot listed at $749,000 and a vintage 1925 charmer for $670,000.
For the first quarter of 2011, sales volume is up, with 15 sales in the area, the highest number since the fourth quarter of 2009 when the same number of homes sold.
According to Jodee Farm, Realtor and partner at Prudential Locations, it’s the neighborhood’s attractive prices – the median price this year is $600,000 – along with the tranquil setting and proximity to town that are giving buyers cause to take a serious look at this island neighborhood.
“I was born and raised in Palolo, both my parents also grew up here, and except for a short stint living in Hawaii Kai when I got married, I am back living in what I would consider ‘God’s Country,'” said Farm.
“The prices are lower than other neighborhoods ‘in town,’ Palolo has many large, wooded lots in the back of the valley, and you’re just a hop, skip and a jump to freeway access that will take you east or west,” Farm added.
Land is plentiful in Palolo and zoning is generally R-5, creating opportunities for investors looking to subdivide or buyers looking for two separate living spaces – one to live in and one to rent out.
“There are many lots over 7,500 square feet, which would allow a duplex; and over 10,000 square feet, which would allow subdivision,” said Farm. “I actually have a listing at $670,000 that sits on 3.82 acres of land. There is over 56,000 square feet of R-5-zoned land. On paper anyway, a person could put 11 single-family homes on that piece of property.”
With listings in the $500,000 to $700,000 price range, and two in the million-dollar plus range, Farm said that the demographic in the neighborhood is not so much entry-level buyers but more move-up or move-back-closer-to-town buyers.
And with conventional financing loan limits at $625,500, Palolo is especially attractive to those buyers looking to stay under the jumbo loan threshold. Palolo buyers may find it easier to stay under the jumbo loan limits, making it easier to qualify for a loan and lower interest rates. The loan limits may in turn have an impact on prices, because ultimately, there ends up being more activity in areas where it’s easier to get a loan.
“The average list price is currently at $619,000,” said Farm. “There are 1.5 months of remaining inventory.”
Months of remaining inventory measures how long the active listings will last at the current rate of sales. Generally, seven to 10 months of remaining inventory is thought to be a balanced market; under six months is considered a “strong” market.
“I would say that with the low inventory, Palolo has become a seller’s market,” said Farm.
It’s all of these components together – the affordability, lot sizes large enough to accommodate multiple dwellings, and great location – that give Palolo Valley its unique appeal.