KAHALA: What Oahu’s bellwether luxury neighborhood can tell us about the market
Real estate experts have long considered Kahala to be one of Oahu’s “leading indicator” neighborhoods.
“As goes Kahala, so goes the rest of Oahu,” said John Connelley, principal broker for Locations. “When home prices rise in Kahala, you can bet that they will begin to rise from Waialae Iki to Hawaii Kai, too. And the rest of the island will follow.”
In general, Kahala home prices outperform the overall Oahu market—both in upswings and downswings. After dipping slightly from 2016 to 2017, median prices in Kahala are once again on an upswing—reaching $2.75 million at the end of May 2019.
Locations’ research has been tracking the price index for Kahala and Oahu overall since 1981. At halfway through 2019, the Kahala price index is 815, compared with 509 for Oahu overall. While Kahala experienced sharper price drops than Oahu overall in the past three decades, its price increases have been steeper, too.
“Historically speaking, the overall Oahu median home price has followed the same trajectory as Kahala home prices,” Connelley explained, adding that the peaks and valleys for the overall market were much smoother.
Locations’ research expects the overall Oahu median price to rise by two percent at the close of 2019.
Inventory in Kahala is also ticking up from a five-year low in 2017, with 35 active listings as of last month. In fact, there are more homes currently for sale in Kahala than there have been in more than a decade.
“We’re seeing more homes for sale in Kahala this year for the same reasons we’re seeing in other established neighborhoods. Long-time homeowners who have a lot of equity in their homes may be looking to trade their high-maintenance homes for the lock-and-go ease of condominium life,” said Connelley.
MIGRATION IN AND AROUND KAHALA
When it comes to Kahala, many people outside of the real estate industry assume that buyers are coming from off shore. So it may come as a surprise that 75 percent of people who purchased a home in Kahala last year are Oahu homebuyers. Only 14 percent of Kahala buyers are Mainland buyers, and only five percent are Japanese buyers.
“Many homebuyers in Kahala are already Kahala residents,” Connelley explains. “Our research shows that 43 percent of folks who purchased a home in Kahala last year are already Kahala homeowners. So, they are either trading up—to move closer to the beach or to a newer home, or they are acquiring additional property for family members or as an investment.”
Many Kahala homeowners have also purchased condominiums in Kakaako in recent years—a trend that’s also reflected among Oahu homebuyers overall. However, of those Kahala homeowners who purchased Kakaako condos, fewer than half have moved and even fewer have sold their Kahala homes.
WHAT’S NEXT FOR KAHALA?
Though median prices have rebounded in Kahala since dipping in 2018, the market has softened a bit in 2019. One sign of a softening in the Kahala market is a decrease in the sold-to-list-price ratio—meaning more homes have been sold for less than the asking price. Days on Market—or how long a home is on the market before an offer is accepted—has also increased, another indicator of a softening market.
These trends could be a sign of what’s to come in other Oahu neighborhoods. However, it’s important to keep in mind that any swings seen in the Kahala market would be less drastic for the island as a whole.
To learn more about Kahala, visit LocationsHawaii.com/Kahala