Real estate agents in Hawaii are faced with a unique problem. While interest for luxury property in the island state has skyrocketed, strict quarantine requirements are making buying and selling real estate much more challenging.
Back in March, Governor David Ige introduced a mandatory 14-day quarantine for any visitors arriving to Hawaii to help stop the spread of coronavirus in the state. Eileen Lacerte, a Better Homes and Gardens broker working in Kona, said that the stringent requirements have hindered many buyers but attracted others.
Eileen Lacerte
“The Big Island tends to draw the .com crowd,” Lacerte told Inman. “When the quarantine was about to start and the Bay Area went into lockdown, many of the CEOs and corporation heads said ‘I am not going to lockdown here with my kids out of school.'”
The state’s real estate market relies heavily on affluent buyers from other states and countries, though many have raised concerns about the housing affordability problems this creates for the local population. But since April, there have been 64 closed sales over $1 million and $10 million on the Big Island, Hawaii’s largest island by territory. An additional 86 sales between $1 million and $45 million are currently pending, according to local MLS stats provided by Lacerte.
The quarantine measures introduced in Hawaii have been some of the most stringent in the country — numerous people caught violating the order by gathering in groups have been arrested and told to leave the state. Lacerte said that the majority of those who bought property in Hawaii have been from the extra-affluent crowd who can fly in on a private jet, buy a million-dollar property sight-unseen and quarantine in it. As a result, more high-end properties worth millions of dollars have been sold than at the same time last year while sales of mid- lower-end properties have stalled.
There have, Lacerte said, been some exceptions with locals, and those who already had family or property in Hawaii. But agents are holding out hope that another type of buyer — one with a desire to spend the winter in Hawaii but not so affluent as to be able to fly in by charter plane and quarantine for long periods of time — is going to appear as soon as the quarantine order is lifted.
Since the start of the pandemic, the state has had to navigate its dependence on tourism with the dangers that outsiders pose given its nature as grouping of small islands isolated from the mainland. The order was originally set to expire on August 1 provided new arrivals could provide a negative COVID-19 test, but on July 13, the order was extended until September 1 amid new spikes of cases in California and Arizona.
Lacerte has been receiving frequent emails about the quarantine from potential clients from California and believes many may try to squeeze in a purchase between when the quarantine is lifted and a potential second wave of the coronavirus in the fall.
“What I’m hearing from the clients is that, if there’s another lockdown this winter during flu season, they don’t want to be caught in the Bay Area or someplace where they’re shoveling snow,” Lacerte said.
Debbie Arakaki
Debbie Arakaki, a broker with Elite Pacific Properties in Maui, has observed a stalling of the luxury market after the quarantine measures were introduced. She said that one in every five homes in Maui is either a vacation property or second home. As a result, they lost a large cut of the market when the quarantine started; since the start of 2020, total sales in Maui are down 16 percent compared to the first half of 2019. Condo sales, meanwhile, are down 22 percent.
“There are a few of the people that have been here since the virus started and are very familiar with the island who might end up buying but in general, our market has slowed because the people aren’t here,” Arakaki said. “We also have such high unemployment that the people who would normally be able to qualify are now unemployed and probably holding back from making a major purchase.”
Prices, however, have not cooled down with the stalling of the market. According to a report conducted by Fidelity National Title And Escrow of Hawaii, home prices are up 3 percent while condo prices are up 9 percent on the island of Maui. The discrepancy between sales and prices is, according to Arakaki, caused in part by the low inventory of homes in the market. Multiple potential buyers are holding off on listing their homes due to virus-related instability while the desire to buy property in Hawaii has not waned due to its idyllic scenery and relatively low numbers of cases.
Thomas Loratta
“We’re doing a lot of virtual tours, we’re doing a lot of FaceTime calls and videos for them so that they get all their information,” she said. “[…] We are trying to get ourselves geared up for a really busy season.”
Tom Loratta, the founder of Pinkert-Loratta Pacific Properties, has been selling luxury real estate in Big Island’s Kona-Kohala area for 30 years and says that he has not ever seen a similar situation on the island. Interest for properties worth anywhere from $1 million to $10 million is high, and he has sold several sight-unseen.
But at the same time, it feels like every agent is waiting for the outbreak to be under control so that the market can start welcoming out-of-state buyers again. “Everybody’s really enjoyed the island with less cars and traffic, but economically I’m sure it’s going to take its toll over time,” Loratta said.
