Vacant land:
Demand for land remains very strong. Average inventory count for Q1 is 2 compared to 42 in Q1 2023. 17 lots went under contract with an average 20 DOM. The lowest DOM recorded in the last 2 years. Sale price average has made an all time high at 49925. It is truly a sellers market with sale price ratio average at 103% of list price. There are a lot of potential buyers watching this market with little to no hesitation to pounce on a lot even if it’s a low quality grade lot priced on the higher end of the spectrum. If demand falters on the new construction sales causing home prices to decline, those who purchased at these all time high vacant land prices will feel double the hit on their profit margins from high land purchase and home declining prices. The speculation is that home prices will remain the same or trend up into the future. The issue is with such strong vacant land accumulation there is a direct correlation with future influence on new construction supply.
New Construction 3 bedroom:
Demand remains strong for new construction, especially considering existing home inventory is still very low. Q1 average inventory is 13 compared to 7 in Q1 2023. Be it slightly elevated, it is still moderately low when considering historically over the last 2 years. 28 homes went under contract in just Q1 alone, the highest in 2 years. 36 DOM was the average and only 2 properties underwent price reductions. The average sale price was 384870. Sellers for the most part have been getting what they ask with a 99.5% of list price average. I still notice a pattern where if the seller puts in the extra work to make the property stand out from the competition the buyer is willing to pay a premium.
Permits:
32 permits were issued for Q1, the highest Q1 count going back to 2018. Q1 2023 was 31. This helps validate the vacant land accumulation correlation mentioned earlier. I estimate 26 of these permits are speculative in nature. Interesting to note is that there are a lot more 2 bedrooms being permitted than normal.Final Thoughts:
Currently Ainaloa remains strong across the board as it seems to be the smaller sibling of HPP. Those seeking for more affordability, lava zone 3, and a solid Association look to Ainaloa.
On the other hand this subdivision remains very volatile due to it being driven by high speculation. Home inventory can spike in a matter of weeks and prices can change dramatically from quarter to quarter.
This article was written by Brandon DeLima a local builder and entrepreneur.
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