Visiting Kailua-Kona Hawaii

The Kona real estate market, located on the more tourist-driven western side of the Big Island of Hawaii, has been facing high rates of foreclosure and collapsing development projects. According to a May 19, 2010 article from the Wall Street Journal, “Bank of Scotland PLC, a British bank that financed a boom-era, 1,500-acre luxury golf-course community in the Hawaiian city of Kailua-Kona, is suffering a steep loss on the stalled project. The final tally will become clearer later this month, when Bank of Scotland, now part of Lloyd’s Banking Group PLC, competes an auction for the debt on the property on the west side of Hawaii, or, as it is known to locals, the Big Island.”

This devastating loss of potential Kailua-Kona homes for sale represents nearly half a billion dollars in lost profits, according to appraisers. The piece by Shayndi Raice and Robbie Whelan went on to say that “The price is expected to be in the $50 million-to-$100 million range, according to people involved in the process. In 2006, at the height of the real-estate boom, a private appraiser valued the property, known as Hokuli’a, at between $600 million and $800 million, according to people familiar with the matter…The sharp drop in value exposes a softness in the market that runs counter to some recent market trends. As builders across the country have begun to buy lots again, prices have begun to rise in many other areas. Prices finished lots are up 20% nationally from their low point in early 2009…But many markets, like the one for multimillion-dollar vacation homes in Hawaii, still have a long way to go.”

The rate of foreclosures in the Kailua-Kona and Big Island real estate markets has been almost twice the national average, according to a May 13, 2010 article in the Honolulu Star bulletin. This piece, written by Gene Park, said that “Oahu remained well below the national rate of foreclosures in April, but the Big Island and Maui markets took large hits…Oahu fared the best, with one in every 580 homes. But Maui and the Big Island saw a high rate, with one in every 187 and one in every 179 homes respectively…The top five neighborhoods in the state with the most foreclosures were Kailua-Kona, Kihei, Ewa Beach, Lahaina and Waikoloa.”