About Kamuela's Puako

Friday's broker caravan at the tiny beachfront community of Puako ran the gamut of properties for sale, from tiny classic beach shacks on the mauka side of the street, to large estate-size homes on the oceanfront side of the street.

This cottage for sale across the street from the beach is the least expensive home for sale in Puako at $799,000 (MLS 241165)

There is just one small street running through Puako, and because the ocean side tends to have large homes on small lots, very few of the houses on the opposite side of the street have any ocean view at all. In compensation, it is never more than a few steps to the beach from either side of the street, since the public has access to all beaches in Hawai'i.

Three homes are for sale on the mauka side of the street. The least expensive is a classic cottage, reminscent of beach shacks from Cape Cod to Kealakekua Bay, 880 sq ft sold in "as is" condition for $799,000. The grounds of this property are wonderful, with the entrance screened by a Royal Poinciana that just happens to be in bloom right now, and a brackish fish pond.

The second Puako property for sale has two stories, each rented separately, and is offered for $875,000 (MLS 239363). The upstairs is a vacation rental and the downstairs is a long term rental...Puako being a popular choice for both.

At the end of Puako closest to the little store is a brand-new version of the beach cottage, with a huge lanai for entertaining (MLS 240224), offered at $1,000,000. Whereas the other Puako properties for sale on this side of the street would require some updating for most buyer's (and perhaps even to qualify for a mortgage), this cute property already has tiny but modern kitchen (and same for the bath). It is built on the front half of the lot, so it could also become the guest house for a larger home.

Tomorrow I'll review the Puako oceanfront estates currently for sale. It was exciting to have an opportunity to see them back-to-back, and "which is the best value?" was the hotly discussed topic as brokers greeted one another on the street.

A hui hou,

When you sell real estate for Hualalai Realty but you need to live closer to the schools in Kamuela for your young children, where do you choose to live? A friend and colleague of mine is facing just that puzzle. We spent the weekend brainstorming about the choices in properties for sale on the Kohala Coast. He and his family have narrowed it down to just two oceanfront communities: Halii Kai at the Waikoloa Beach Resort, and the small community of Puako, nestled between the Mauna Lani Resort and the Mauna Kea Resort.

Buying Oceanfront in a Buyer's Market

The appraisers tell us that in a buyer's market, "location premium" gets squeezed. What that means is that the premium a buyer would pay (and a seller receive) for oceanfront or ocean view real estate, relative to a similar property without that feature, diminishes in a down market. Thus the eventual upside potential for those premium locations is greater. If you can afford to buy oceanfront property, now is the time to do it!

Two sides of the street in Puako on the Kohala Coast

There is a single road running the length of Puako, with a single row of houses on each side (except in a few locations where the lots have been split to allow two buildings on one lot). The homes for sale on the ocean side of the street are obviously more valuable than those across the street, many of which do not even have an ocean view because their view is blocked by the homes across the way.

At the market peak, a nice home on the mauka (non oceanfront) side of the road would have sold for the $2 million range. Now cottages are available for $1 million or less on the mauka side, and would sell for double that on the oceanfront.

My favorite active listing across from the ocean is Hawaii Life's: a nearly new cottage that mimics the traditional style, built at the front of the lot so the new owner can-if they choose-build a more substantial home behind:

Best buy at Puako: $1 million for this cottage across from the beach (MLS 240224)

On the Puako beach side, the house I think should be the next to sell is listed for $2,500,000...and based on last year's sold properties, should be prepared to accept an offer in the $2,000,000 range:

This 2-bedroom Puako beachfront home is listed for only $2,500,000 (MLS 238957)

If your taste and need is for a more substantial home but in a non-resort location, there is currently only one listed at Puako, the King estate offered for $4,500,000. At that price point, the savvy buyer would want to compare with oceanfront Kolea homes...but that's another blog post.

A hui hou

Beth

Although we've shared the space with our vacation rental partner for months now, after a complete remodel our Hawaii Life Real Estate Services LLC's Big Island Branch Office is having its grand opening in Puako on Friday, July 23rd!

What's so special about Puako?

For 45 years since the completion of the Mauna Kea Resort, visitors have known the Big Island's Kohala Coast as THE destination for sunshine and beaches. Twenty years later, two more beautiful resorts, Mauna Lani and Waikoloa Beach, joined Mauna Kea along this strip of Gold Coast. But in between Hapuna Beach (where the second of the Mauna Kea's hotels is located) and Mauna Lani Resort, the tiny oceanfront town of Puako kept its low key style even as prices on the oceanfront side of the street soared.

Puako is a place where "kama'aina" families who lived upcountry woudl have a beach house. A few local families still own or live there, nestled in between the grand homes built by newcomers. Across the one street in and out of Puako, you might find local kids running a lemonade stand in front of their house, with juice squeezed from lemons growing in their own backyard. If you are renting one of the homes, don't be surpised if the local kids show yours the turtles and teach them the best places to get in and out of the water.

Even Puako is not immune to the downturn in the real estate market and right now there are some "best buy" opportunities.

At the entry level, I am surprised someone hasn't already made a run at a newly remodeled, very private 4 bedroom home on the mauka side of the street priced at only $1,180,000. Five years ago you would have paid that much for a lot with a shack on it!

On the oceanfront side of the street, my pick is the home with a $500,000 price reduction to $2,500,000. It has a main house and a studio! Owned by the same family for four decades, you'll want to do some careful updating, keeping that classic Puako style intact. A recent sale on the block closed at $4,200,000. Did I hear VALUE?

For the serious investor/developer, the last big (6.76 acre) oceanfront parcel is still listed in the MLS for $9,675,000. There are water commitments and subdivision plans...but also financial difficulties. Heading to foreclosure if someone doesn't act soon.

A hui hou,
Beth

"This feels like 'Old Hawaii'" is a statement we often hear when someone “discovers” Puako Beach on the beautiful Big Island of Hawaii for the first time. Don your pareo, we’re going back in time with recently sold property prices as well.

New Oceanfront Listing in Puako—coming soon!

While the first quarter volume of 2010 shows improvement over 2009 for Puako Beach sales (no sales in Q1 2009), prices have continued to decline. Two second floor condo units sold for $275k and $225k. At the market high, these units would have traded from $400-500k.

There haven’t yet been any mauka (mountain) side properties sold in Q1, but as far as oceanfront property sales go, we’ve seen one 750 sq ft traditional beach cottage conveyed for $1.8M and a bare oceanfront parcel sold for $1.6M. Um. Wow.

These are 2001-2002 prices, peeps. Have we hit the bottom yet?

2009 year-end results for Puako Beach, show that neighborhood sales are looking positive! Out of the six properties sold in 2009, 4 were mauka side and 2 on the makai (oceanfront) side of the road. Compared to 2008’s two properties sold - 1 mauka, 1 makai, and 2007's 8 properties - 2 mauka and 6 makai, I would say it looks as if Puako beach has come through the economic crisis intact, and is on the upswing again.

It appears possible we’ve hit the “bottom” of pricing in Puako, at least on the mauka side of the street. The lowest-priced mauka sale since #35 sold in April, 2003 for $499k*, lot #27 went for $500k in May, and comparable sold property prices indicate an increase in value since then. This is good news for the “desirability” of Puako in general.

As for the makai side of the street, two sales hardly indicate a trend, compounded by the fact that they were entirely different sorts of properties. #56, a 972 sqft, 3/2 traditional puako beach cottage was sold by Pattie Freeman of Hawaii Vacation Rentals, for $2,650,000 in May. The second sale was two side by side oceanfront properties lots which sold together for $6.5M in August. The architecturally significant luxury home on lot 20 has a lap pool and gym, while lot #18, next door, was designed to operate as the “yard” for #20.

MLS#218052, asking $2,500,000

Currently on the market for $2.5M is a 751sqft, 1/1 traditional beach cottage which has been making me wonder if we’ve yet seen the “bottom” of pricing on the makai side of the street? On the other hand, oceanfront choices are few and far between in Puako, with only two other homes on the market today, and one oceanfront home offering a "half share" - #10. I currently have three clients who want to buy on the makai side of Puako right now, but nothing available suits their needs. It’s an interesting position to be in during this “buyer’s market.”

To see all the properties currently on the market in Puako Beach, please see the gallery I’ve created: www.puakoproperties.com. Or email me katie@hawaiilife.com and I’ll send you a brochure.

*In the interest of full disclosure, I am the owner of #35 Puako.