Moloka'i feels heat of housing market
By Andrew Gomes
Advertiser Staff Writer
Moloka'i is often described as Hawai'i's "most Hawaiian" island because it has been largely untouched by urbanization.
Advertiser library photo • 2002
But the state's red-hot housing market is leaving its mark on the rural community and threatening its way of life, some residents say.
Kaunakakai, located at the lower center, is the main city on Moloka'i, where longtime owners are being tempted by a hot real-estate market.
Home prices have more or less doubled over the past two years, brokers on the island say, bid up primarily by Mainland buyers seeking vacation property and Maui residents priced out of their market where midpriced single-family homes cost around $600,000.
Some real-estate agents still advertise Moloka'i as the "undiscovered island" — calling it Hawai'i's best-kept secret in real estate — though that has become debatable following the recent and controversial property sale by computer software guru John McAfee.
"The wave is here," said Stacy Helm Crivello, executive director of nonprofit community development organization Moloka'i Enterprise Community, referring to off-island buyers of Moloka'i real estate.
A decent home on Moloka'i is priced around $200,000 on the low end. That may seem cheap by larger Neighbor Island standards, but for a community with the state's highest unemployment rate, the price spike is particularly straining.
"The housing costs are having an effect on everybody," said Jeffrey Jumper, kitchen and dining room manager at Paddlers' Inn, a Kaunakakai dining and entertainment spot. "We've had people leave the restaurant and move to the Mainland because they can't afford to live on Moloka'i."
Because of Moloka'i's small housing market, relatively few sales can more easily influence property taxes and rents across the island.
One resident on the outskirts of Kaunakakai who didn't want his name used to avoid upsetting neighbors is frustrated that on top of gas prices nearing $3 a gallon and groceries that cost more, his property taxes are headed higher if two nearby homes sell for their asking prices of about $400,000.
"It's unreal," the resident said. "You no can make ends meet over here."
Some observers say that people born and raised on Moloka'i who don't already own property have little chance at buying a home even if they work full time.
Residents also say that children of longtime Moloka'i families who inherit property are increasingly tempted to sell because of property-tax demands and high offering prices.
The limited housing opportunities are a reality of living on an island that has few options for economic expansion.
People who make the 261-square-mile island their home relish its beauty but must live within limits of its underdeveloped, post-plantation economy and strong opposition to commercial growth.
Native Hawaiians make up the majority of Moloka'i's population of around 8,000. Many significantly rely on subsistence farming, hunting and fishing. Tourism has a minor foothold, but visitor numbers remain well below levels of the 1990s even as statewide tourist arrivals break records.
Unemployment on the island last year was 10.6 percent, more than triple the state average. According to the latest Census estimates, about 14 percent of Moloka'i residents receive public income assistance, and about 19 percent live at or below the poverty line.
Moloka'i's ruralness does serve as a natural barrier for some would-be newcomers. There are few job opportunities and not much in the way of city life.
But the rural lifestyle — no stoplights, quiet living, unspoiled coastlines — has its appeal, especially for people seeking vacation property, a place to retire or a bedroom community for commuters with jobs on Maui.
"We don't have the high-rises and shopping malls," said Ray Miller, principal broker at Friendly Isle Realty and a Moloka'i resident since 1957. "It's just a simple life, and people are attracted by that.
"Our prices are lower than any of the Islands, so (buyers) come here," he added.
Miller said the ongoing real-estate boom on Moloka'i has been more dramatic than the expansion during the Japanese investment bubble of the late 1980s and early 1990s. "This price increase has been by far the highest," he said.
According to Hawaii Information Service, which compiles real-estate sales data, the number of residential property sales on Moloka'i more than tripled between 2002 and 2004, from 94 to 336.
The median sales price rose during the same period from $88,000 to $150,000, meaning half the transactions were for more and half for less.
Brokers said most of these purchases are vacant land, suggesting the median home price is significantly higher.
Judging from recent real-estate advertisements, vacation condos ranging from around $250,000 to $350,000 make up most of the listings.
At Kawela Plantation, a 210-parcel east Moloka'i development, 2-acre lots are priced around $300,000 with one two-bedroom home listed for $729,000. Up until about two years ago, Kawela Plantation lots were selling for about $90,000.
Also on the market are at least a dozen properties priced over $1 million, including several $3 million homes and 6-acre lots ranging from $1.6 million to $5.4 million.
The appetite for million-dollar property on Moloka'i was on display last month when McAfee sold 1,046 acres of agriculture and conservation land at an auction that drew about 40 bidders, mostly from the Mainland. An unidentified Mainland couple bid $3 million for the property.
During the auction, the owner of land bordering McAfee's put up a makeshift sign advertising approximately 200 acres for an undisclosed price several brokers confirmed to be $3 million.
Some residents fear that buyers willing to pay eye-popping sums for Moloka'i land will entice more longtime owners to sell.
"It's a vicious cycle," said Walter Ritte Jr., a Native Hawaiian community activist on Moloka'i. "You cannot stop it. Only the ones who can afford the land are going to be able to live here."
Prices have already risen enough to preclude low- and moderate-income residents from taking out loans through the island's rural assistance mortgage program run by the U.S. Department of Agriculture, according to the USDA.
The exception is for loans to build homes on Hawaiian homestead property leased from the state Department of Hawaiian Homelands.
There are roughly 500 to 600 residences on Moloka'i homestead land, which does ease the housing burden somewhat. The federal government's Section 8 rental housing voucher program also helps insulate part of the population from housing price woes.
One aid for property owners is a circuit-breaker tax credit, which caps property taxes to no more than 3 percent of a taxpayer's adjusted gross income for residents who qualify for the homeowner's exemption on real property taxes. But Miller of Friendly Isle Realty said many residents don't know about the credit.
Jumper at Paddlers' Inn said it's sad that most of Moloka'i's housing inventory used to be affordable. "It used to be for $125,000 you could buy a nice home here," he said. "Not anymore."
Reach Andrew Gomes at agomes@honoluluadvertiser.com or 525-8065.
