Investing In The Right Condo
I recently read a CNBC article that said owners who purchased 5 years ago have doubled their equity in their home. This got me thinking.
Real estate is an investment too. Like investing in the stock market, the buy-and-hold strategy seems to be the most efficient way to turn your home into a sound financial investment.
Scrolling through the MLS, I chose three condos to analyze: (A) 1133 Waimanu; (B) Country Club Village; (C) Royal Palm at Waipio. Here is was my search criteria:
- Data was pulled from November 1, 2013 to November 1, 2016.
- I only used 1-bed, 1-bath, 1-parking comps.
In addition, I chose these condos for two main reasons:
(1) Each condo is located in a different neighborhood. There is this misconception that you have to live in places like Kaimuki or Kahala to have your home appreciate in value.
(2) Over the past few years, I've shown numerous listings at these three condos. I once had a co-listing at 1133 Waimanu and I represented a first time home buyer at Royal Palm at Waipio.
1133 Waimanu (Kaka'ako)
2013: 1 unit sold for $380,000.
2014: 3 units sold. The median price was $375,000 (with a low of $370,000 and a high of $380,000)
2015: No units were sold within this time frame.
2016: 1 unit sold for $480,000.
Comparing the unit ($380,000) that sold in 2013 to the unit ($480,000) that sold in 2016, prices increased 26%.
Country Club Village (Salt Lake)
2013: No units were sold within this time frame.
2014: 7 units sold. The median price was $361,000 (with a low of $349,000 and a high of $369,000)
2015: 2 units sold. The median price was $382,000 (with a low of $375,000 and a high of $390,000)
2016: 1 unit sold for $400,000.
Comparing the lowest sold unit ($349,000) in 2014 to the only unit ($400,000) that sold in 2016, prices increased 14%.
Royal Palm at Waipio (Waipio Gentry)
2013: 1 unit sold for $218,000.
2014: 2 units sold. The median price was $233,750 (with a low of $227,500 and a high of $240,000).
2015: 5 units sold. The median price was $247,000 (with a low of $232,000 and a high of $250,000).
2016: 6 units sold. The media price is $266,500 (with a low of $249,900 and a high of $270,000)
Comparing the only unit ($218,000) that sold in 2013 to the highest sold unit ($270,000) in 2016, prices increased 24%.
What does the data tell us? First, not all condos in Kaka'ako cost millions of dollars. Given 1133 Waimanu is a different product than the new luxury condos being built, many people assume that all Kaka'ako condos will appreciate in value overnight.
Second, there's a demand to live in Salt Lake. Interestingly, many prospective homeowners don't realize that Salt Lake is still considered "Metro Honolulu."
Third, based on the statistics from Royal Palm at Waipio, could the homes located on the west side be considered the "value stocks" of the market. It'll be interesting to see what homes prices do once the rail is fully built.