There's no doubt about it that condos on Oahu have appreciated well since the lockdowns of 2020, however there's no other area on Oahu that's seen as crazy a spike in prices as Turtle Bay has.
As we've reported on the monthly market updates on Oahu the last several months, condo appreciation has been in the low single digit range if any (two months ago, prices were down .3%). However, if you were to look at the 3 Kuilima Condo Complexes at Turtle Bay (Ocean Villas, Kuilima Estates East and Kuilima Estates West), you will see a complete different story!
Ocean Villas at Turtle Bay Prices up 32.7%
The bulk of the transactions that take place at the Ocean Villas are their 3 bedroom, 2 bathroom product. On occasion, you'll see a studio or 4 bedroom sale. However, since those sales are rare, let's take a look at the 3 bedroom activity. In 2021 (there were no sales in 2020), there were 5 sales that took place that ranged between $2,320,000 and $3,300,000. Earlier in the year, I sold one for $2,550,000 and it didn't appraise. The Buyer had to bring in an extra $200,000 to get the deal done. My client was happy as we got achieved a record sales price. We never would have guessed what would have happened later with that $3.3 million sale! It just completely shattered all other prices.
The average sales price in 2021 was $2,684,000. So far, this year, there has been 3 sales that have ranged from $3,375,000 to $3,378,000 for an average sales price of $3,564,333. That is a 32.7% increase since last year, which is leaps and bounds over the rest of the condo market on Oahu. The Ocean Villas was not alone. See what was happening at the Kuilima Estates condos below...
Kuilima Estates 1 Bedroom, 1 Bath Units up 36.9%
The Kuilima Estates (both East and West) saw a similar spike in prices. In 2021, there were only two 1 bedroom, 1 bathroom sales that were at $525,000 and a HUGE jump to $824,000. In 2020, the average price was $506,540. So far this year, there have been 7 (fee simple) transactions that range from $850,000 to $1,026,750! With an average sales price of $906,393, that is a 36.9% increase from last year's average of $662,000.
Kuilima Estates 2 Bedroom, 2 Bath Units up 49%
Unfortunately, there were not any 2 bedroom, 2 bathroom sales in 2021, however in 2020, there were 6 transactions that took place that ranged between $639,000 to $850,000. So far this year, there's been 9 sales that range from $1,150,000 to $1,734,000! In 2020, the average sale price was $740,167. This year, the average sales price is $1,465,444, which has almost doubled. Dividing the 2 year appreciation of 98% by two give you an annual appreciation of 49%! This is just unheard of when comparing to other condo complexes on Oahu!
Why are Turtle Bay Condo Prices so Crazy?
Is there something in the water? Why have the prices at Turtle Bay shot up so much higher than everywhere else on Oahu over the past 2 years? There are several factors at play here:
1. The passage of Bill 41, which later became ordinance 22-7 took the minimum rental period on Oahu from 30 days to 90 days. Prior to that, Bill 89 on Oahu gave the city some teeth to enforce the law on the books of 30 day min on rentals. Up until that point, there are been tons of properties all over the North Shore of Oahu (both homes and condos), where people were renting out their properties short term. What we've seen with these recent laws is investors flocking to the "legal" short term rentals.
2. The recent renovations of the Turtle Bay Hotel in 2021. The Blackstone Group bought the hotel in 2018 and pumped over $70 million in to upgrading the hotel. They also recently cancelled some long term agreements where owners of the Ocean Villas condos could use certain hotel amenities if they went with a certain property management company. Some thought the value of the condos would go down by severing that relationship. Well, it turns out to be quite the contrary as there's still a huge demand for the Ocean Villa condos as seen above.
Where Will Prices Go from Here?
Just this past week, a federal judge has stopped the city from enforcing ordinance 22-7, which prohibits 30-89 day rentals. It will be interesting to see if this law gets overturned as it takes away people's property rights and was in direct conflict with the landlord tenant code. With all that aside, we didn't really see a huge spike of condo prices in town for legal vacation rentals with the exception of a few buildings. I don't foresee prices coming down overnight at Turtle Bay because there's just a finite amount of real estate there. What's also wild, is we haven't even hit winter yet, which typically shows an uptick in buyer traffic.
One thing I'll be some money on is prices can't continue to appreciate the way they have over this past year or two. It is just not sustainable to have 30-50% appreciation year over year... If you own a condo at Turtle Bay, however this might not be a bad time to sell. Feel free to contact me for a confidential conversation.