It is hard to pick up the paper these days without reading about falling real estate prices across the country. In some areas, those decreases in value have created a ripple effect in the mortgage market. Borrowers, who financed with little or no down payment and low initial interest rates, are now facing much higher payments as those adjustable rate loans increase to market rates. And unfortunately, they do not have enough equity to sell the property and pay off their loan, forcing lenders to foreclose in ever larger numbers.

Our local market here on Kauai has not been immune to supply and demand. There are not as many buyers as sellers and this has lengthened time on the market. Interestingly, we have not seen a wholesale drop in values, as has been the case in many markets that enjoyed sharp price run ups over the past two or three years. Statistics comparing all of 2006 with the first eleven months of 2007 reveal some interesting data.

The total number of sales has declined from 1429 to 827, a drop of 43%. That steep drop was lead by condo sales, which were off 56%, due primarily to a drop in the Lihue District; vacant land sales were down 48% and residential home sales were down a modest 12%.

Total sales volume year to date is down 25%. Sales volume has not declined at the same rate as total sales due to the fact that multi-million dollar property sales have not felt the same pinch as the rest of the market.

The most interesting statistic is the median sales price. Year to date that figure stands just shy of a 17% increase. The breakdown by category is residential down 4%; condos up 44%; vacant land up 63%; commercial down 3% and businesses down 16%.

The two categories that had the largest decline in number of sales, condos and vacant land, were the same categories that had the largest increase in median sales price. The logical explanation is that more of the higher priced condos and vacant sold this year compared to last.

The residential category is more reflective of market conditions here on Kauai.The median sales price is down 4% on a 12% drop in the number of sales. And although the median drop in value is 4%, the bottom and middle of the market is seeing more downward pressure on prices than the upper portion of the market.

In the next issue I'll be commenting on the very large amount of inventory that will be coming on the market in Poipu in the next two or three years and what impact I believe that will have on the market in general.