Snorkelling, swimming, surfing and suntanning aren’t the only reasons Canadians visit Hawaii these days.

They’re saying aloha to condos and homes that have plummeted in price as much as 60 per cent since January 2008, while the Canuck buck soars. Why buy a cottage on a lake in Canada when you can be on a beach with gardenia-scented breezes?

“What’s really driving the market is foreclosures,” says Re/Max Resort Realty’s Howard Dinits, who lives on Maui.

“Many island properties here were bought as second homes by speculators in the States. In the economic downturn, people used revenue from these holiday rentals to make payments on their main homes – then they defaulted on the island properties.

“In some areas prices have dropped 40 to 60 per cent and it’s as bad as Phoenix.”

He gets calls and emails from Canadians daily.

“Some are waiting for a bell to ring that says we have hit absolute bottom, ” he jokes. “Others have pulled the trigger because in Maui we’re having a half-off sale.”

The best values are on the big island, Dinits says.

“In Maui you need two wallets – on Hawaii you can survive on one,” he says. “You can get a nice house on Hawaii today, six blocks from the ocean, for $66, 000. That would be a bank-owned foreclosure, or reo (Real Estate Owned) deal.”

The Hawaiian capital, Honolulu, is on Oahu, where property values declined only 7.1 per cent in the last year thanks to a more stable population and U.S. military base.

While cheaper homes sell fastest, on Maui more than 250 homes sold for over $1.8 million last year. A typical condo now sells for about $250,000, while a typical house is $480,000.

Dinits sold Ottawa businessman David Renfroe, 38, a two-bed, two-bath condo in the Maui town of Lahaina last year for his growing family. “We went over looking for a bank foreclosure,” Renfroe says. “With our strong dollar it seemed like a no-brainer.”

After doing his due diligence, he made a lowball offer and was shocked when he got it. “We paid $245,000 for a condo previously priced at $550,000. We were thrilled.”

He has reserved several months for family and friends and rents it the rest of the time. “It’s been 78 per cent rented, so the cost to us is zero.

“Everybody here is looking at Florida, but there’s hurricanes and 20 per cent unemployment there. I think the Hawaii market will come back quicker.”

Dinits recently sold two oceanfront condos to a Lillooet, B.C. couple: a one- bedroom for $250,000 and a two-bedroom for $300,000. Both are available for vacation rental, which is important, as strata fees (maintenance fees) can be $800 a month.

Another young Canadian family recently bought a vacation home in Lahaina for $245,000. “It’s managed by a company that rents it, cleans it and had it 90 to 100 per cent rented all winter at $195 a night.” The unit was worth $500,000 in 2005.

The best deal he saw recently was a $123,900 condo previously valued at $289, 000. Located at the north end of Kihei, a block from the beach, it had a recent $40,000 renovation and featured two bedrooms, two baths and two parking stalls. “There’s no pool, but it’s a block from the `big’ pool. And strata fees are under $400 because of that,” says Dinits, who closed 67 deals last year.

The most affordable living is in Hilo or Puna, on the lush (rainy) side of Hawaii. Here a three-bedroom, two-bath, 1,200-square-foot home, built five years ago goes for $125,000 to $175,000. Not all neighbourhoods allow vacation rentals, however.

“Raw land sold for $75,000 an acre in Puna in 2008. Today I just sold some for $19,000.”

There are deals at the top end, too. A Lahaina house recently listed for $1. 25 million. Completely remodelled, it has a pool, ocean views, four bedrooms and 2,600 square feet; it was $1.88 million three years ago.

Hawaii has a 10 per cent federal and five per cent state withholding tax to force people to pay the 15 per cent tax on capital gains. It does not apply if a person sells for a loss, or reinvests in more U.S. property.

Dinits doesn’t see prices strengthening any time soon – “I don’t think we’ll see irrational appreciation in the next five years, although Americans do have amnesia.”

Oahu real estate agent Kalama Kim is with Coldwell Banker and specializes in Waikiki, where the median price for a condo is $296,000.

“Canadians now make up 15 per cent of the traffic at open houses and there’s lots of inventory,” says Kim, noting there are 487 condos for sale in the Waikiki area.

Jay MacMillan, of the MacMillan Team in Edmonton, is doing brisk business in Maui these days. He has made three sales this year, in addition to his father, who bought a condo six months ago, and his brother, who bought two. “All of them are cash flowing.”

Strata fees are steep because pools, barbecue areas and lush landscaping are expensive to maintain, “but there is money to be made. Prices have dropped while the rental market is still extremely good – and it is so easy to hop on WestJet and get there. Instead of buying recreational properties on lakes here or in B.C., people are getting places in Maui for the same price.”

He advises buyers to talk to an accountant before buying. “It’s a different country, with different laws and taxes.”

glitwin@timescolonist.com By Grania Litwin

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