A decade ago, Palolo Valley was considered one of East Oahu’s most undesirable neighborhoods. With a reputation for gangs, drug activity and violence, single-family home sales in the area remained flat and prices low at $305,000 in 1998. Since then, homes values have ballooned, with the average property selling at $690,000 in 2007.

Today, Kamuki/Palolo is known to be a quiet community, where many dilapidated properties have been transformed into comfortable residences. A mix of immigrant and middleclass families that have lived in the area for generations, characterize residents of this neighborhood.

Current buyers in Kaimuki and Palolo choose this neighborhood for its convenient location, says Prudential Locations Realtor and Partner Russell Nishimoto. “Lots of home buyers purchase the lot with plans to tear down the existing house and rebuild,” says Nishimoto. “These buyers are usually trading up and are seeking a better yard and good location. Their sacrifice is dealing with the older age of homes in this area – you don’t find too many renovations here.”

Another approach – common in Palolo more so than Kaimuki – is buyers purchasing old homes and improving them with large additions to create multigenerational living situations. Larger lots that are level on the Mauka side of Waialae Avenue contribute to this trend.

Nishimoto says because of the age of homes in Kaimuki, and buyers tendency to value the land more than the dwelling, it can take a little longer to market the property to the right buyer. And sellers must know that the market isn’t slowly rising to meet high list prices, which is why Kaimuki has seen some recent reductions in list prices.

Nishimoto often advises buyers not to overlook Palolo – it’s a good alternative to Kaimuki and has a cooler climate with prices still sometimes up to $100,000 lower than comparable properties makai of Waialae.