Maui Real Estate

Jan: 30

2008 Sees a Dramatic Drop in Maui Real Estate Sales

In Maui real estate sales figures declined significantly in 2008 and short sales became uncharacteristically common. A short sale is one in which the seller does not expect to receive the full mortgage value for his/her house. As such, lenders must be prepared to release a lien knowing they will not get a full repayment.

Maui real estate had always been quite lucrative and resilient seeing as much as 25 per cent growth in a year. However, such gains have been all but lost except in a few places like Kula. The large condominium projects in Kihei Villages are representative of the market in general and huge price drops as well as short or distressed sales are becoming the norm. Developers are being forced to slash their asking prices across the board.

When reviewing year-end sales statistics from the association’s Maui Multiple Listings Service, the numbers are misleading. Average prices for single-family houses look to have dropped a mere 10 per cent while condo prices have actually risen 13 per cent. While on the Mainland, real estate prices are arguably crashing, the real estate market here appears to be sleeping. The total number of sales has dropped considerably compared to 2007 as there has been a 21 per cent drop for single-family homes and 34 per cent drop for condos.

When contrasted against the 2005 peak in the real estate market, especially for condos, these drops are shocking. In that year, there were 2,050 condo closings which dropped to 1, 187 in 2007 and a mere 788 in 2008. Similarly, single-family sales peaked at 1,136 in 2005 down slightly to 1,142 in 2007 and only 907 in 2008.

Similarly, the median price of a single-family dwelling in Maui County has come down significantly from $630,069 in 2007 to $577,867 in 2008.

However, some real estate experts warn that since Maui is such a small real estate market, housing averages can be easily impacted by a few high or low sales and this appears to be the main impetus for the drop in 2008. A large fraction of closings in 2008 were at subsidized prices, far below the island averages. Spencer Homes’ at Waikapu Gardens accounted for a great number of these closings.

All this change points to a buyer’s market. And for those buyers who purchased homes or condos before the 2005 peak, they should not expect to lose much, if any, on their homes. Reasonably priced homes will sell relatively easily.

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Jan: 19

New Legislation Opens Door to B&Bs in Maui Island

A recent article in the Maui News (Tavares puts signature on new B&B bill, January 8, 2009) details some of the changes Maui residents can expect to see with regards to permits for bed-and-breakfasts. In order to relieve the constraints faced by owners seeking B&B permits, the new legislation not only expands the area where B&B permits are allowed but also limits the number of permits given in each district.

Controversy had been brewing over the past several years as home owners and business operators are not easily appeased. According to the Maui News article, B&Bs are “short-term rentals allowed in a home or room on a property on which the owner-operator is living full time.” While another type of vacation rental known as transient vacation rentals “are short-term rentals in homes or condominium units in which the owner does not live on the property.” Before this new legislation, home owners complained that various unpermitted short-term rentals in their neighborhoods were disruptive. On the other hand, vacation rental operators argued that B&Bs and transient vacation rentals filled a necessary void in the visitor market.

Until now, the Maui council had been allowing B&B permits after thorough applications and public hearings. Moreover, since the early part of 2007, the council began to crack down on unpermitted vacation rentals which lead to a greater need to solve these legislative woes. As a result, the new legislation appears to remove some of the red tape involved with applying for B&B permits and allows these permits not only in hotel zones but in residential, business, rural, and agricultural zones as well.

These changes were meant to reflect a cooperative agreement between the council, business owners, and home owners in order to increase the number of overall permits available and reduce the number of unpermitted vacation rentals. Tavares is quoted as saying “This new law reflects the wishes of our community through the correct process of legislation. Council members, department staff and members of the public worked hard to find a way to help businesses, comply with community plans and remain mindful of concerns of neighborhoods that would be impacted by a bed-and-breakfast operation.”

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