Despite all signs that a disaster is on the horizon for the housing market in Maui, the Maui County Council are diverting affordable housing funds to an ill-conceived affordable rental project. While recognizing that something must be done to provide families with affordable housing, the Council and county administration are essentially ignoring the signs of a massive foreclosure crisis and are doing little toward helping families get into new homes.
The Realtors Association of Maui is clear in predicting an onslaught of foreclosures like never seen before in Maui. Currently, Maui has the highest foreclosure rate in Hawaii which also overshadows the national average and experts in real estate warn that these terrifying trends will likely continue for another year or more. There are 444 pending foreclosures in the next quarter alone, not to mention the hundreds of homeowners who have already experienced foreclosure.
Perhaps one of the overlooked consequences of foreclosure is the effect of empty homes. Without question, the loss of a home is plenty devastating for the family involved but the effects of vacant homes on neighborhoods is equally devastating. Property values in said neighborhoods can drop by as much as 40 or 50 per cent which also means a loss of revenue for the county. Unfortunately, instead of using their resources to deal with this issue, the county looks to be assigning funds to solve the problem of affordable rentals. Real estate experts worry that the problem of affordable rentals is here to stay while the county still has some time to tackle the issue of foreclosures.
The council has fast-tracked the allocation of$ 2.75 million toward the development of a 28-unit rental facility. While the Real Estate Association of Maui typically supports projects that bring about affordable rentals, they see a number of problems with this current project. For example, the construction price runs to $464,285 per unit at a building in Wailuku. In addition, DBR Development LLC, the winning bidder for the project, is a California company while several qualified local firms were bypassed. Finally, the excess of rentals on the market now suggest that rental prices will drop naturally and investments should be directed toward the foreclosure crisis.
However, the main concern is not the cost, construction, or appropriateness of the project but the fact that these units will not be ready for tenants for 3 years. On the other hand, the problem with foreclosures is very much in the present. Some nonprofit organizations are taking matters into their own hands. Na Hale O Maui is planning to buy several foreclosed homes for around $350,000 and then sell them to low income Maui Families for around $200,000. Moreover, these homes would be sold with restrictions of further increases in price meaning that they will continue to be affordable in the long term. In consequence, families who are currently renting would move into their new home leaving more rental properties unoccupied. Na Hale would be able to finance 30 homes using county funds leading to further stability in our dubious real estate market.
With all the evidence under consideration, the Real Estate Association of Maui seems clear in its recommendations. The impending foreclosures in Maui are guaranteed to bring stress to families throughout the island as well as having a direct negative impact on the economy and county revenues. As property values continue to fall, the county and local government could face its own serious financial problems causing budget deficits and likely future layoffs. On the other hand, investing in foreclosed homes and creating affordable options for buyers will bring the kind of stability to the market that can have a positive impact on the economy as well. The Na Hale project brings opportunity in the face of disaster.
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Are you looking for a brand new luxury home in an exclusive gated Golf Course Community in South Maui? Look no further!
For a limited time, the next 5 buyers will receive a $200,000 discount off the List Price at Hokulani Golf Villas. With prices starting at $989K, this works out to a discount of approximately 20%.
Call us for a personal viewing, or check out this Video Tour of the project as well as Virtual Tours for the following 3 models: House 1, House 2, and House 3. There are no better values for homes of this quality in this type of setting.
One out of every 5 new pending sales on Maui is an REO (Bank Owned) property. Because this is a such an important segment of the market, we are now including newly listed REO’s as well as price reductions on existing listings that occurred since our last publication.
As a heads up, we just listed an REO home at 122 Honuhula Place in North Kihei last week. This five year old, 2136 sq. ft. 3 bedroom 2.5 bath home with attached 1 bedroom ohana, has central a/c, granite counters in kitchen and bathrooms, Jacuzzi Tub, wood laminate flooring, and more. At $506,900, we expect it will sell very quickly. Click here for more details.
Mahalo Nui Loa,
The Smith Team
P.S. For a complete list of REO’s and Short Sales, please subscribe to our Weekly Newsletter.
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The Maui Planning Commission held an open meeting for West Maui residents at the Lahaina Civic Center in order to discuss the current Maui Island Plan. Essentially, two developments were the topic of discussion: the anticipated new town at Olowalu and the Maui Land & Pineapple’s staff-housing project at Pulelehua. Indeed, these projects have been the topic of hot debate as some residents are concerned about the size of the projects. Unlike other projects which have received little attention, like the development of Wainee and Kaanapali 2020, hundreds of residents came out to Lahaina to discuss the possible addition of 5 to 6 thousand new homes in West Maui over the next 2 decades.
While the projects are designed to keep up with population growth, many West Maui natives are concerned about excess development as the island may not be a sustainable locale for such expansion. The Maui Island Plan, as it is commonly known, may tax existing infrastructure making highways, beaches, parks, and schools overburdened. Currently, many of these infrastructure issues are already causing a stir as some classes are required to meet in make-shift buildings and even now traffic is a major concern of residents. Protesters to the development argue that the addition of 6,000 new homes would be far too much for the community to handle. Commissioners are being asked to consider the impact of this development on jobs, traffic, schools, and other community resources.
Other residents are looking for protection in their own communities. For example, Honolua home owners do not want more development in their area and are asking for the urban-growth border to end at Kaanapali making a distinct division between developed and undeveloped areas. The marine environment seems to be one of the leading factors with regards to this development. As it stands, certain areas of Honolua are under a great deal of stress and urbanization needs to be limited in order to protect marine life. Meanwhile, representatives from the Maui Pineapple Co. argue that Honolua is a fertile agricultural area that can support a number of diversified crops. Protecting agricultural lands also appears to be a major issue in this debate.
A few testifiers support growth in Kaanapali 2020 as well as the expansion of Wainee in future developments. These projects have continued with participation from the community and developers and would provide much needed low-income housing in areas rich with good schools, parks, jobs, and infrastructure. However, development at Olowalu continues to be one of the most highly debated in the planning process. The project is displaced from existing jobs and located along a very busy highway. As such, infrastructure would clearly need to be further developed to support residence. Residents fear that development will exacerbate problems that are already arising and appear to benefit property owners and developers without considering the effects on residents. In fact, Maui Tomorrow evaluated many proposed projects with regards to location, infrastructure, and affordable housing and the Olowalu project received some of the lowest grades. It is argued that due to a lack of affordable housing and a location that is far from jobs this project will cause far too much stress in the area.
However some residents are supporting the project. Housing and employment would certainly come to the area and some people are frustrated that the Maui Planning Commission is not listening to their needs. Various planners and residents of Olowalu village have long supported the project as they look forward to the employment opportunities that will certainly follow development. The general Plan Advisory Committee has recommended building 1,500 new homes on an area covering roughly 300 acres of Olowalu but the Planning Department appears only willing to allow for the development of a small area, a few businesses, and about 100 new homes.
Like Olowalu, development in Pulelehua has also been the topic of hot debate. County planners were hoping for a development project assigning 280 acres for building about 1,150 new homes while the General Plan Advisory Committee prefers a smaller project allowing 116 acres for 696 new homes. Some buyers have been disturbed by the amount of time it is taking for this project to gain approval. Many developers and residents alike feel this project is long overdue. The need for affordable housing in the area seems to warrant development. Moreover, the infrastructure is much better in the area. The development is near existing jobs which would reduce the amount of commuting and could possibly improve some poor traffic areas. Also, developers have been discouraged from making their case. While the Maui Planning Commission organized a meeting specifically for developers to present their ideas, they also asked developers to avoid future Planning Commission meetings.
The Maui Planning Commission will continue toward a final decision in the matters of Olowalu and Pulelehua developments but it seems both sides of the issue are not confident that their concerns have been heard.
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- Aug
- 13
Predicting the Market Bottom
There is still controversy about whether or not the latest real estate market data is signalling a bottom to the market.
The naysayers point to the increasing delinquency rate on Alt A and Prime Loans as an indication that we will see a new wave of foreclosures and further declines in prices.
Those who feel the market has already bottomed or soon will, point to the increased sales and drop in inventory.
Who is right? We wish we had a crystal ball and could tell you for certain where prices will be in a year or two from now. Unfortunately, our crystal ball is rather cloudy at this time.
What we can tell you is that timing market bottoms is nearly impossible to do. In some cases, prices have already dropped by 50% or more. Are you willing to risk waiting in the hopes that you’ll be able to get another 10 or 15% in savings?
Look ahead 5 to 10 years from now, and ask yourself where prices will be. When you put it into perspective, you will probably feel, as we do, that the risks of missing the boat are far greater than the downside risk at this time.
Mahalo Nui Loa,
Ken Smith R (S)
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U.S. new home sales posted their biggest monthly gain in eight years in June (Up 11% from May), suggesting the housing market may be starting to recover from its worst slump since the Great Depression of the 1930s. Despite the large increase, sales levels are still much lower than a year ago and prices are still declining in most areas of the Country. Read more.
One of the factors leading to the increase in sales is the “Homebuyer’s Tax Credit” of up to $8000. If you or your spouse have not owned a home within the last 3 years, you may be eligible for this credit provided you meet certain income requirements and the home will be occupied as your principal residence. You must close on your purchase by December 1, 2009 in order to be eligible for this tax credit, so time is running is out. Read more.
In addition to the Homebuyer’s Tax Credit, foreclosures are also a major factor stimulating sales. Here is a list of the 80 bank owned (REO’s) properties that are currently for sale on Maui. We will soon be listing a home and cottage in Pukalani, a large 5 bedroom home in Kihei, and a 2 bedroom condo at Southpointe. Call or e-mail us for more details.
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