As seems to be the case for much of the country’s real estate market, Maui’s market is still marked by both positive and negative aspects. While some experts are putting positive statements out there, they are typically cautious or modified by somewhat less optimistic follow-ups. The reason behind this mix of good and bad is simply that certain aspects of Maui’s real estate market have begun to improve but others are still lagging behind.
For example, Maui sales volumes are on the rise but such increases have occurred at the expense of sales prices. As compared to the first and second quarters of 2009, Maui has experienced a 64% increase in condominium sales volume so far in 2010. Volume increases of 43% and 42% have also been recorded for residential property sales and vacant land sales respectively. Sales volume increases for West Maui in particular have been 16% for condominiums, 59% for residential properties and 120% for vacant lots.
While those numbers looked at in isolation would suggest a strong improvement for the Maui real estate market, such statistics must be compared to other numbers for a more complete picture. As previously mentioned, the rises in sales volumes have been accompanied by declining sales prices. The median sales price for condominiums dropped 32% for Maui as a whole and 3% for West Maui. There have also been respective declines of 7% and 16% for Maui and West Maui residential properties as well as drops of 31% and 32% for vacant lots.
One of the most predominant characteristics of Maui’s current real estate market is the marked excess in inventory. At the moment, there is more than an eight month supply of both condominiums and residential properties, and more than an 11 month supply of vacant lots. Of course, the number of distressed properties is still remarkably high as well, with a significant reduction unlikely to occur anytime soon due to the backlog of properties in some state of foreclosure.
When taken all together, the above statistics and information can be boiled down to this — for potential homebuyers, now is an excellent time to look for some great deals on the Maui real estate market. With low asking prices and low mortgage rates, there are many opportunities for good real estate investments. For sellers, on the other hand, this is not the best time to put a home on the market, unless the homeowners are truly serious about selling.
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The latest word from economists is that the downward trend that has characterized the Maui real estate market over the past many months should be at its end. It is expected that real estate prices will not drop much further, if at all, and Hawaii as a whole is believed to now be in the wake of the recession. However, even though Maui’s economic climate is not expected to get any worse, recovery will be neither fast nor instantaneous. As one economist stated, Maui’s recovery will be a jobless recovery and it will take time for the positive changes to become evident.
That said, however, economists are warning potential Maui homebuyers that there is not much time left to wait to look for real estate bargains. Those who decide to wait a bit longer to try and save a few more dollars may regret that decision in the long run, as they could end up missing out on the best bargains. A rise in housing prices in California most likely foreshadows a similar trend for Maui, as Maui typically follows in California’s footsteps in such situations. The lack of new housing on Maui’s real estate market is also expected to raise prices as demand will begin to outweigh supply.
Compared with Maui’s rising population, the proportion of new housing projects on the island has been declining at a steady rate. The main reasons for this have been government regulations and the slow response to keeping up with the demand for infrastructure. Such factors are likely to keep the proportion of new housing low in the near future, resulting in an increase in prices for available housing as Maui’s economy enters into the recovery stage.
In other words, while it may not be obvious to the average person and while many homebuyers may still feel cautious, Maui’s economic tide is about to change. And with that change will come the recovery of the local real estate market. That is why now is a good time for homebuyers looking for bargains to get out into the Maui real estate market and make their move.
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The first half of 2010 has brought a marked increase in sales activity in Maui’s residential real estate market. In fact, single-family closings have increased by 42.6% to 422 as compared to the first half of 2009 when there were 296 closings. Condominium closings have experienced an even greater increase, rising 63.6% to 666. However, while sales activity has shot upwards in recent months, the same cannot be said for Maui’s residential real estate prices.
While the average price of a Maui residential home is now $768,866, an increase of 2%, condominium prices are down by 11% to an average of $756,119. Many who are actively involved in Maui’s real estate market believe that the current pricing situation is not likely to improve significantly until the number of distress sales has gone down. As a result of the economic downturn, many homeowners have found themselves in the difficult situation of having mortgages that are more than the current value of their home.
This unfortunately common scenario has lead to a shortage of clean offerings and a high number of short sales. One of the major problems with short sales is the fact that they can be stalled or frustrated when second mortgages are involved. However, many local real estate professionals are now taking steps to become educated on the short sale process which will hopefully lead to better management of such sales and, in turn, market improvement.
Despite the static nature of housing prices, Maui’s real estate market has seen increased turnover in most residential areas, especially in Maui Meadows, a South Maui subdivision where closings have increased from two to 11 in just the past year. Wailea-Makena and Kaanapali have also experienced marked sales increases, with Wailea-Makena’s sales doubling to 18 and Kaanapali’s sales doubling to 12.
While most areas have seen housing prices drop or remain relatively the same, there are some exceptions. Prices for single-family homes in East Maui’s Haiku, for example, have risen 10% to $607,000 and those in West Maui’s Lahaina have increased 8% to $947,000. However, the median price for a Maui single-family home, including the Molokai and Lanai markets, has dropped nearly $35,000 to $469,000, and it is expected that it will still take some time before Maui’s housing prices begin to experience the same strong upward trend as the market’s recent sales activity.
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Here are five smart reasons to buy a home now.
1. Low Mortgage Rates
2. Houses are in move-in condition
3. Terrific houses are coming on the market
4. Appraisal regulations are finally aligned with market realities
5. Plenty of programs
So, if you are looking for a home, please allow us the opportunity to work with you to find the perfect property to match your needs and budget.
As a reminder, you can search all MLS listings from our website. After you have selected your criteria, and done a search, hit Save Search. Then, whenever there is a new listing matching those criteria, you will be automatically notified.
Have a wonderful week!
Mahalo Nui Loa,
The Smith Team
P.S. Ken will be on vacation for 4 weeks beginning August 6th. Follow his exploits on Facebook, or check out his progress during the National Scrabble Championships. He is entered in the Intermediate Division.
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