According to noted economist, Paul Brewbaker, “If Maui real estate prices haven’t already hit bottom, they’re not going to get much lower.”
He further stated that it wasn’t worth looking for the last 5 dollars, and if you want a bargain, the time to act is now.
In addition, even if prices do drop further, the likelihood is that interest rates will more than offset any possible savings for those who are financing their purchases.
The uptick in housing prices in California, fortells an uptick here, as Maui closely follows the trends in California; although normally with a lag time. Read the full article.
Next week, we will put up a link to the video, so you can see for yourself the data which Mr. Brewbaker is using for his forecast.
Have a wonderful week!
Mahalo Nui Loa,
The Smith Team
P.S. Ho’onanea at Lahaina is a brand new D.R. Horton project with terrific pre-construction pricing. Here are three representative Listings.
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Maui County is the collection of 4 separate islands in the state of Hawaii: Lana’i, Kaho’olawe, Moloka’i, and of course Hawaii’s second largest island Maui. The region is known for stunning landscapes and tropical weather and as such has become one of the top tourist destinations in the United States. Recently, real estate in Maui has begun to see a resurgence and if you’re interested in Maui properties, the Smith Team can give you valuable insight into different regions on the islands.
Sub-regions
Maui is divided into several distinct sub-regions that are defined by major geographic features like mountains or valleys. Generally speaking, each region is met with a unique climate and these regions can be broken down crudely as follows:
- Windward lowlands
- Leeward lowlands
- Interior lowlands
- Leeward High-altitude mountain slopes
- Leeward Low-altitude mountain slopes
- High mountains
Climate
As with all the Hawaiian Islands, Maui’s climate is defined by a two season year. Most of the regions throughout Maui will have mild, consistent weather patterns characterized by warm temperatures and high humidity. However, geographical idiosyncrasies in Maui allow for much more variability in weather patterns than other Hawaiian Islands and rainfall, cloud cover, and winds can differ markedly across regions. Indeed, more than any other of the Hawaiian Islands, Maui’s weather is influenced by marine environments. Weather patterns tend to be determined by elevation and the effect of trade winds and because of the rugged topography of Maui weather patterns are highly variable.
Since the climate in Maui is dependant on the geography, we see patterns emerging in each of Maui’s distinct sub-regions. In the windward lowlands, which are generally below 2,000 feet and located on the north and north-east sides of an island, the weather is moderately rainy as the trade winds bring showers. It’s not uncommon to see overcast skies and temperatures tend to be very consistent.
In the leeward lowlands temperatures during the day are slightly higher while evening temperatures are cooler, on average. For the most part, the weather is dry but it is not uncommon to see periodic rain showers that follow the wind patterns. The interior lowlands are marked by more variable weather and this region will share weather patterns with other lowland sub-regions. Strong afternoon showers and hot afternoon weather is quite common.
The highest rainfall averages come in the leeward high-altitude mountain slope regions. Cloud cover is predominant and extensive rainfall is observed year round. The temperature is usually quite mild while humidity is relatively high. On the leeward low-altitude mountain slope side there is also more rainfall but less than on the windward side. Higher temperatures and cloud cover are also common.
Finally, the high mountains of Maui exceed 3,000 feet and as your elevation increases, rainfall decreases quite rapidly. Relative humidity is fairly low but you also see the lowest temperatures in Hawaii. In fact, air temperatures can drop below zero.
Throughout Maui, rainfall is much more common than you would expect. Nevertheless, showers tend to be light and they don’t last long. Thunder and lightening are very rare and during the summer we see dryer weather due to the dominant trade winds.
Economy
In Maui, there are two predominant industries: agriculture and tourism. In recent years, the government has been trying to encourage technology companies to invest in Maui because its business environment is ideal for expansion in such industries. Still, coffee, macadamia nuts, papaya, tropical flowers, pineapple, and sugar are the major exports of Hawaii and this holds true for Maui as well. Maui Land & Pineapple Company and Hawaiian Commercial and Sugar Company are the major agricultural players in Maui. Some 37,000 acres of sugarcane are produced by Hawaiian Commercial and Sugar Company making it the largest operation of its kind in Hawaii. In addition, Maui has become an important location for space research and is home to advanced satellite tracking facilities as well as research and development facilities that are world renowned for data collection and communication support.
As of March 2009, the unemployment rate spiked to a staggering 9% due to growing economic concerns throughout the country and the world. However, over the past several months the island has seen dramatic improvements in industry that suggest unemployment rates will start falling very soon.
Tourism
Tourism is obviously one of the leading industries on the island. The major tourist destinations in Maui include Hana, Lahaina, and Haleakala National Park. Maui is blessed with curving roads, soaring mountains, black sand beaches, and luxurious waterfalls making it a dream spot for any tourist. Visitors tend to congregate around West and South Maui and 2004 figures show 2,207,826 people visiting Maui. By far, domestic tourists make up the bulk of visitors to the island but there is also a thriving cruise ship industry.
Maui Landsat satellite photo source: [1]
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The past couple of years have marked trying times in the state of Hawaii but many will be happy to hear that leading economists are pointing to early signs of recovery. The University of Hawaii Economic Research Organization announced that despite low visitor figures, Hawaii is on the path to recovery.
As the tourist industry continues to slump, experts from the University are predicting a 2.9 per cent gain in arrivals for 2010 along with improvements in gross domestic product (GDP). Indeed, figures for Hawaiian GDP call for a contraction of about negative 0.2 per cent this year but point out that this is actually an improvement on the 1.3 per cent contraction that was estimated for 2008. Likewise, 2009 saw a GDP contraction of 0.4 per cent so while economists are cautiously optimistic there are early signs of improvement. Moreover, by 2011 these same economists predict GDP growth of 0.5 per cent.
The past year has certainly been a turning point for many businesses in Hawaii. The mostly unexpected economic downturn has prevented development and wreaked havoc with the tourism industry. Yet, as world and national economic conditions continue to improve, leading economists see bright things for the future of the Hawaiian tourism industry. At the moment, Hawaii is still suffering from serious state budget woes and job loss statistics whose impact is just starting to be felt.
Still, the University of Hawaii Economic Research Organization sees improvement in jobs figures in the near future. This year may see continued job losses, up to about 0.8 per cent, but as tourism improves the main job sources in Hawaii (retail, the visitor industry, and government) will see more jobs returning to the market. And while noticeable increases in jobs isn’t forecasted until 2011, visitor spending, construction employment, and building permits all seem to be recovering suggesting more future jobs.
Even inflation has been halted by the struggling economy, but the University is expecting a slight bump in inflation this year.
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A line of around 400 formed outside the Whole Foods Market which had its grand opening in the Maui Mall on February 24th. Shoppers seemed impressed by the variety, quality, and affordability of the nations leading organic supermarket. Customers raved about the freshness of everything from fruit and vegetables to prepared desserts, cupcakes, tarts, and pies.
Various food samples provided customers with ample opportunity to judge the quality of the goods on offer. One particularly popular item was a strawberry shortcake retailing for $17.99. Asked about the prices, customers admitted that they’d expect to pay nearly the same at other big name supermarkets like Safeway.
Nevertheless, not all the reviews were glowing. Some customers complained that they couldn’t find what they had come looking for, especially when it came to more exotic fare. While some of these items may have sold out quickly, others may not be available. Yet, the variety of fresh produce, meats, seafood, and organic goods was enough to keep most shoppers happy.
Some prices at the Whole Foods Market were even considerably lower. Take Synergy drinks which are often sold between $5.50 and $6.50 per bottle around the island were going for $4.49 at Whole Foods. Some customers were skeptical that prices may have been lowered for the grand opening, to entice customers to make a return visit.
The new store at Kahului is actually the second Whole Foods location in Hawaii. The first store opened in 2008 on Oahu and another store is expected to open in the fall of 2001 in Kailua, Oahu.
The Maui Mall store is at the same location where locals found the Star Market. Whole Foods represents 26,366 square feet of organic shopping and employs around 140 people. What locals will be happy to hear is that of the 205 Hawaiian suppliers, 60 of them are from Maui. Clearly, Whole Foods puts an emphasis on local produce, seafood, and other goods.
The store management must have been happy with their first day considering several hundred waited in line to get in. The support for local farmers and the variety of products available likely attracted the crowds.
To get an idea of the variety, you could find 16 brands of yogurt of different types from organic, rice, sheep milk, and even goat milk yogurt. The more carnivorous of us could find prepared baby back ribs, boneless pork chops, turkey sausage and other organic products. Customers were also greeted with seafood and salad bars and a wide selection of olives and more. Prices also compared to other supermarkets.
There were even a large number of prepared or ready to cook meals including meats, pizza, sandwiches, salads, and desserts. You’d find Mexican, Japanese, and European cuisine alongside a coffee bar with all the fixings. Staff members were helpful and ready to serve.
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During the recent recession, affordable housing has become a major concern of local councils. Maui County Council members therefore have been working toward changing the county’s residential work force housing guidelines in order to encourage more development of affordable housing. Members will continue to tinker with the policy which was originally written in 2006 to ensure that as luxury properties were developed so would be affordable housing projects.
Unfortunately, the economy’s recent nose dive hasn’t helped matters much and in its entire life span, this affordable housing policy has only been applied to three housing projects. Many are pointing to these facts as proof that the ordinance isn’t getting the job done. On the other hand, supporters of the ordinance are quick to mention the fact that the poor economy is stalling all new housing projects, not just affordable housing projects. With nobody building due to the recession, little has been done to ensure affordable housing for county residents.
Regardless, something needs to be done to kick start the fledgling construction industry and most people are looking to the government to take the necessary steps to provide housing opportunities for Maui residents. As such, the local government is taking the first steps to revising this ineffective policy.
In their efforts, the city council is reducing the number of affordable homes that must be developed in a new sub-division with five or more homes. Indeed, the first draft of the new ordinance calls for only 25 per cent of new homes in a development to fall into the category of “affordable.” Previously, 40 per cent of new homes in a development were required to be affordable options. If the new ordinance passes, County Council suggests that it apply only to projects in which the houses are expected to bring in $600,000 or less in the open market.
Last year, the average single-family home in Maui sold for around $720,000. With regards to the existing law, when a developer works on a project with market rate homes starting at more than $600,000 at least 50% of these properties are required to be affordable.
Essentially, changes to the affordable housing policy are being lobbied for by local developers and contractors. Hoping for the limit on affordable homes to be lowered to 15%, developers are arguing that the county needs to do something to get construction back on track. New construction will provide new jobs as well as affordable homes.
However, not everybody agrees with these changes. Non-profit organizations and charity groups would prefer a higher threshold, perhaps 30 per cent. As you can see, the county is faced with the challenge of making a compromise. The county needs to take the necessary steps to increase construction but without giving developers the opportunity to take advantage of any loop holes and create neighborhoods only for the wealthiest members of society.
There are also problems with the language of the ordinance that makes it difficult to understand. When a developer works on a project of 100 homes, they can build the affordable homes either “on-site” or “off-site” and this changes the requirement for affordable homes. At the moment, a company can build 100 luxury homes and then have the choice to build either 25 affordable homes at the same site or 40 affordable homes at another site in the same planning district. Local groups want the requirement for off-site affordable homes to be raised to 50 per cent. But some locals are concerned that these kinds of laws will lead to class segregation where luxury homes would be built in one neighborhood and affordable homes in another. The idea of homogenous neighborhoods is a concern because of the difference in community services often seen in neighborhoods of varying wealth.
Nevertheless, the county voted 5-0 in favor of the current ordinance changes and the mayor gives them full support. Over the past year, developers and real estate representatives alike have been submitting proposed changes to this work force housing policy as they want to lift deed restrictions and get rid of a companion law that would force developers to provide their own water sources.
Approximately 3,100 homes have been proposed since the work force housing policy was passed but some of these projects are still in the planning phases while others have lost funding or are hoping for the market to improve before they proceed. Other changes that might be accompanying the housing ordinance are geared to encourage development of affordable housing while preventing owners from selling these affordable homes at market rates.
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Years after the last housing boom, Hawaiians are still paying too much for rent. However, things are starting to change and the slowed real estate market is encouraging landlords to decrease their rents. Indeed, for the first time in more than a decade, property managers and landlords are looking for new ways to fill vacancies which could mean anything from free parking to lower rents for tenants.
Even urban properties throughout Hawaii are seeing lower rents encouraging suburban and rural renters to make the move to the city; a move they couldn’t afford in the past. Without question, we’re seeing more of a renters market throughout Hawaii and this is giving more power to the tenants. They’re in a position to ask for lower rents or property improvements for the first time in a very long time.
Landlords have been suffering from very long waits to fill vacancies which is why many are lowering rents by as much as $100 or more in order to fill the vacancy or to encourage current tenants to stay. Whereas many renters in the past expected to pay as much as $1,025 for a studio, many one-bedroom apartments are available for as low as $800 in some places.
Indeed, many renters are looking for lower monthly payments so they can start saving for a mortgage or other big purchase. And landlord urgency to fill apartments is only helping renters secure better deals. Many stories are floating around about people who are looking to move in a month or two only to have property managers request that they move in sooner.
There are so many rental properties available right now that it’s hard to imagine anybody not finding a place that suits their budget. Yet Hawaii’s rental market is much stronger than those on the Mainland. Some properties that have fallen victim to the housing collapse remain empty for months at a time. Landlords are resorting to gimmicks and other offers to attract renters. You can expect anything from slashed rental rates to free gift cards and even major renovations.
Unfortunately, this renters market is ameliorated by the economic situation faced by many potential renters. They are often facing difficult times as employment figures continue to drop and companies cut salaries and hours. As such, lower housing costs aren’t making a major difference in their economic picture. In fact, much of the reason for increased vacancies is the fact that many renters cannot afford to go it alone anymore. This means renters are downsizing or doubling up to share the cost of living and as a result there is an increase in the number of vacancies.
At the moment, experts are predicting further decline in rental prices throughout the United States. High unemployment and little hope for economic recovery suggest that rents will stagnate well into 2010 and further drops have not been ruled out. The average asking price for apartment rentals fell 12 per cent in 2009 while the asking rent for homes dropped 4.7 per cent and townhouses fell about 2.7 per cent.
Still, let’s keep these rental prices in perspective. Despite lowering costs, Hawaii is still one of the most expensive states in which to rent and we’re in desperate need of affordable housing. The average rent in Hawaii was actually the highest in the country and more than half of renters spend more than 30 per cent of their income on housing. Surprisingly, more than 40 per cent of Hawaiian residents are renters and as such they are welcoming the news of lower rents.
Declining rents are a definite boon for renters and low-income families. Some renters even have the opportunity to negotiate cheaper rents which has been unheard of in the last couple of years. And more importantly, landlords are willing to drop their rents. Unfortunately, many o f these negotiations are the result of less income for the renters – lost jobs, cut wages, or fewer hours have made economic responsibilities harder to meet and the only option for many is to cut living costs.
For the first time, Hawaii tenants are in a highly favorable bargaining position. New appliances, upgrades, carpeting, and other renovations are a few of the perks to this troublesome housing market. Landlords don’t want to lose tenants so are willing to make some compromises that they might not have been willing to make in the previous housing market.
But these lower rents don’t equate to more affordable housing. Policy makers and local councils need to be aware of the lack of affordable housing for low- and middle-income families and these drops in rent are not being seen by people in these income groups. So although rental prices are dropping, this is not affecting the neediest people in Hawaii and the government still needs to work toward providing affordable options.
Photo Credit: jessicafm
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As chosen by Conde Nast Traveler, Maui was named the Best Island in the World for the 12th straight year and the 15th time overall. Indeed, not only was Maui chosen as the best island but also the Top Travel Destination by voters at Conde Nast Travel. Obviously Maui offers a wealth of natural beauty including stunning beaches with pristine waters, volcanic peaks reaching to clear blue skies, and deeply cut valleys that caress windswept shorelines. These diverse landscapes in combination with the dynamic Maui communities which feature award winning restaurants, first-rate shopping, luxury accommodations, and world-class golf resorts surely constitute the main factors in selecting Maui as the world’s best island.
From an economic perspective, such recognition is certainly a boost for Maui residents. With the real estate market facing difficult times and jobs numbers in disarray, the award not only acknowledges the outstanding efforts of Maui’s visitor industry to offer nothing but the best to island guests but should also serve as an economic motivator to help preserve and sustain the island’s tourism sector. Of course, Maui is generally considered the perennial favorite for this award but winning for the 12th consecutive year was not considered a given. The Pacific Ocean is home to most of the world’s most naturally spectacular islands and competition for the World’s Best Island was considerable.
Similarly, for the first time, several Maui resorts held the top positions in the “Top Hawaii Resorts” category. In fact, four of the top five Hawaii resorts; the Four Seasons Resort Maui at Wailea (ranked 1st), the Four Seasons at Lana’i, the Lodge at Koele (ranked 3rd), Hotel Hana-Maui and Honua Spa (ranked 4th), and the Four Seasons at Lana’I, the Manele Bay (ranked 5th); were all located in the Maui region.
These awards position Maui as the premier world island destination. Not only is Maui the top island choice among the Pacific Islands but also stands head and shoulders above similar travel spots around the world.
Photo Credit: Chris Taleye
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- Oct
- 16
Kihei Real Estate
Although historically known for its dry, hot days, Kihei is a Maui community located southwest of Haleakala on the coast. The traditional Hawaiian name for the region highlights its more barren aspects but despite dusty days and less than 13 inches of annual rainfall, Kihei has much more to offer than one might expect. In the early 20th century, a small settlement of around 350 came to Kihei in order to establish a sugar plantation, an effort met with little success. No paved roads and little economic potential meant that Kihei remained relatively uninhabited until the 1960s when plumbing finally reached the community. Before then there were a few beach plots but generally speaking Kihei property was cheap and few ventured to the area. With water came developers and the chance to attract the tourist dollar. During the 1970s the development plan in Kihei was muddled at best and condominium units sprang up along with shopping centers and strip malls.
Despite the lack of planning, these shopping locations were the first draw to modern tourists. The opportunity to purchase inexpensive goods and find cheap accommodation brought the first flood of tourism to the community. At the moment, Kihei maintains its 70s appeal and with a collection of condos, rentals, timeshares, and small hotels, the community has become a thriving beach town. Still, aside from tourism, the region represents a great place to live. Because of the tourism draw, Kihei has developed an infrastructure that supports a diverse community. In addition, as the town is surrounded by beaches it is the ideal location for individuals looking for vacation or retirement homes. Shops, restaurants, schools, and other facilities make this a small but flourishing ocean-side community.
Indeed, the beaches are the central draw for tourists and residents alike. Several beaches stretch out from either side of the town and because of the quaintness of Kihei you’ll find that the beaches are much more sparsely populated than other Maui beaches. Take the Kalama Beach Park as an example of the natural beauty of Kihei. Well-maintained lawns shaded by palm trees and 36 acres of oceanfront land make Kalama Beach Park the community’s focal point. Musical festivals, craft fairs, and family events are regularly held in the park. As you can see, Kihei is a tight-knit community that is ideal for anybody who loves the ocean.
Real estate development in the region is also starting to boom. As a community with a bit to offer any appetite it’s no wonder home buyers and real estate investors alike are turning their attention to Kihei. Nature lovers are drawn to the beautiful parks, beaches, wildlife conservations, and premium diving opportunities. Shoppers will love the strip malls and shopping centers. Boating aficionados will enjoy fishing expeditions, snorkelling trips, and whale watching excursions. Indeed, anybody who loves sport and the outdoors will be happy to learn that Kihei offers world class golf, surf, fishing, and wildlife sightings. All together the activities, sunshine, and amenities in Kihei make it a great place to call home. Plus, as Kihei is still a relatively isolated community, home buyers will find some of the best deals in Maui.
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With the economic troubles that have plagued the nation lately, people are being more frugal and spending less. This means that many families and individuals are cutting back on luxuries and extras such as vacations. For a tourism hub like Hawaii, that’s definitely not good news. While economists have previously predicted a downturn for Hawaii’s visitor industry, the University of Hawaii Economic Research Organization now estimates that it will take a number of years before visitor numbers return to their past high levels.
This forecast has resulted from a combination of a loss of interisland cruise ships as well as significantly reduced consumer spending across the country. While the impact of this downturn is expected to result in only a modest decline of total jobs on Oahu, areas such as Maui County which are more dependent on the tourism industry will likely experience a greater negative effect. For instance, economists are expecting a 6 per cent decrease in jobs in the service and lodging industries in both Maui County and Kauai County. The Maui construction industry is also expected to be one of the most negatively affected sectors. Overall, Maui County is expected to experience total job losses of 4.4 per cent.
Of course, there are other factors which could influence the above economical predictions. Most notably, the impact that the swine flu will have on Hawaii’s tourism industry remains uncertain. Past experience with the SARS virus has shown that an epidemic in Asia can have a significant effect on Hawaii. However, economists say that it is still too early to determine exactly what impact the swine flu will have on Hawaiian tourism and economics.
Despite all of the bad news, however, there is still reason for hope. Certain sectors of the Hawaiian economy, such as health care and social assistance, are still expanding. Also, while it’s believed that visitor numbers will take several years to fully recover, the downturn is expected to stabilize before the end of the year. This means that it may not be too long before we start to see the situation beginning to move back in the right direction.
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