Maui Real Estate

As expected and hoped for, the First Time Home Buyer Credit has been extended until April 1, 2010.

Although our temperament has been and still is cautiously optimistic; we are starting to see very positive signs in the Maui real estate market that are leading us to be more bullish about the future.

As a reminder, we have lots of great tools available to help you search the Maui MLS. You can customize your own search, and save it so that you are automatically notified of any new listings matching your criteria. Try it. We know you will like this feature.

Also, in addition to South Maui condos, most West Maui condos now have active links to site maps, virtual tours, comparable sales data, floor plans, etc. This is another great tool that we are happy to make available to all of our subscribers at no charge.

We appreciate your referrals, and look forward to helping you with your next real estate transaction on Maui.

Have a wonderful week.

Mahalo Nui Loa,

The Smith Team

P.S. Are you contemplating buying or selling property outside of Maui? Coldwell Banker is the leading real estate company in the world with the best resources in the industry. Please allow us to refer you to an experienced and knowledgeable professional to help you.

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With interest rates hovering around 5% with zero points, is it any wonder why sales have been improving month after month.

This week’s featured property was once the home of Princess Kapiolani, so it truly is fit for royalty. Of course, you don’t need royal blood, just a couple of million dollars, and this spectacular estate could be yours.

Are you planning a trip to Maui sometime soon? If so, we’d love to hear from you so we can prepare to help you find what you are looking for.

Have a wonderful week.

Mahalo Nui Loa,

The Smith Team

P.S. Many of you have shied away from Short Sales in the past, and rightly so. Things are improving for this asset class, so don’t be afraid to make offers. You might be pleasantly surprised.

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In another devastating blow to the Maui economy, Maui Land & Pineapple Co. (MLP) announced its decision to end production after 97 years of plantation-scale pineapple farming on the island. The trend of pulling out of pineapple farming in Maui is nothing new as major operations like those of Del Monte and Dole relocated operations in the 1980s due to high land and labour costs. MLP, a Kahului-based land, resort, and agricultural holding company, plans to terminate new planting immediately and will cease pineapple harvesting by the end of the year.

Nearly 300 employees are scheduled to be laid-off during this restructuring, news that wasn’t as shocking to staff as expected. Still, while many employees of MLP recognized signs that the company was in financial trouble, many did not expect to lose their jobs so quickly. However, since the company estimates $115 million in losses on its agricultural businesses since 2002, executives point out that they had little choice. They could not continue operations with such staggering losses and despite exhaustive efforts there seemed to be no financially viable options for continuing in the pineapple business.

MLP is engaged in a range of industries other than selling pineapples, including operating golf resorts, vacation rentals, and real estate development, and the current economic climate has hit them hard. A combination of a decline in visitors and slowing real estate markets has negatively impacted operations in such a way that MLP was struggling to climb out of the red. Quarter to quarter losses were sparked, at least in part, by dwindling demand for real estate and required MLP to scaled down their pineapple operations but opportunities to save this portion of their business holdings were extremely limited. Essentially, real estate investment by MLP severely impaired the company as the economy took a sharp dive and the Maui real estate market followed.

Unfortunately the end of MLP in Maui likely will significantly impact the real estate market further. With another 300 citizens forced out of work, rental and sales figures are bound to take another hit. This could therefore lead to even more foreclosures and vacant rental spaces. So while the national economy appears to be on the rise, Maui has faced yet another setback that feeds the vicious cycle of market decline.

Photo Credit: Homies In Heaven

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Checking the stats on Pending Sales, we find that REO’s (Bank Owned Listings) and Short Sales account for approximately 40% of all of new Escrows on Maui. Here is the breakdown.

There are currently 202 Pending Home Sales. Of these, 27 are over $1 Million. In this category, there are no REO’s and only 1 Short Sale. Under $1 Million, there are 42 REO’s and 40 Short Sales.

In the condo market, we see a similar situation. There are 154 Pending Sales of which 8 are over $1 Million with no Short Sales or REO’s. Under $1 Million, there are 13 REO’s and 48 Short Sales in Escrow.

There are still a large number of properties pending foreclosure, so we expect the market to continue to be dominated for at least the next 12 months by REO’s and Short Sales. Nonetheless, we feel that it is a excellent time to take advantage of distressed Sellers and low interest rates.

Have a wonderful week.

Mahalo Nui Loa,

The Smith Team

P.S. Congratulations to all of the Finishers in the 2009 Maui XTERRA Championships held this last Sunday in Wailea and Makena.

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The fall months is normally a transition period where sales fall off, but this year we are running well ahead of last year. In fact, there were as many new escrows for the first half of October 2009 as there were for the full month in 2008.
Given the recent strength of the Canadian dollar vs. the U.S. dollar, we expect to see this giving added impetus to the recent increase in sales. When the snow starts flying, things are going to really heat up on Maui.

Prices will not increase dramatically right away, but we do expect to see a general firming up in prices.

Have a wonderful week.

Mahalo Nui Loa,

The Smith Team

P.S. Only one home left at Hokulani Golf Villas with a $200K seller credit.

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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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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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Wailea is a small community located in Maui that is home to several world class resorts. Boasting year-round sunny weather, superb restaurants, and excellent shopping as well as outdoor activities like golf, surfing, kayaking, and diving; Wailea is not only a great place to visit but a great place to call home as well. Though there were only 5,600 residents as of the 2000 census, the resort qualities of Wailea ensure that it is a dynamic and exciting place to visit with no shortage of amenities.

There are several popular resorts in Wailea that cater to a range of visitors from couples seeking a romantic getaway to families looking for a fun-filled and adventurous vacation. Wailea offers everything you would expect from a Hawaiian destination including pristine waters and extensive sandy beaches which is the main reason why Wailea has become such a popular resort spot. Moreover, when it comes to shopping, there are few resort towns that compare with this jewel of Maui.

The major resorts offer boutique shopping and high-end designs from such famous fashionistas as Louis Vuitton, Fendi, Gucci, and Coach. On the other hand, if you’re looking for local goods and interesting markets, Wailea delivers as well. In fact, Wailea is packed with amenities so whether you’re a “foodie” and you want to find some of Hawaii’s best restaurants or you’re the outdoor type looking for a surfing paradise, Wailea is sure to have a range of activities that suit your personality.

Until recently, Wailea has been seen primarily as a resort town. Most residents work in the tourist industry and the major hotels provide for much of the local economy. Nevertheless, in recent years, real estate development has caught the eye of investors. Because Wailea offers a range of amenities that cater to tourism, it is certainly a place to live. What is often overlooked is the community itself.

The people of Wailea are committed to building a strong and vibrant town with fantastic community facilities like schools, community centers, libraries, and more. In addition, the long term plans for Wailea as one of Hawaii’s premier resort destinations assure that this is a prime location for real estate investment. Not only a lovely place to live, Wailea is also a place that will continue to develop and grow.

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There is a growing consensus that the recession is over. Here are a couple of optimistic reports worth reading.

Getting Back to Normal - The Outlook Continues to Improve

8 Reasons Why (We Believe) the Recession is Over

Of course, not everyone feels the same way, so in the interest of being objective, here is a somewhat contrarian point of view.

More Rough Times Ahead for U.S. Economy, Despite Recent Improvements

What do you think? Are you looking to buy real estate on Maui in the next 6 months, or are you waiting for prices to drop further? We would love to hear from you.

Mahalo Nui Loa,

The Smith Team

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While housing prices in Maui are still not at a level that allows the average island family to buy, just yet, there are some reasons for optimism. For the most part, the average island income is not enough to comfortably buy an average island house, but the University of Hawaii Economic Research Organization is quick to note that the Housing Affordability Index is on the rise. This index is designed to demonstrate how much of an average house an average income can support and a score of 100 indicates that an average family can afford an average house.

Hawaii has always scored lower than 100 on this index. In general, home ownership in Hawaii is lower than other states and while asking prices are falling the index is still reading below 100 in this state. Nevertheless, the index is higher than it has ever been before.

In 2006, Maui County was perhaps the worst region in Hawaii when it comes to affordable housing. With the index reading an abysmal 46.4, many experts would argue that Maui had the most unaffordable housing in the entire country. Last year however, the index topped out at 65.6 and most signs point to further improvement. Similarly, the Honolulu index which has improved dramatically to 64.4 this year is predicted to reach as high as 76.

The reason for the improvement in the index seems is undoubtedly falling housing prices. Most statistics show that the median house price in Maui is falling more rapidly than other regions, like Oahu, and as such we may see the greatest advances in the index here. Unfortunately, the economy is not only negatively impacting the price of homes as evidenced by the fact that annual incomes appear to be dropping off drastically as well. As Oahu is a larger more diversified community, it has not seen the same negative impact on personal income as Maui. Simply put, Maui is a tourism-based economy which is usually immediately affected by international economic turmoil. Unlike Maui, Oahu is home to a wide range of state and government jobs and as such layoffs and cutbacks may have yet taken effect.

Moreover, there is quite a range of buying patterns across Hawaii and these patterns will affect the Housing Affordability Index. For example, while single-family units saw an increase in median price, condo prices continued to fall. So, as the economy begins to regain its foothold and housing prices level off, we may see more affordable options in the Maui region.

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