Last week, I posted my unofficial April Maui Real Estate Statistics. I did not allocate much time to discussing the statistics on land transactions. Frankly, Maui land sales have shown very limited activity since mid 2007. There has been only one month between July of 2007 and April of 2010 where there were more than 20 land sales in the county. The one month that exceeded 20 was due to a bulk purchase of lots. While we have not seen any signs of significant changes in sales volume, there is an emerging trend on the Maui land market that merits some discussion.
Like all property classifications, Maui land prices have seen some adjustments. When we initially saw changes to the overall real estate market, land was slower to adjust than other property classifications. It was less impacted by challenges in the mortgage market. There were fewer loans and fewer exotic loans that were applying pressure to sellers. That changed as the duration and extent of the overall economic down turn was revealed. We saw some distressed sales as lots bought for speculative building came on to the market. Sellers needing capital started to adjust prices to attract from the limited pool of land buyers. More recently, we are seeing some significant shifts in land pricing particularly among larger agriculturally zoned parcels. Some larger Maui land owners are starting to shed inventory well below peak market prices.
We have seen the shift in West Maui. The owners of the Makila Ridge agricultural subdivision held an auction earlier this year. The auction featured 20-50+ acre lots with big ocean views. Sales prices ranged from the high $500,000s-mid $700,000s. Comparable lots nearby were selling for over $2,000,000 at the peak of the market.
Along the North Shore of Maui, Alexander and Baldwin recently sold a series of 10-40 acre agriculturally zoned lots with beautiful ocean views. These lots sold from the low $400s to the mid $600,000s. There are lots within the vicinity of the recent sales that fetched almost $2,000,000 towards the peak of the market. A&B recently placed a few other lots on the market in the Haiku area with slightly higher pricing than the recent sales. Two of the four quickly went under contract.
There is currently still quite a bit of fallow agricultural land on Maui that has yet to come on the market. it isn’t entirely clear how much of this land will ever come on the market. If we continue to see more inventory like what we have seen of late, it will pose challenges for some individual sellers. There are still some 2-4 acre agricultural lots listed for prices equal to or greater than these recent larger acreage sales. If these sellers find themselves continuing to compete with offerings from larger land owners, they are going to have to adjust pricing to improve their odds of sales. This is especially the case when you consider the smaller pool of buyers actively in the market for raw land. Limited financing options continue to limit the number of buyers. Buyers who have substantial amounts of cash will find themselves in good position if other acreage opportunities come on the market.