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Could Maui Real Estate Prices Stabilize in the Coming Months?

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I’m one of those agents who proudly carries the banner of “Be wary of Realtors serving Kool-Aid.”  However, it has been a busy year for The Maui Real Estate Team and we have recently encountered some phenomena worth exploring.

While watching the national press bemoan the real estate markets and warn us all about a second leg down, we have experienced a few situations on both the listing and buy side of late that make me wonder whether Maui will succumb to these same forces.  I am extremely wary of the “Maui is different” mantra that has left many Maui property owners staring at values anywhere from 15% to 50% below their peak values.

So why have we experienced bidding wars on both a luxury Wailea listing on the sell side and an entry level Kihei condotel on the buy side?  I can identify a few “soft factors” such as Maui tends to cater to the extremely affluent, and many of the buyers are feeling good about surviving or thriving through what some think has been the worst of the Great Recession.  The “Looney” or the Canadian Dollar is strong and sending us a lot of buyers, and well, Maui is a pretty damn special place.  In both transactions, the home and the condo were well priced relative to the existing inventory. We can discuss the importance of good pricing in another blog post.

Existing Inventory.  That seems to be the aspect that is changing the market dynamic a bit.  The Maui inventory has been declining for 4 solid months.  Two charts below help illustrate this point.  The first chart  represents single family homes for Kihei, Wailea and Makena separated into quartiles.  The second Chart is for all of Maui County, which I like to utilize for data analysis since it is a larger data set.

Kihei, Wailea & Makena Single Family Home Inventory

Medium Chart

Maui County Single Family Home Inventory

Medium Chart

One could argue that we are simply experiencing the seasonal reduction of inventory that we always see this time of year as Sellers “rest” their listings, preparing to refresh them for the winter season. Transaction volume seems to contradict that. We’ll revisit these inventory charts in January when the Winter selling season is in full swing.

There are many factors which contribute to real estate prices on Maui, and our markets are not all alike.  The central Maui market is currently decimated by foreclosures and short sales.  That being said, the resort markets and higher end areas are showing glimmers of hope. One final thought. I have a hypothesis that the activity in our market heavily correlates to the Dow. I haven’t taken the time to graph it, but anecdotally it appears to have some merit. If the overall economy continues to slow, the stock market falls and we possibly move into a double dip recession as Jan Hatzius and other economists have increased the odds on…All bets are off for stabilizing prices, even on extraordinary Maui!

The Maui Real Estate Team will continue to analyze inventory, and other statistics to help keep you informed whether you are looking to buy or sell Maui Real Estate.  Please don’t hesitate to call or e-mail any of the Team with questions you may have! And keep an eye out for more statistics and charts and a new look. We’ve been very busy with a complete re-design of our website. Watch for a new look coming soon and a slew of additional features over the coming months. We strive to be the best source for Maui Real Estate news and information on the web.


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10/5/2010

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