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Paia Real Estate Market Update May 2016

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The Maui Real Estate Team’s office is based out of the North Shore community of Paia. This small town known for its bohemian feel and proximity to world class water sports has been one of the stronger real estate markets on the island over the last 10-15 years. I wanted to take a look at the Paia Real Estate market and how it is fairing to start 2016. This post looks specifically at Paia and Kuau. It does not include the Spreckelsville neighborhood. If you are interested in that area, check out our recent Spreckelsville Market update. In this post, I wanted to show the general activity in Paia during 2016 with comparisons made to sales activity in 2015. I will also drill down and look at sales activity in certain neighborhoods around Paia.

The map below shows activity in the 2016 Paia Real Estate market. The Red pins represent sales. The yellow pins represent pending sales and the green pins represent active homes. You can click on the individual pins for details on each of the properties.

I have also included a map of the 2015 Paia Real Estate Sales for some context.

While the maps give you a visual reference as to what has been happening in Paia, the numbers below may be a little easier to digest. This is a look at the sales volumes, median sales prices, average sales price, some 2015 numbers for comparison and some other notable numbers from the first five months of sales.

  • There have been 15 homes reported sold for the year to date in the Paia/Kuau area with an additional 5 homes under contract. One of those pending homes could conceivably be classified as a land sale due to the condition of the home. In addition to the reported sales, I am aware of one other home that sold without Realtors in Kuau Bayview.
  • By comparison, there were 9 homes that sold over the first five months of 2016. There were a total of 26 home sales throughout all of 2016. That calculates to a 66% increase in sales for the first 5 months of 2016 and 57% of the total sales for all of 2015. It looks the 2016 sales volume is well on its way to beating 2015 totals.
  • The median price for the 15 2015 sales was $600,000 and the average price was $1,372,000. By comparison, the median and average sales prices for the first 5 months of 2015 was $599,000 and $684,222. The difference in average sales price speaks to a couple of big dollar sales that closed earlier this year. The negligible difference in median price does not accurately reflect changes in property value. Perhaps we can glean more when we look at some of the individual neighborhoods below.
  • The highest priced sale during the start of the year was $6,000,000 for an oceanfront estate. The property located at 23 Wa’a on Tavares Bay includes a 4 bed, 4.5 bath home with 6,258 square feet of living space and a 1 bed, 1 bath 1,025 square foot cottage on a 1.28 acre lot.
  • There were two condo sales at Paia’s one and only condo complex, Kuau plaza. There were no sales at Kuau Plaza during the first five months of 2015. There was only one Kuau Plaza sale in all of 2015.
  • There were no land sales in the Paia area during the first five months of the year. There is one property under contract and arguably a second when you factor in the condition of the property’s home. There were no land sales during the same period of 2015. The low volume of sales is not a reflection of demand. There just isn’t any supply. Paia is hemmed in by agricultural land and there are very few remaining vacant lots. That could change in the future with the end of the sugar plantation, but nothing is imminent at this point.

For a small community, Paia has a pretty diverse market of homes. From old Hawaii Plantation Style Homes to luxurious oceanfront estates, there is a significant range in property values. With that in mind, it is worth looking at some of the market activity of some selected neighborhoods around Paia.

Kuau Bayview
Kuau Bayview was one of the more resilient neighborhoods coming out of the downturn. While many areas of Maui were just starting to see modest appreciation, Kuau Bayview was setting new market highs. The neighborhood offers proximity to town and area beaches, a community park, good views from selected homes and consistent pride of ownership. There have been two sales publicized in the MLS this year, one sale that did not involve Realtors and two pending sales. The three sales to date have all set new record highs for the community. Two of the three sales closed in the mid $900,000s. All three homes are two story, have good ocean views and they have been remodeled and upgraded. The two homes under contract are both smaller single level floor plans. While these homes will not set any new high prices when they close, they will be among the highest ever sales price for their floor plan.

Additional activity in the neighborhood during 2016 will be predicated on new inventory coming to market. Potential sellers should realize that the run of high sales does not necessarily mean the next home to hit the market will set a new record. For a relatively small neighborhood, there is a decent range in home values. The highest priced homes tend to be located towards the top of the neighborhood where views are better and there is little to no road noise from Hana Highway. Remodels and additional square footage are also factors in pricing.

North Shore Village
North Shore Village was built in 2003. It was the last new development in Paia. The two story homes are located on small lots. The area also offers consistent pride of ownership, and it is just a few minutes walk from all of the amenities of downtown Paia. Due to the limited number of homes in this neighborhood, we don’t see a lot of turnover. In 2015, there were no sales in the neighborhood. This year there has been one sale and one additional property is pending. The home that closed was a smaller two bedroom floor plan that sold for $589,000. The pending sale is particularly noteworthy as it was listed for $780,000. That is well above previous sales in the neighborhood. The home was well maintained, but not significantly upgraded. It is rumored to be under contract for close to the asking price. That would smash the neighborhood high sale. If say it were to sell for $740,000, it would be selling for 26% above the last neighborhood sale for a home that is only 145 square feet larger.

This is another neighborhood that would require new inventory if there is going to be additional sales activity in 2016. It will be interesting to see how the next home that comes to market is priced. Will this pending sale reset prices in the neighborhood or will the market view the one high sale as a one off close?

Halelani
Halelani is a small neighborhood nestled between North Shore Village and Kuau Bayview. It is behind the Paia Community Center. Most of the homes were built in the early to mid 70s and they tend to be modest in size and construction. There have been some nice remodels in the neighborhood over the last decade. It is a desirable neighborhood due to proximity to downtown and area beaches. It also offers a lower price point under $700,000. Halelani was pretty busy in 2015 with 5 sales in the neighborhood. Those sales included the two highest neighborhood sales of all time. This year, it has been quiet with no listings and no sales reported to date. With limited Paia inventory under $700,000, well priced new inventory inventory would be well received.

Skill Village
Skill Village is a neighborhood of more modest homes built in the mid to late 80s. The neighborhood is located above the old Mill in Paia close to Paia Elementary School. It is the primary location for entry level homes in Paia, but there have also been some homes that have been significantly updated. This neighborhood has had some pretty healthy activity this year and last year. There have been five sales thus far this year, with two additional pending sale and one active listing. Last year, there were 3 sales in the first five months of 2015 and 9 total sales for the year.

There were more high priced sales in 2015 than what we have seen to date in 2016, but that is a reflection of the homes sold rather than market dynamics. There was actually one home sold in both 2015 and 2016 with little to no new improvements. On August 20, 2015, 32 Palekana sold for $530,000. Less than 7 months later, it sold again for $561,500 on March 7, 2016. That is almost 6% increase in that period of time. Other signs of appreciation in the neighborhood are apparent when you compare the low sales in 2015 with the low sales in 2016. The lowest priced sale for the year to date was $465,000. Last year, there were two homes that sold for $385,000.

I would imagine, we will continue to see steady activity in Skill Village this year if there is sufficient inventory. Paia remains an in demand community and this is one of the more accessible neighborhoods for potential buyers.

Kuau Point
The Kuau Point neighborhood is a mix of older plantation homes, newer homes and oceanfront properties. Neighborhood amenities like a high end convenience store, Mama’s Fish House, Mama’s Beach and a great launch for wind and waves sports make this little community on the ocean side of Hana Highway very desirable. There have been three home sales in the neighborhood this year, with one oceanfront lot under contract and one new oceanfront home listing. The range of sold homes provides a pretty good cross section of Kuau Point properties. At the low end, there is a small residential condo just off of Hana Highway that sold for $590,000. With only 720 square feet of living space, it came at a pretty hefty price. That said, its size is offset by its proximity to amenities. The middle sale was a former vacation rental just a stone’s throw from Mama’s Fish House. This home sold for $1,323,000. The high sale was $4,850,000 for a house and cottage on .4139 acres of oceanfront. Last year, there were 3 sales during the first five months of the year and 7 total sales throughout the year.

Paia Oceanfront
Paia Oceanfront isn’t a neighborhood. This class of property spans across a number of neighborhoods and there is some overlap with my Kuau Point discussion. That said, oceanfront is it’s own unique market segment that merits a separate discussion. It is also the only part of the Paia market where you can find an abundance of inventory. There are currently 10 active oceanfront home listings in the Paia/Kuau area. You could make a case that one of the home listings could be thought of as more of a land listing. The 1.1 acre oceanfront lot we have in Paia is one of the more stunning parcels along the coast. The older structures have less value and the heavy lifting has been done to get approvals to construct a new home. There is also one oceanfront lot on the market that is currently under contract. Thus far this year, there have been two oceanfront sales. That is ahead of the one oceanfront home sold last year.

Market dynamics for oceanfront properties in Paia are pretty interesting right now. The two homes sold and the lot under contract are an uptick in activity over last year. That said, the most recent close could put some downward pressure on list prices. Sellers have been shooting for premium prices. A number of those asking prices feel high in light of the sale of 23 Wa’a. The cost per square foot was significantly lower and the quality of construction was significantly higher than some of the other homes currently on the market. It will be interesting to see if the existing inventory is able to shrug this off as an outlier sale or if buyers successfully leverage the 23 Wa’a sale to negotiate lower prices.

Overall Paia Market Thoughts
The overall Maui Real Estate market has seen upward pressure on pricing due to a lack of new supply and strong demand fueled by compelling interest rates and high rental costs. These issues are particularly acute in the Paia area where the lack of new construction dates all the back to 2003 and market demand has increased as Paia has become seen a significant increase in demand from second home owners. Those dynamics would suggest that we may continue to see upward pricing pressure in Paia as long as the economy maintains or outperforms current level and borrowing costs do not increase too much. That being said, I would not be surprised to see the rapid rates of appreciation we have seen in some neighborhoods cool off. Price increases in Paia tend not to be linear. We get something of a stair step effect where prices shoot up and then level off for a while before they increase again. I can see that happening in a few neighborhoods. If you made it to the end of this tome, you have to be pretty interested in the Paia market. Feel free to contact us if you have questions about the market or if you need assistance with your real estate needs. We would welcome the chance to learn about your needs. You can find more details about the current Paia Real Estate Listings on MauiRealEstate.com.

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6/3/2016

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