Three months into the year and interest rates continue to fluctuate. In January it seemed like rates were heading downward steadily. February saw an increase in rates. The banking crisis earlier this month caused rates to adjust downward again. Last year, there was a lot of ink spilled and key strokes dedicated to predicting rates. Most predictions proved to be wrong. At this point, prognostication on rates seems like a fool’s errand. That said, I wanted to talk about one of the better bellwethers for mortgage rates, the ten year treasury bond.

In the financial world, a bellwether is an indicator of something bigger. For the bond market, the ten-year Treasury bond is the go-to indicator of how things are going. When investors are feeling good about the economy, they tend to buy more bonds, which drives down the yield (i.e., interest rate) on the ten-year Treasury bond. Conversely, when things are looking a bit shaky, investors tend to flock to the safety of Treasury bonds, which drives up the yield.

So, what does all of this have to do with mortgage rates? Well, the yield on the ten-year Treasury bond is a key indicator of where mortgage rates are headed. When the yield on the ten-year Treasury bond goes up, so do mortgage rates. When the yield goes down, mortgage rates tend to follow suit.

Think of it like a game of follow the leader, but with money. When the leader (the ten-year Treasury bond) goes up, the followers (mortgage rates) try to keep up. And when the leader goes down, the followers slow down too.

What Does This Mean for Buyers?

Consider this as more of how does this work vs a how to post. I’ve read in some places that following the ten year treasury closely may give buyers a sense of when to lock their mortgage rate. I have to say, I am a little skeptical about that. While the two are closely correlated, there may not be enough lag between the change in treasury bond yields and the change in mortgage rates. It’s a pretty busy world out there and unless you work in finance, you also may not have the time to closely monitor treasuries. This is where I would lean on a knowledgeable mortgage professional rather than tracking things yourself. Let your mortgage professional give you guidance on when to lock your rate.

A quiet country road that wanders towards the ocean. Cooling trade winds. Swaying palm trees. Vibrant greens and the vivid blues of the ocean along Maui’s North shore. If this sounds like a place that you would like to call home, 300 Mehana Road offers two separate opportunities for those that want to build their dream home or cottage on Maui. The state recently approved plans to drill a well to serve the parcel, making these two CPR properties a great places to create your own personal paradise.

Location

300 Mehana Road is located in the community of Haiku on Maui’s North Shore. This quiet town is located on the windward side of the island. Mehana Road is a small private road on the ocean side of Hana Highway. It is about 10 minutes away from a grocery store, restaurants, food trucks, the post office and fitness centers at the Haiku Cannery. It is about 15 minutes from Paia town. Ho’okipa Beach Park is ten minutes away. The airport is roughly half an hour away.

300 Mehana Road Unit A

Unit A consists of 3.88 acres of gently sloped agriculturally zoned land. This unit is designated for the construction of the main house on the property. There is plenty of space for your building site with lots of room left over for gardens or orchards or you can expand upon the existing grove of Coconuts. The property is just one lot back from Uaoa Bay. You don’t just see the ocean, you can smell it and hear it too.

300 Mehana Road Unit B

Unit B has entitlements to build a 1,000 square foot accessory farm dwelling (cottage), This unit includes 4.22 acres of gently sloped land. As with unit A, it offers big ocean views and Haleakala views. There is a grove of guava trees and plenty of space to plant your own orchard, gardens and more. There is even an ag storage shed included in the sale for you to keep all your farm and garden tools.

Utilities

Electric and high speed internet both run to the edge of the property. A buyer will be responsible for bringing those utilities to the building sites. There are two options for water. Many homes in the Haiku area rely on water catchment. Water is caught off a metal roof, stored in a catchment tank and then filtered prior to consumption. The seller also recently obtained approvals from the state for a well. The buyers of the units would be responsible for installation costs of the well.

Contact The Maui Real Estate Team

Unit A is offered for sale for $985,000. Check out the 300 Mehana Unit A listing page for additional photos. Unit B is offered for $895,000. Check out the Unit B listing page for additional photos. If you want the opportunity to build both a house and a cottage and just over 8 acres of land in total, you can of course buy both! These listings sold! Contact The Maui Real Estate Team for assistance with other Maui Land listings.

Christmas is just a few days away. Still stumped on what to get the family or that special someone? While none of these suggestions will fit under the tree, maybe the keys would fit nicely in your Christmas stocking. Here are four of our listings that would make this a Christmas to truly remember.

For Those That Love The Ocean

If there is a certain someone in your life who loves the ocean and ocean sports, you would be hard pressed to find a better option on the market than Sugar Cove Building 6. This is the ultimate North Shore lifestyle property. This whole building in the Sugar Cove condominiums is located right above the golden sand of the beach. The beach is as good as it gets for water sports. Long considered a good spot for windsurfing, these days it is a hot spot for wing foiling, kiting, surfing, stand up paddling, body boarding and fishing. Our agent Ridge Lenny gives a taste of the lifestyle on offer in the video below.

Watch this video on YouTube.

While location may be the biggest amenity of Sugar Cove Building 6, the condo itself is a one of a kind offering. Originally three separate units, it was consolidated into one primary living space and a guest space. Overall, it includes eight bedrooms, seven bathrooms, three half bathrooms and a total of 5,950 square feet of living space. This other video highlights the quality design, materials and finishing.

Watch this video on YouTube.

The asking price for Sugar Cove Building 6 is $17,000,000. Contact The Maui Real Estate Team for more information.

For Those That Demand The Highest Quality

A Design Nerd’s Dream. Impeccable finishing. Precision Crafted. Carefully Curated. Just some of the ways that people describe the Oasis in Spreckelsville.

Watch this video on YouTube.

This immaculate property includes a 2 bedroom, 3 bathroom main home, a detached garage with second story studio apartment, a soaking tub, lap pool and a zero edge main pool. The construction is truly of the highest quality as are the fixtures and building materials. It is sold with furnishings and selected artwork. Again, all of these items carefully chosen by the owner with an attention to detail and quality rarely seen on Maui. Check out our previous posts on the Oasis, its outdoor spaces and design details. Offered for $9,800,000.

For Those That Want to Build The Best…

Five Star Location. A big lot of 1.88 acres. A gated subdivision with only one other vacant lot. Easy access to beautiful beaches and fantastic resort amenities. All of the above make 21 Ualei Place a truly tantalizing spot to build a spectacular luxury home. Located in the One Palauea subdivision, the lot is just to the south of the Fairmont Kealani. Palauea Beach, Polo Beach and the Wailea Beach Path are all a short minutes walk from the property. The Wailea Blue, Emerald and Gold golf courses are again all close by.

This lot is offered for $6,500,000. Check out the 21 Ualei Place listing page for more photos and details.

For Those That Want to Build Now!

Building takes time and patience. One of the biggest time sinks can be the permit process. That is particularly true when you are in a special management area close to the ocean. That makes 300 Mehana Unit B in Haiku the perfect spot if you want to build your dream cottage on Maui sooner rather than later. SMA approvals are done and the permits approved for a 1,000 square foot accessory farm dwelling (cottage), detached garage and agricultural workshop. The CPR property includes 4.22 acres of land. There is plenty of room for gardens or orchards. Set close to the ocean, you can hear the waves and smell the salt in the air. The ocean and Haleakala views are both fantastic.

Grab your builder and break ground in the new year. The asking price for 300 Mehana Unit B is $895,000. Check out the listing page for more photos and details.

Contact Your Favorite Maui Real Estate Elves

There you go! Four last minute gift ideas for the family or a special someone clearly not on the naughty list. Contact The Maui Real Estate Team for help with these properties or if you have something else in mind on your real estate holiday wish list. We look forward to being of service.

Updated County Tax Rates for the New Fiscal Year and New Tax Classifications

On May 13, the Maui County Council approved new property tax rates for the upcoming fiscal year. There are a some particularly notable changes. The new rates decrease tax rates for owner occupied properties and apartments while significantly increasing rates on non owner occupied properties. Rates for the Short-Term Rental, Agricultural, Industrial and commercial classification also changed.

Another notable change for the coming fiscal year is the creation of a new long-term rental category. This is a lower tax rate category meant to incentivize more long term rentals. The county council created this classification last fall but this is the first fiscal year it will be in effect. Owners who qualify for this classification also get an exemption that reduces their assessed value by $200,000.

One last note, there was some modification to the tier system first implemented in the 2020/2021 fiscal year. For certain categories of property, this system created three different tiers of tax rates based on the assessed value of properties. The tier system was implemented for the homeowner, short-term rental and non-owner occupied classifications. The new long-term rental category is also part of the the tier system.

Previously, tier 1 was for properties assessed up to $800,000. Tier 1 is now for properties up to $1,000,000. Tier 2 was for places assessed between $800,001 to $1,500,000. The new tier 2 is $1,000,001 to $3,000,000 for owner occupied, short-term rental and long-term rental. The new tier 2 for non owner-occupied is $1,000,001 to $4,500,000. The old tier 3 was for properties assessed for more than $1,500,000. The new tier 3 is more than $3,000,000 for owner-occupied, short-term rental and long-term rental. The tier 3 for non owner occupied properties is more than $4,500,000.

2022/2023 Maui County Property Tax Rates

Here are the updated rates for this coming fiscal year. If there is any change in rates, last years rates are noted for reference. All rates shown below are per $1,000 of assessed value.

Owner Occupied

• Tier 1: up to $1,000,000 Formerly $2.41 now $2.00
• Tier 2: $1,000,001 to $3,000,000 Formerly $2.51 now $2.10
• Tier 3: more than $3,000,000 Unchanged $2.71

Non Owner Occupied

• Tier 1: up to $1,000,000 Formerly $5.45 now $5.85
• Tier 2: $1,000,001 to $4,500,000 Formerly $6.05 now $8.00
• Tier 3: more than $4,500,000 Formerly $8.00 now $12.50

Apartment

• Formerly $5.55 now $3.50

Hotel and Resort

• Unchanged $11.75

Timeshare

• Unchanged $14.60

Short-Term Rental

• Tier 1: up to $1,000,000 Formerly $11.11 now $11.85
• Tier 2: $1,000,001 to $3,000,000 Formerly $11.15 now $11.85
• Tier 3: more than $3,000,000 Formerly $11.20 now $11.85

Long-Term Rental

• Tier 1: up to $1,000,000 New Class $3.00
• Tier 2: $1,000,001 to $3,000,000 New Class $5.00
• Tier 3: more than $3,000,000 New Class $8.00

Agricultural

• Formerly $5.94 now $5.74

Conservation

• Unchanged $6.43

Commercial

• Formerly $6.29 now $6.05

Industrial

• Formerly $7.20 now $7.05

Commercial Residential

• Unchanged $4.50

About Maui Property Taxes

The new rates go into effect at the start of the new fiscal year on July 1st, 2022. Property taxes are due in two separate installments. The first installment is due in August 2022 with the second installment in February 2023. Owners should have received notification of their new assessed values in March of 2022.

Homeowner and Long Term Rental Exemptions

The deadline to file for the homeowner or long term rental exemptions and classifications passed. If you file by the end of 2022, you would be eligible for the exemption and tax rate for the 2023/24 fiscal year. Here is the link to the Long Term Rental Exemption and the Home Owner Exemption forms. The eligibility for the homeowner exemption can be confusing. It is worth reading the county Exemption FAQ to better understand eligibility requirements. Check out the county’s explanation for different property type classifications if there is any confusion on what category your current property or future property might fit into. Contact The Maui Real Estate Team for assistance buying or selling Maui property.

Rising gas prices. A more chaotic climate. Improved health and wellness. There are a lot of reasons why driving less has more appeal these days. Maui is a pretty rural place. As a result, it is not exactly an easy place to live car free. That said, there are parts of the island where there are more conveniences and amenities accessible by foot or by bike. We recently created a handful of Walkable community pages on MauiRealEstate.com that highlight areas within a higher concentration of amenities within walking distance. This is a quick overview of those new pages on the site and a few communities that are worth an honorable mention.

Featured Walkable Areas of Maui

• Walkable Paia : For a small town, Paia has a lot going on. It has restaurants, a great grocery store, a Bank of Hawaii Branch, a yoga studio, massage studios, coffee shops, a post office, the beach and more all in and around town. If you live in the neighborhoods to the East and North of town, almost all of this is accessible via your own two feet. As an added bonus, the North Shore bike path runs to the West of town, through Spreckelsville and into Kahului. Paia is the one area of the island where you really could go for longer stretches without driving.
• Walkable Wailuku : Downtown Wailuku is the seat of Maui County Government. It is also home to federal and state agencies, medical facilities, law offices and other professional services. The homes and condos in the downtown area give options to those who work downtown that want to avoid commuting by car. Add in restaurants, the Iao Theater, shops, a library and other amenities and there are plenty of things accessible by foot. While you will still find yourself driving to some amenities, your odometer is less likely to get a workout.
• Walkable Makawao : Upcountry Maui may not be the first place you think of when it comes to walkability. That said, downtown Makawao is another small town with a lot going on. There are restaurants, a public library, Eddie Tam Park, a post office, shops, coffee, yoga and more. There are quite a few neighborhoods within walking distance of these attractions. Again, this is a place where it may be difficult to completely avoid car dependence, but you could get away with driving less when you live close to Makawao.
• Walkable Lahaina : Front Street is a renowned tourist destination. That said, residents living in the neighborhoods close to Front Street are located close to restaurants, shops, grocery stores, the beach, surfing and more. Put on your walking shoes or grab your cruiser bike. This is an area where you can leave your car parked in the driveway more often than not.

Honorable Mention

The Kulamalu area of Pukalani wouldn’t have received a mention 10 years ago. While there was a Long’s Drugs and a Fitness Center, this was a convenient but car dependent community. Then came the Saturday’s Farmer’s Market, followed by Food Trucks. A new brewery and a great pizza place in the last year are two great new additions. The Cottages at Kulamalu and Kulamalu Hilltop are now two neighborhoods where owners now have some great amenities within walking distance.

There are parts of Kihei where you may not need a car as much depending on your lifestyle. Areas of South Kihei and Central Kihei offer restaurants, shops, grocery stores and beaches within walking distance.

Contact The Maui Real Estate Team

Contact The Maui Real Estate Team if you are looking for a home that decreases your car dependence. We would welcome the chance to help you find a home or condo that might help change your lifestyle.

This week’s edition of Maui Market Musings is another grab bag of topics. I look at days on market on Maui, try to get a sense of price increases since the start of Covid and check in on sales activity at Hoku’ula, the new development in Upcountry Maui.

Properties Continue to Move Quickly

One way of gauging the strength of the Maui market is looking at days on market. The local Realtor Association publishes days on market for sold properties. I wanted to use data from recently listed properties for a more current look at market activity. Between February 9th and February 16th, 71 listings came to market. Of the 71 listings, 40 already went under contract. Of the remaining 31 listings, 7 are waiting to review offers until a later date or are in the process of reviewing offers. One bank owned listing successfully completed an auction with the buyer and the bank completing contract paper work. Two additional listings are vacation rentals with no opportunity for showings as of yet.

We are seeing things go under contract really quickly. What does this mean for buyers? Over 50% of properties are going under contract in 10 days or less. Many sellers are setting offer deadlines a week after listing to allow for strong showing demand. Multiple offers are common. Buyers who want to enter the fray need to have pre-approvals and proof of funds in hand. They also need to prepare to write very strong offers.

How Much Have Property Values Increased on Maui?

How much have prices gone up since the start of Covid? This is one of the most common questions people ask about the Maui market. This is a surprisingly difficult question to answer. The Maui market is incredibly heterogeneous. While changes in median price give some indication of changes in value, it isn’t an exact indicator. Changes in median prices aren’t just due to changes in price. Differences in the composition of the market in any one month also contribute to changes in median. For example, if you have a greater proportion of higher end homes selling in any one month, median prices will tend to go up.

With that in mind, I thought I would do my best to try to get a better sense of how much prices changed since early 2020. To do that, I went through the sales over the last month and compared them to sales during the same period of January and February 2020. I tried to find as many like for like properties to compare from each of the two time frames. Truth be told, the list of properties that fit that criteria is surprisingly small. Here are some of the properties I identified, notable differences if any, their sales prices and the percentage change.

Comparing Early 2020 and Early 2022 Home Prices

• The first example I found was actually a home that sold on January 31st of 2020 and sold again on February 9th of 2022. 24 W Makaukau Loop is located in the Waikapu Gardens subdivision of Wailuku. The seller made one notable improvement during their two years of ownership. They added a photovoltaic system with a Tesla Powerwall. It closed for $731,000 in 2020 and $990,000 in 2022. That is a 34% difference. If you add roughly $35,000 for the improvements, you are looking at a 29.4% increase in value.
• I found two very similar homes in the Pi’ilani Villages subdivision in Kihei that sold in 2020 and 2022 respectively. 38 Polale and 62 Polale are both three bedroom, two bathroom homes with 1,478 square feet of living space. Both homes have net metered photovoltaic systems. and new flooring. The home at 38 Polale has original bathrooms, while the home at 62 Polale includes nicely remodeled bathrooms. The lot at 38 Polale is 300 square feet bigger. The home at 38 Polale sold in early 2020 for $756,000. The home at 62 Polale sold in early 2022 for $1,100,000. That is a 45.5% difference in value. Regardless of the bathroom improvements, this is a big shift in values.
• While the next two homes don’t offer a true apples to apples comparison, they are still worth sharing. Both homes are in Kaimana at Kehalani. This is a subdivision with a single developer and a handful of different floor plans. The first home is a 4 bedroom, 3 bath with 2,021 square feet of living space and a Photovoltaic system. The home is located on a 4,500 square foot lot. The second home is 3 bedrooms, 2 bathrooms with 1,185 square feet of living space. It is also situated on 4,500 square foot lot. The 4 bedroom home sold in early 2020 for $725,000. The second sold for $815,000. That is a 12% higher sales price for a home that is 41% smaller.

Comparing Early 2020 and Early 2022 Condo Prices

• The first two condos I wanted to compare are located in the same floor of the same building at Aina Nalu in Lahaina. They are both 2 bedroom, 2 bath unit with 832 square feet of living space. Unit C 203 sold in early 2020 for $599,000. The seller did add some new flooring and there was some sort of bamboo ceiling covering added in parts of the condo. Unit C 209 was almost identical minus the improvements. It sold in early 2022 for $766,000. That is a 27.8% price increase. It is worth noting that Aina Nalu was one of a small handful of condos that actually saw prices go down in mid 2020. During that time, second floor two bedrooms went as low as $500,000. The level of appreciation is that much higher if you factor in that price adjustment.
• Kai Malu is an upscale non-vacation rental condo in Wailea. There is variability in value within the complex based on location and view. I found two condos with the same 3 bedroom, 2.5 bathroom floor plan in different parts of the development. Both are considered to be good locations. They both overlook the golf course with the ocean in the distance. Unit 5A sold in late January 2020 for $1,700,000. Unit 55B is a little more upgraded unit with some more recent renovations. It sold for $2,200,000 in early February. That is a 29.4% increase in sales price.
• Kihei Villages is an entry level condo complex that prohibits short terms rentals. I found two pretty similar ground floor units for comparison. Both have two bedrooms, one and a half baths and 750 square feet of living space and an enclosed yard area. Unit 10-103 had some improvements in the kitchen, but bathrooms appeared to be original. It sold in February of 2020 for $365,000. Unit 34-103 was well maintained with a nice yard, but no upgrades to the kitchens or bathrooms. It sold for $535,000 in February of 2022. That is a 46.5% difference in value.
• I compared two one bedroom, one bath listings in building 2 at Maui Vista. This is a vacation rental friendly condo in Kihei. Both units appeared to be in original condition. Unit 2203 sold for $420,000 in February of 2020. Unit 2308 sold for $572,000 in January. That is a difference of 36.19%.

While this is a relatively small sample size, it does provide both homes and condos over a pretty broad area of the island. Overall, here are my takeaways from this number crunching exercise. You are looking a bare minimum of 27% appreciation over the last two years with some properties seeing more significant increases. There is some variability in appreciation around the island. While all these prices are moving in the same direction at this point,some are taking a little longer to get there.

The significant price increases appear to be continuing. Anecdotally, bidding wars feel that much more competitive of late. In turn, it feels as if values skipped up on some of the properties going under contract over the last few weeks. It will be interesting to see if the sales numbers corroborate this in the months ahead.

Hoku’ula Lottery Update

Last week I posted about the lottery for first phase of the market priced listings at Hoku’ula. This development in Hali’imaile is one of the largest developments ever in Upcountry Maui. It will include 196 total homes with 98 work force housing homes and 98 market rate housing homes. The work force housing units are fully reserved. The developer held a lottery for the first phase of the market rate housing at the end of last week. Per the developer’s representatives, 15 homes went under contract as a result of the lottery. That is half of the 30 homes in the first phase. Registrations for the first phase may still be submitted. Contact The Maui Real Estate Team for buyer representation if you are interested in the development.

Final Thoughts

Well, so far so good on making this a regular feature of our blog. We are hoping that this is valuable tool for buyers and sellers trying to get a better sense of the market. Feel free to reach out if there are any specific things you might want us to discuss in future volumes of the musings. Contact The Maui Real Estate Team if you need assistance buying and selling property.