Maui Real Estate Blog
Maui Market Musings Volume IX
It’s May on Maui and time for another Market Musings. This week is a little bit more of a meat and potatoes affair as we look at notable numbers from the April Statistics and try to get a better pulse on current market conditions. National Real Estate numbers are showing signs of slightly slower activity due to current interest rates. It feels like we may be feeling something similar on Maui. Do the numbers support my anecdotal feelings? Keep reading to find out what I discovered.
Notable Numbers From the April Statistics
The April statistics are out and they speak to the strong buyer demand in January-March. I compiled these numbers using sales just from the island of Maui. I filtered out Molokai and Lanai.
- Maui Realtors reported 101 home sales. That is down 22% from last year’s 129 sales.
- Tighter inventory is a significant factor in the decreased sales numbers. At the end of April, the Realtors Association of Maui reported 176 homes on the market. That is 24% lower than last year at this time and 15% lower than the end of March 2022.
- Competition remained high for the limited inventory. Of the homes sold, 34% sold for over asking price and 56% sold for asking price or higher.
- That’s stronger than last April’s numbers of 26% over asking and 53% for asking price and above, but lower than March 2022’s 35% sold for over asking and 59% sold for asking or higher.
- The median price of the homes sold was $1,250,000. That represents a significant 28% increase over last April’s median of $975,000.
- The increase in median can be attributed in part to price increases and also limited inventory at lower price points. Only 8 homes sold for less than $800,000 in the month of April.
- The average price of the homes sold was $2,189,247. That is a more modest increase of 8% over last April’s average of $2,015,101.
- The high average prices are due to robust luxury market activity. Three homes sold for $10,000,000 or higher. A total of 9 homes sold for more than $5,000,000 and 25 for more than $2,000,000.
- The highest priced home closed for $18,750,000. That was for a 4,800 square foot luxury home with a 600 square foot cottage on just over a half acre right on Keawakapu Beach in South Kihei.
- Maui Realtors Reported 168 condos sold in April. That is down 36% from April of 2021.
- Inventory played a big part in the decreased activity compared to the year prior. There were only 158 condos on the market at the end of April. That is 50% of the number for sale at the end of April 2021 and 6% below the end of March 2022.
- As with homes, competition for condos on the market remained high. Of the condos sold, 41% sold for over asking and 62% sold for asking price or above.
- That is a substantial increase over last April’s numbers of 9% sold over asking and 36% sold for asking price or above, but a little lower than March when 43% sold for over asking and 70% sold for asking price or above.
- The median price of condos sold in April is $857,500. That is 23% higher than the median in April 2021.
- Average sales price for a Maui condo in April comes in at $1,223,669. That is 28% higher than the median in April 2021.
- Like the luxury home market, the luxury condo market remained busy. That helped boost the average condo sales price. There was a single condo sale over $10,000,000. Four condos sold for over $5,000,000 and 34 condos sold for $1,500,000 or higher.
- The highest priced condo closed for $12,000,000. That was for a ground floor 3 bedroom in the D building at Wailea Beach Villas.
What’s Happening Now?
Sales Statistics look backwards. As mentioned above, the strong April numbers reflect buyer demand from February, March and to a limited extent Early April. Since that time, Interest rates broke the 5% barrier and we transitioned out of peak tourist season.
The one relevant statistic to the present is inventory. Supply was lower at the end of April than it was at the end of March. The first five days of the month did not bring a torrent of new inventory. That’s one area where we differ from the overall national market. The National inventory of homes for sale slowly increased during the spring with healthier gains over the last week. Plain and simple, the supply side of the Maui market remains severely constrained.
What about demand? There are suggestions in the the April stats that demand has been cooling slightly. Over asking sales prices and full price sales both decreased from March. Is there anything we can tease out from the current inventory?
In Market Musings Volume 8, we looked at the percentage of new listings going under contract in 10 days or less between April 6th and 13th. It came in at 46%. Between April 19th and April 26th, 35 out of 82 listings are under contract in 10 days or less. That is roughly 43%. It is worth noting 2 additional properties went under contract only to cancel escrow.
While I don’t have a basis for past comparison, I also looked at price reductions in the market. Out of the 160 active home listings on May 5th, 59 or 37% reduced their price . Of the 130 active condo listings, 19 or right around 15% reduced their price. This can be a baseline of comparison for future Musings.
I saw the quote below and had to work into a Musings. It was such a good analogy. I could practically feel the blister forming on the roof of my mouth from a Hot Pocket I consumed in 1991.
It also resonated with me as I watched the hot sheet over the last ten days. It sure seemed like not all parts of the Maui Real Estate Market are at the same level of frothiness. That’s clearly the case when comparing homes to condos. Condos have less inventory and far fewer price reductions overall.
Within the home market, I looked at the price reductions and sorted them by community. Kula and Haiku have the highest percentage of active inventory that’s dropped their price one or more times. They both clock in with 42% of the active inventory having dropped their price.
While this validates some of my expectations. I will say this is something of a flawed metric. While Haiku has had quite a few price reductions, there are only 13 active listings. Well priced properties can still sell pretty quickly. On the other end of the spectrum only 8% of the active inventory in Ka’anapali made a price reduction to date. That would seem to suggest strong demand. That said, the average days on market for the active Ka’anapali listings exceeds 100 days.
Overall, the market remains pretty darn strong and inventory remains really low, but there is a hint of nuance to things. Some parts of the market still feel hot like earlier this winter, others are just warm. The slight cooling likely can be attributed to the significant rise in mortgages rates. Rates continue to rise slowly and other economic headwinds like the recent stock market plunge could threaten demand. Will decreased demand change the trajectory of the market or will the low inventory continue to be the determining factor in market conditions? I will keep you posted in future editions.
A Side of Maui Beauty With the Stats
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Dynamic market conditions call for quality, experienced representation. Contact The Maui Real Estate Team if you are considering buying or selling Maui Real Estate. We look forward to learning about your real estate needs.
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Maui Market Musings Volume VIII
There are a couple of reasons why I titled this series of posts Maui Market Musings. The first is that I am a sucker for alliteration. The second is that sometimes I want to explore the thoughts about the market that are popping through my head. A lot of times, that translates to me seeing if the data supports my thinking or reveals me to be just an average human subject to the flaws of biases.
Needless to say, the significant increase in interest rates runs through my mind quite a bit. It’s been a subject of discussion in past musings. With the 5% threshold crossed for 30 year fixed mortgages, some real estate analysts are starting to see signs of cooling in the market. It’s still a seller’s market, but the frenzy is maybe a little less frenetic. Anecdotally, it seems like that may be the case on Maui. With that in mind, I wanted to look at some of the local numbers that I think could help to answer the question of whether there might be cooling buyer demand in the Maui market.
How Quickly Are Things Going Under Contract?
A sign of the strong sellers market this year is the speed at which properties went under contract after being listed. A reasonably priced listing could expect to go under contract fast. Offers due by Monday, seller to respond by Wednesday was a common refrain in listing remarks. I looked at the speed that properties went under contract once before in a past edition of the Musings so I also have a basis for comparison from early winter.
For properties listed between April 6th and April 13th, 29 of the 63 new listings are under contract already. That is still a pretty strong number with 46% under contract. If you are wondering why I am looking at an eight day period, I have a basis for comparison in Market Musings Volume II, I looked at pending sales among newly listed properties for the eight day period between February 9th and February 16th. Over that time, 40 of 71 listings went under contract in 10 days or less. That calculates to 56%.
It is worth noting that in February there were even more listings in the process of either reviewing offers or had a submit all offers by date still to come. Looking at the active listings in April, I saw one listing with a review all offers by date still outstanding. Based on the numbers above, there may be some signs of cooling. That said, the supporting data is based on a small sample size. It will be interesting to see if the data in the coming weeks indicates a more clear trend.
Weekly Pending Sales
As mentioned above, I can’t say that small sample of data is proof of a changing market. I wanted if another metric with a bigger pool of data might provide some additional evidence of cooling. I decided to look at overall weekly pending sales over a little longer time period. Knowing that seasonality is a factor, I looked at Mid-February through Mid-April over four years. I used 2022, 2021, 2019 and 2018. 2020 is omitted since it was completely anomalous. Including two pre-covid years gives a little more of a baseline for a comparison to “normal market conditions”.
I acknowledge two hazards to using pending weekly sales data. The small sample size for Maui tends to mean there is a little more noise in the numbers. This is also a part of the year where you can see subtle shifts in the number of potential buyers on island year to year due changes in school calendars. Changes in the timing of Easter and peak spring break can lead to shifts in when more second home buyers are on island.
When putting the chart above together, I looked at the 2022 data first. When I saw the big dip in new pending sales for the week from 4/13 to 4/19, I thought I had a Eureka moment. A 34% slowdown in new pending sales is a pretty big dip. Low and behold, there was also a pretty big dip during the same seven days of 2021 While the 2021 dip is smaller, it is still a substantial 26%. There are also more modest dips for the same week in 2019 and 2018.
So is there a takeaway from the pending sales? Probably that it is too early say that the data shows a clear sign of a slow down. I will try to revisit this in the near future or so to see if a sharper divergence between 2022 and 2021 emerges.
Real Estate economists looking at data on a national level have a much larger data pool. Subtle shifts in the market might be seen over a week or a couple of weeks. With the Maui market, noise and variability from a much smaller pools of data make it harder to detect subtle shifts in the market. Anything but Maui Market shifts are likely to be evident over a little longer time frame.
The Impact of Rising Rates on Sellers
Real estate forecasts throughout most of late 2021 and early 2022 predicted that a gradual increase in mortgage rates would lead to more sellers coming to market. Those sellers would be enticed by the closing window of opportunity to reach buyers taking advantage of lower mortgage rates. These sellers might allow inventory levels to slowly creep back towards normal.
With rates rising faster than most anticipated, some economists are starting to talk about the “lock-in” effect of higher rates. Plain and simple, that means homeowners with rates of 3% or less are less likely to sell their old home and buy a new home at 5% interest. For some, even downsizing could mean higher monthly payments. With that in mind, some would be sellers shelve their plans.
As a counterpoint, consider the following tweet.
Will those google searches translate into actual listings? That remains to be seen.
At this point, I don’t think looking at local data is going to show any clear signs one way or the other of how higher rates are impacting potential sellers. At least not yet. Anecdotally, it doesn’t seem like we are seeing much of an increase in listings on island, but we don’t typically see the influx of spring listings like the overall national market. Brief surges of new listings in certain towns on island this spring often seem to be followed by a couple of weeks of quieter inventory. If and when, I see more anecdotal evidence of a shift in new inventory, I will dig into the data for a future edition of the musings.
Some Maui Scenery to Brighten this Post
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Contact The Maui Real Estate Team if there is anything you want us to discuss in the musings. We welcome your feedback and questions. Of course, we also welcome the opportunity to earn your business. Let us know if you need assistance buying or selling property on Maui. We look forward to learning more about your real estate needs.
Maui Real Estate Blog
Maui Market Musings Volume VII
This week’s market musings takes a look at one sign of resilience evident in the market and the latest Redfin report on the second home market. Without belaboring the intro, here are the latest market musings.
Anecdotal Signs of Market Resilience
Entry level condos in Kihei experienced some of the steepest declines during the last real estate crash. I remember the turning point for that market pretty well. During the Summer and fall of 2005, places like Southpointe, Kihei Villages and Keonekai Villages experienced rapid price increases. Condos in these complexes jumped in value 25% or more in a span of about 6 months. The rise in prices occurred during a period of low rates (for the time) with rates forecast to increase. Inventory during this period was low.
A pretty drastic shift occurred in the market in early 2006. A number of the buyers who purchased the condos in the second half of 2005 were pure speculators. They planned to make some very rudimentary improvements prior to flipping the condos. In some cases, they were just naked flips where they purchased the condo and flipped a few months later with no improvements made. By early 2006, the inventory ballooned from a handful of listings in entry level complexes to as many as 25 units in a single development. A rate increase between .5% and .6% caused demand to cool. Sellers who didn’t have the reserves had to adjust their prices. Thus started a precipitous decline that grew worse as a number of sellers found themselves underwater.
The contrast with present conditions is pretty significant. Recent mortgage rate increases are far more drastic. We are looking at an increase of 1.5% in the span of less than 6 months. That said, inventory levels remain low. At the time of this post, there are only 4 active listings in the “entry level” condo complexes in Kihei. Buyer demand continues for the limited inventory. Four non-vacation rental condos in Kihei went under contract within the last few weeks.
While market conditions may continue to shift depending on further rate increases and/or the overall economy, this segment of the market isn’t the house of cards that it was in the mid 2000s. There are fewer speculators and the financial position and loan terms of borrowers are stronger. The market conditions that caused the calamitous collapse in values just aren’t present currently. That’s why we continue to see buyers despite the significant rate increases and much higher prices.
The Second Home Market Slows Nationally
Recent data presented by Redfin indicates that second home demand hit its lowest point since May of 2020. While it is still up from pre-pandemic levels, the decrease in demand is notable. Redfin cites affordability as one factor in the decreased demand. Some of that stems from price increases and some from rate increases. The Federal Housing Financing Agency also announced an increase on upfront fees on second homes starting on April 1. The fee increase is between 1.125 percent and 3.875 percent, tiered by loan-to-value ratio. That’s a pretty hefty number for those borrowing substantial sums.
Will we start to see this reflected in the Maui market? I haven’t seen signs of a clear decrease in the second home market on Maui. Demand appears to remain strong with inventory limited. We also have a lot of cash in the market. Of the vacation rental condos that sold over the last month, 44% were cash transactions. That might be a low number as it doesn’t include 1031 exchange purchases using cash. The lack of inventory may also make it harder to detect changes in buyer demand. If we start to see anything that shows Maui reflecting national trends, we will report it in the Musings
A Little Bit of Maui Beauty to Brighten Your Day
Contact The Maui Real Estate Team
If you are reading some mixed messages in recent musings, that’s because information on market conditions remains pretty mixed. On the ground, buyers are still facing bidding wars and properties are still selling for premiums. That said, there are more headwinds brewing with the rise in rates. Current market conditions call for quality representation. Contact The Maui Real Estate Team if you are considering entering the Maui market as a buyer or seller.
Maui Real Estate Blog
Maui Market Musings Volume VI
The sixth edition of Maui Market Musings is here. The latest edition includes a review of the first quarter statistics that point to scarcity and competition in the market. It also delves into the taboo question of whether we are in a housing bubble. For that and a little more, keep on reading.
All Done with Quarter One
March 31st marked the end of the first quarter. The end of the quarter presents an opportunity to look back at the sales activity during that time. Specifically, I wanted to show the numbers that point to the scarcity of listings and the resulting competition for properties on the market.
The signs of scarcity are pretty clear in the numbers. New listings of single family homes decreased 9.5% compared to the first quarter of 2021. New listings of condos fell 8.9% compared to the first three months of 2021. We entered the year with low inventory and the lower number of new listings meant less relief for buyers. There was an average of 188 homes for sale during the first quarter. That is down 29% from the average of 264 during quarter one of 2021. The average number of condos for sale during the first quarter of 2022 was 71% lower than early 2021! The lack of inventory showed when it came to sales volume. Home sales for the quarter are 13.7% lower and condos sales are 3.7% lower.
The signs of heightened competition are also readily apparent in the first quarters statistics. Days on market for homes dropped 13.7% compared to the first three months of 2021. The average days on market for condos in the first quarter was 76 compared to 143 in the first quarter of 2021. That is a 46.9% drop! Competition impacts bidding strategy and drives offer prices higher. Of the homes that sold in the first quarter, 64.58% of the homes sold for list price or above. That compares to 42.21% during the first three months of 2021. For the condos that sold in Q1, 71.02% sold for asking price or above compared to 34.52% in the same period of 2021.
Of course, changes in the median prices also reflect increased competition. Median home and median condo prices increased 20.4% and 25.2% respectively compared to the first quarter of 2021. The March monthly median prices were both all time highs at $820,000 for Maui condos and $1,177,500 for Maui homes. For the data geeks looking for more numbers, here is a link to the Realtor’s Association of Maui March Statistics.
Are We in a Bubble?
The question now is where does the market go from here? After two straight years of extraordinary growth, the conventional wisdom among real estate economists seems to be that the national real estate market should slow gradually as the year progresses. Rising interest rates would help to cool demand despite continued low inventory. Over the last week, some economists are taking a more bearish outlook. Most prominently, the Dallas Branch of the Federal Reserve released a paper that highlights what they see as signs of a housing bubble.
The Dallas Branch’s paper highlighted the metrics that indicate a growing break between the market and what fundamentals support. Specifically, they site price to rent and price to income ratios as being out of balance. They show that the current ratios are starting to look similar to what we experienced during 2006/2007 when the last real estate bubble was about to burst. If comparisons to 2006 and 2007 give you a case of the cold sweats, take some solace from the fact that the Dallas Fed is not predicting a similar fallout if there is a housing correction.
Another thing that is worth noting from the Fed’s article is their explanation for what causes bubbles and markets to diverge from fundamentals. It often happens when there is a widespread belief that price increases will continue. Buyer’s fear missing out before prices go up and so they bid more aggressively. This of course helps to spur price increases. In light of this, I thought this tweet from Economist Ali Wolf from Zonda was interesting.
Will the Dallas Fed’s article put a dent in some of the exuberance that caused market fundamentals to fall out? In other words, will the widespread belief in additional price increases start to fade? Or will discussion of housing bubbles fade as we move away from the publication date of the article? It is worth noting that the discussion of bubbles is happening at a time when interest rates for 30 year loans spiked near 5%. Is there a threshold with mortgage rates that saps that exuberance?
While there may be a few more people raising concern about a housing bubble, it’s safe to say that this is not an emerging consensus. There are still a significant number of economists advocating for the gradual shift. This is a volatile time in our world making prognostication that much harder.
What does this mean for buyers and sellers? For buyers wondering whether now is an ok time to buy, we ask two questions. Can you afford it and how long do you plan to own the property? With the first question, how much of a stretch is it for you to buy right now? Are you going to be leaving yourself house poor? If the answer to the last two questions is yes, it may not be the best time to buy. Are you planning to hold the property for 5-10 years or just looking for an interim home for a couple of years? If it is a more short term purchase, again now may not be the best time to buy. It depends on your individual circumstances.
For sellers, market conditions remain in your favor. That said, it is a time to be more vigilant about economic and market conditions. We are continuing to see sellers really push the envelope on pricing with mixed levels of success. If and when market conditions start to cool, those sellers may end up way out of line with the market.
Notable on Recent New Inventory
Over the last week or so, it seemed like a few more properties came to market that only sold within the last couple of years. I looked at new listings between March 21st and April 4th to see if the data backed up anecdotal observations. Of the 150 new listings, 15 sold previously between 2020 and 2022. That’s a nice even 10%. Looking at those 15 listings, it is clear that there are some that are fix and flips, some are flips with limited or no improvements made by the seller, some appear to be sales due to life changes and some are just head scratchers. The head scratchers were the properties that closed and were back on the market within the month with more limited price increases.
A little Maui Beauty to Brighten the Post
A drier than normal winter meant fewer rainbows on Maui. The return of trade showers last week brought not only some much needed moisture, but also some color to the sky.
Contact The Maui Real Estate Team
Dynamic market conditions, limited inventory and strong competition demand quality representation. Contact The Maui Real Estate Team if you need assistance buying or selling property on Maui. We would love to take the time to discuss your real estate needs.
Maui Real Estate Blog
Maui Market Musings Volume V
This week’s edition of the musings dives into recent numbers from the Maui Luxury Home and Luxury Condo market. There is also an update on the end of the State of Hawaii’s Safe Travels Program and Mask Mandates, a look at the national real estate market and a little bit of Maui beauty to brighten your day.
Maui Luxury Market Update
As we approach the end of the first quarter of the year, it is worth taking a moment to check into see how the luxury property market is fairing on Maui. For the sake of this article, luxury is defined as homes priced for $2,000,000 and above and condos priced $1,500,000 and above. The numbers below are based on sales numbers between January 1st and March 21st. Here are the numbers followed by a few thoughts on the luxury home and condo market.
Maui Luxury Home Market 2022 Sales Numbers
- Thus far, 47 homes sold over $2,000,000 as of March 21st. That is down 13% from the 54 sold during the same period last year.
- Six homes sold for more than $5,000,000 this year. That is down from 13 during the same period of 2021.
- When you look at sales over $10,000,000, activity is up just a little bit. Realtors reported 4 sales over $10,000,000 compared to 3 last year.
- A number of the stronger luxury home markets in early 2021 saw activity decrease in early 2022 as shown by the chart below. West Maui saw some of the more pronounced decreases with bigger drops in Lahaina and Ka’anapali.
- A number of communities that did not see sales in 2021 experienced activity in 2022. Notably, there were 5 sales in Haiku and 3 in Makawao this year.
- Days on Market decreased substantially on homes sold over $2,000,000. This year, the average sale is closing in 127 days. That is 29% less time on market than last year’s 179 days.
- Competition in this market place is up significantly. Of the homes that sold for $2,000,000 or above, 57.44% closed for asking price or higher. That is well above the 16.67% that sold for asking price or above during the same period of 2021.
- It is notable that the three highest priced home sales all closed for their full asking price.
Maui Luxury Condo Market 2022 Sales Numbers
- Maui Realtors reported 71 condos sold for $1,500,000 or higher as of March 21st. That is up almost 34% from the 53 sold during the same period of 2021.
- Of the 71 sales, 7 sold for $5,000,000 or more as of Match 21st. That is up slightly from the 6 that sold during the same period last year.
- The Ka’anapali Condo market stands out for the significant increase in sales activity compared to other Maui markets. The Napili and Kahana market also experienced a notable increase.
- Other markets saw less drastic annual changes with Lahaina and Kapalua repeating last year’s numbers and Wailea and Makena down slightly.
- A big reason for Ka’anapali’s increased activity is due to activity at Honua Kai. Honua Kai saw 12 sales after just 4 last year.
- Days on market decreased quite a bit for high end condos. The average of 67 days on market is 54% lower than the average of 145 days on market in early 2021. It is worth noting, that long term new developer sales are excluded from calculations for both years. These are contracts signed pre-construction, but do not close until 2-3 years later when construction is completed.
- Competition for luxury condos also increased. Of the 71 condos sold, 63.4% sold for asking price or above. That compares to 39.6% last year.
Some Takeaway from the Luxury Home and Condo Numbers
Volume may be down for homes, but that is more a function of reduced supply vs. decreased demand. The lower days on market and number of homes selling for at or above listing price support the notion of sustained demand and a more competitive market.
The impact of decreased inventory is also evident at the community level where places like Wailea and Makena are seeing lower sales volume due to decreased inventory. The Ka’anapali market and to an extent the Lahaina market are seeing lower sales for a few reasons. 1. Inventory is down at the lower price points of the luxury home market. 2. Some of the homes going under contract are “spec” houses with completion dates later in the year. Finally, some of the sellers are pushing the envelope on pricing. I mentioned the Lanikeha subdivision in Ka’anapali specifically in volume I of the market musings. The bulk of the inventory in that neighborhood is priced well above previous neighborhood high sales. To be fair, a couple of the higher priced homes have gone under contract since my post. That said, there are still quite a few homes available.
The increase in activity in new markets is also due to a combination of factors. We are seeing some homes selling above $2,000,000 due in part to appreciation. With price increases year over year ranging between 10 and 20 percent, some of last year’s below $2,000,000 sales are going for more money. Another factor is just plain old variability. Places like Haiku and Makawao both saw an increase in $2,000,000 sales over the last 4 years. It’s just that early 2021 was quieter in those communities. We are also seeing some luxury buyers expand their search outside the resort markets due to the lack of inventory.
The increase in activity in the condo market is largely due to better inventory selection compared to the luxury single family home market. That said, not all markets have an abundance of inventory. The Wailea and Makena area have lower inventory and it is reflected in the lower sales volume. We can see the impact of decreased inventory in some area of the luxury condo market in both the decreased days on market and the higher percentage of condos selling at or above asking price.
End of Safe Travels and the Mask Mandate
March 25th was the last day of the Hawaii Safe Travels program. Travelers coming to Hawaii will no longer need proof of vaccination or a negative covid test prior to arrival. It is also the last day of the indoor mask mandate in Hawaii. There are still requirements to wear masks on planes, buses, public schools and the airport.
Interest Rate Increases Don’t Seem to be Slowing the Market Around the Country
While keeping tabs on the local market, it’s also worth keeping an eye on national trends. This is particularly the case in the current market as interest rates hit heights we haven’t seen over the last few years. The folks over at Altos Research have good access to pending sales data around the country. That gives you a little better sense of current market conditions than what you would get by just looking at sales data. Here is their video overview of the most recent data and it’s worth a watch.
If you don’t have the time to watch, here are a few quick notes. Inventory ticked up again although pending sales and pricing both appear to be strong. They are watching closely to see if the recent rates are impacting buyers. While they aren’t seeing any data to really suggest a change in market conditions, they spoke to a few things they are looking for that might indicate a potential slow down from the current frenzy. They mentioned listening for anecdotal signs of less active bidding wars. Altos suggested keeping an eye out for an increase on cancelled transactions and an increase in cancelled new developer contracts. Again, they haven’t seen that in the national data yet.
For what it’s worth, they aren’t expecting any seismic shifts in the market other than moderation of the current activity. The caveat being that a more significant shift could occur if interest rates were to settle over 5%.
Interestingly, there were a few more cancelled contracts on the Maui MLS last week. I am hesitant to read too much into the cancellations at this point. While it might be related to the rise in rates, it could also be a coincidence. It is something to watch a little more closely going forward.
A Little Bit of Maui Beauty
It was another beautiful morning on Maui today. I thought it was worth sharing this photo from Baldwin Beach with the West Maui Mountains in all of their glory.
Contact The Maui Real Estate Team
Have questions on anything in this post? Need assistance buying or selling property on island? Just want to talk about a specific part of the market? Contact The Maui Real Estate Team. We look forward to being of assistance.
Maui Real Estate Blog
Maui Market Musings Volume III
Welcome to the third edition of Maui Market Musings. It’s our almost weekly take on a variety of Maui Real Estate topics. This week I wanted to take a look at competition in the market. We know first hand that quite a few listings are seeing bidding wars, but I wanted to look at some of the sales numbers to gauge where competition is most intense. We also take at some of the notable numbers from our condo listing at Sugar Cove. Last but not least, I offer a few closing thoughts on the state of the world and the state of the market. Without further ado, here is musings volume III.
Maui’s Most Competitive Markets
It is safe to say that buyers shopping for property on Maui are experiencing some of the most competitive conditions in the history of our local market. I took a look at recent sales data to try to get a sense of where the competition for properties is the most intense. I focused on two primary metrics. Properties selling for above asking price and properties selling for asking price or above. When comparisons were relatively close, I also looked at the number of cash transactions.
I used sales that closed between February 1st and March 9th. Keep in mind that this is something of a lagging indicator. Sales closed during this period mostly likely came from contracts agreed upon sometime between December and early February. Anecdotally, it felt like there were a large number of bidding wars in the second half of February. Most of those transactions are yet to close. By the same token, the war in Ukraine and its impacts on the economy are largely unknown. Depending on the direction of the economy, competition could ease. That will be something to watch over the coming weeks and months.
Most Competitive Property Type
The condo market is the most competitive market segment based on the sales data. A whopping 42.86% of the condos sold over that period closed above asking. The total for those at asking price or above comes in at 73.73%. If you were shopping for a condo over the last few months, you needed to be at or above asking price with your offers on the majority of the sales to ensure your chances for success.
Honorable mention goes to the single family home market. A total of 30.19% of home sales came in above asking price with an equal number coming in at full price. That means a grand total of 60.38% of homes sold went for asking price or higher. Needless to say, competition is strong for homes too!
Most Competitive Condo Market by Location
If you bought a condo in Kihei over the last six weeks, chances are that you had a lot of competition. A total of 85.72% of Kihei condos sold for at or above asking including 54.55% over asking price.
Lahaina earns honorable mention with 83.3% at or above asking price. It is worth noting that this skews towards asking price sales with 50% selling at asking price.
Most Competitive Condo Market by Price Point
This was a tough one to call as there were two price points with really similar levels of activity. In the below, $500,000 market, 34.21% sold above asking with a grand total of 81.58% at or above asking. It is worth noting that 42% of all transactions in this price range were cash purchases. In the $500,000 to $999,999 price range, 77.39% sold for at or above asking price. That said, 52.17% ended up selling for above asking price. Realtors reported cash transactions for 38.2% of sales in this price range. The lower price range had a slightly higher level of cash and at or above asking sales prices. The $500,000 to just under a million range came in with a much higher percentage of above asking price sales.
Most Competitive Home Market by Location
Competition for homes in Wailea was pretty tight as of late albeit on a limited number of sales. Three homes sold with two going for full price and one going over asking price. All three sales were cash.
Of the markets that had higher sales volumes, Haiku experienced the most competition. 77.78% of the homes sold for at or above asking price. Of all the sales, 44.44% closed above asking price.
Most Competitive Home Market by Price Point
The lower the price, the higher the competition. There was no category for sales under $500,000 as there were no sales in this range. In the below $1,000,000 range, 77.27% of all transactions closed for at or above asking price. That includes 31.82% closing for more than asking price.
Honorable mention goes to homes listed in the $1,500,000 to $1,750,000 price range. I didn’t set out to make this a specific price point for comparison, but the activity in this price range jumped out in the sales data. Nine of eleven listings closed for at or above asking with 72.7% closing for above asking price.
A Few Other Thoughts Looking at The Numbers
- This is a really challenging time for entry level buyers on Maui. Let’s be honest, it’s been really tough for quite some time. However, the threat of rising rates seems to have enhanced the urgency of some buyers. Investors with cash are lurking in this part of the market making for tough competition.
- The West Maui resort markets experienced some of the most competition in late 2020 and throughout out 2021. It seems as if relocations played an important part. This year, those markets cooled a little. Kapalua has the lowest percentage of condos closing for at or above asking with 25%. The one Ka’anapali home sold for below asking and quite a few homes are sitting. Some of that stems from sellers really pushing the envelope on pricing.
- While I found that competition was indeed stronger in some places than others, well priced properties were likely to draw competition regardless of price point or location.
Sugar Cove Building 6 Behind the Numbers
Our office listed a condominium in Sugar Cove in Spreckelsville for the jaw dropping number of $17,000,000. That is a pretty extraordinary asking price. That said, it is a truly unprecedented condo offering both for the North Shore of Maui and the island as a whole. These are some of the notable numbers that justify what would be one of the highest sales prices on record for a Maui Condo.
- 5,950:The interior living space of this listing. That is 23% larger than any previous condo sold on the island. It is the 3rd largest interior living space of any oceanfront condo or home actively listed for sale. The list prices for the larger properties are $22,900,000 and $59,500,000 respectively.
- 1: This listings is for 1 whole building at Sugar Cove. There are no shared walls with any neighbors.
- 3: Originally 3 units, the owners combined 2 of the units for a truly luxurious primary living space. The 3rd unit is used as a 4 bedroom, 3.5 bathroom guest space.
- 8: The total number of bedrooms. This is the first condo listing on Maui with 8 or more bedrooms.
- 4: The number of bedrooms with direct ocean views. There are a lot of beautiful condos on island where the bedrooms lack ocean views. This offering has four direct oceanfront, big view bedrooms. No more fighting over the bedroom with the best view.
- 70: There are over 70 feet of windows and glass doors overlooking the beach and ocean from the living/kitchen/dining area of the primary living space.
- 15.6: The total number of kilowatts generated by the 50 solar panels
- 28: The total number of racks for surfboards, windsurf boards or stand up paddle boards located on Sugar Cove Building 6. There is plenty of room for friends and family to store their gear after taking advantage of the world class combination of wind and waves located right offshore.
The numbers add up to a truly impressive property. Not a numbers person? Enjoy this short video to get a better feel for Sugar Cove Building 6.
Check out the listing page for more photos and details.
It’s been heartbreaking to watch the last two weeks of violence since Russia invaded Ukraine. Our thoughts go out to the Ukrainian people.
In light of the human tragedy, it feels difficult to talk about how the war could impact the real estate market. That said, some clients reached out to us over the last week asking about the potential impact of the war on the market. I thought it would be worth sharing a few thoughts. The reality is that this is a question that economists and people a whole lot smarter than us are still trying to answer. At this point, this looks like it will be a drawn out war, and it is becoming increasingly clear that it will have significant impacts on the global economy.
The upward pressure on gas and utility prices is well known. Air travel to and from the islands is going to become a lot more expensive and local utility rates are forecast to rise 20%. Russia is also a major exporter of raw materials above and beyond petroleum. The end of raw material exports out of Russia through the end of the year is likely to put upward pressure on all sorts of goods and commodities. The tweet below shows the global supply of certain raw materials coming out of Russia.
Ukraine is also an important raw material provider. It provides as much as 50% of the neon supply in the world. Neon shortages would impact a lot more than beer signs. It is an important component in the lasers used to etch semiconductors. The semiconductor and microchip shortages of the last couple of years are unlikely to go away anytime soon.
While inventory remains near record lows, inflation pressures could further push interest rates and/or take the steam out of parts of the economy. Thus far, the local market is more than weathering increased rates from before the start of the war. It remains to be seen if these additional challenges will cool off demand.
Contact The Maui Real Estate Team
Limited supply and increasing global uncertainty call for quality representation. Contact The Maui Real Estate Team if you are interested in buying or selling the current market. We welcome the chance to discuss your current needs.