The July Sales stats have yet to be posted online by the Realtors Association of Maui. However, the numbers have been released to the press and other interested parties. We will publish all of the stats in our next newsletter. However, we thought we would give you a sneak preview of the stats and our thoughts. After reaching record highs in May and June, median condo prices are back down to levels closer to what we were seeing the first half of the year. The record highs were fueled largely by transactions at the new luxury development Wailea Beach Villas. With less activity in the Wailea Beach Villas complex this month, we saw the median go from $645,000 to $525,000 in June and July. As I have mentioned in previous blog posts and our newsletter, median and average sales prices on the island provide a skewed view of the real estate market when viewed on a month to month basis. Our market is small enough that the data can be significantly inflated by closings in a single development. When you look at things from a year to year perspective, the fluctuations in pricing are less drastic. That being said, the median sales price of condos is still 40% higher than this time last year. While there is a Wailea Villas effect over that time, there have been increases in condo prices throughout the island.
There are some pretty strong indications that the market is starting to resist these price increases. Sales volume is an area that tends to be less skewed than other market statistics. The sales volume statistics for July were the most noteworthy of the data released by the board of Realtors. In July of 2005, sales of condos were at a torrid pace with 228 transactions closed. This was the highest individual total for number of units sold going back through at least 2001. There were only 78 transactions closed in July of 2006. While there are still people willing to pay higher prices, the number of buyers has decreased significantly. Lower priced condos have been the first to feel the impact of this market change. This segment of the market was one of the hottest last year due to low interest rates and low inventory. As prices increased speculators added to the fray. This year inventory is up, interest rates are up and the number of prospective buyers is down. As a result, we have seen some recent sales prices below the peak prices at the end of last year and the beginning of last year. It will be interesting to see if this happens in other segments of the condo market. One thing is certain. There is a lot of inventory to choose from, which should present some buying opportunities for those looking to enter the market or enjoy the long term benefits of ownership on Maui.
Single family homes have experienced somewhat similar dynamics although price increases have been less dramatic between 2005 and 2006. Overall the median sales price is up 8% from this time last year. Changes in median prices vary throughout the island. Some communities are up in median price while other communities are down. It is a little harder to guage the significance of changes in the median pricing within individual communities due to the variability of properties and sample size. Sales Volume is down from 125 in July of last year to 88 home sold in July of 2006. Volume of sales is lower in communities throughout the island. Overall year to date single family home transactions are down 27 percent. There were 585 homes sold over the first 7 months of 2006. This compares to 799 sold over the same period of time in 2005.
The question is what does this all mean? In changing markets we are often asked what is going to happen in the future. Frankly, your guess is as good as mine. The world economy is way too complex at this point to venture a guess as to how Maui’s Real Estate Market will look in the next 6 months or a year. From a buyer’s perspective, Maui remains an extremely attractive place to live or visit. If you want to buy a home in a great climate, and a beautiful natural and cultural setting, Maui is second to none. There is more inventory to choose from and many sellers are motivated. For seller’s, the market is still responding to well priced properties. Now is not the time for pie in the sky pricing, but seller’s who purchased their home as recently as a a couple years ago have still seen significant gains in equity. If you want or need to sell, you should consider pricing your home very competitively. We would be more than happy to provide you with a market analysis to help you determine the value of your property / holdings. Click here to view a recent presentation from Paul Brewbaker, the chief economist for the Bank of Hawaii, for a more in depth look at the state of the Maui market. As the market changes, Billy and I are certainly not going anywhere. We are still working hard for both buyers and sellers. If Maui is a place you want to be, Contact us and we can help make it happen.