March 26, 2020
With Maui under a stay at home order, I thought this might be an opportunity to get back into the swing of things with the blog. It is only appropriate to start these efforts by looking at the current impact of Covid-19 on Maui and the Maui Real Estate market.
What is the Current Impact on Maui?
As mentioned above, the Mayor of Maui County issued a stay at home order. The order closed non-essential business. Schools are shuttered through April 30th. Tourism is for all intents and purposes shut down. Last week, the governor requested that vacationers postpone their visits to Hawaii. Hawaiian Airlines made plans to stop long haul service to the islands. As a result, there was a substantial drop off in passengers flying in to Hawaii. The governor now requires residents and visitors flying from outside of Hawaii to quarantine for fourteen days.
This week, a number of the island’s large resorts announced that they would be closing their doors through the end of April. The fields of unused rental cars outside the airport are a surreal byproduct of the drop in visitors. Needless to say, the closures also idled a substantial chunk of the local workforce. This will be a tough time financially for quite a few Maui residents.
Fortunately, Covid-19 is not widespread on the island at this time. Local authorities reported the first case on island on the 14th of March. On Monday, the district health office began drive through testing in Wailuku. As of today, Civilbeat is reporting 14 cases on island. At this time, none of the cases locally stem from community transmission. Hopefully, the stay at home measures keep those totals low going forward.
What is the Impact to Date on The Maui Real Estate Market?
Needless to say, the Maui Real Estate Market has not been immune to Covid-19. On February 26th, there were 630 properties under contract on island. That was the highest number yet for this market cycle. As of today, the number of pending sales stands at 497 properties. This drop can be attributed to a variety of reasons.
First and foremost, a number of the properties under contract in February have since closed. There are still properties going under contract, but those numbers have dwindled. New pending sales are happening at a much lower rate than closed transactions. Last but not least, we are seeing some deals cancel. I don’t have accurate numbers, but anecdotally I am seeing a couple of cancellations happen on a daily basis.
Are We Showing Property Right Now?
Real Estate agents are deemed non-essential workers under the current stay at home/ work at home decree. While our local Realtor association has not mandated that we stop showings, they did recommend that all open houses, in person showings and caravans cease. Even prior to the stay at home order, some sellers were opting out of showings. The best bet for those who really want to see a property is to inquire as to whether the property has a good video or 3D tour. For examples, check out our 3D tour of the Cottage by The Sea in Wailuku or this video tour of the Haiku Sanctuary.
Are Buyers Still Submitting Offers?
As mentioned above, we are seeing properties go under contract. Our office put one of our listings under contract today. There are some buyers putting in sight unseen offers. Our office received a sight unseen offer on a listing a couple of days ago. It will be interesting to see how much the stay at home order impacts additional contracts going forward. I have seen quite a few sellers decide to pull their listing off the market. Some of that may be due to the lack of opportunity to show their property. Some may stem from general concerns about showing their property.
During this period of social distancing, contracts can be put together without a face to face meeting. Docusign was already a key part of our day to day business prior to the pandemic. Buyers and sellers should be aware that they may also need to sign a Coronavirus Addendum. There is no standardized Coronavirus addendum for purchase contracts as of yet. That said, individual brokerages are creating their own addenda. Most of these addenda are a variation of a force majeure clause that allows for extensions or cancellation due to circumstances out of a buyer or seller’s control.
What About Deals That are Under Contract?
As mentioned above, we are seeing both cancellations and sales. While there are additional challenges, it is still possible to close a transaction. The biggest hurdles involve any contingency or contract term that involves visits to a property. A transaction typically includes a visit from a home inspector, an appraiser, and a termite inspector. Home and land sales will typically include a surveyor.
An unoccupied property is going to have fewer issues than an occupied property for third party visits. I have seen one e-mail from a home inspector this week indicating they are still doing inspections. That said, the inspector outlined new protocols including one that prohibits the buyer from attending the inspection. Title companies are trying to do as much of the signing as possible via docusign. In person signings that require wet ink signatures include social distancing measures. One local title company is even offering a drive through signing process.
Future Impacts and Updates
At this point, I think it is far too early to begin prognosticating about the overall impact that Covid 19 will have on the Maui Real Estate market. A lot of really smart economists are scratching their heads as to what the future holds. For that matter, there are a lot of really smart medical professionals and researchers trying to wrap their arms around controlling this pandemic. There is just a whole lot of uncertainty in our world.
I will try to take advantage of my time at home to keep providing updates on events on the island, the local real estate market and the overall real estate market. Contact the Maui Real Estate Team if you have any questions on the Maui Real Estate market. We are here to help. Until the next update, I hope everyone stays safe and healthy. Stay home and flatten the curve!
