Welcome to Maui Market Musings! This is a new feature that I hope to post weekly or at least every other week. This is going to be something of a grab bag post where I hit on a variety of topics relevant to the Maui Real Estate market and beyond.
The first month of the year is done and dusted and that means the Realtor Association of Maui January stats are out. Here are some numbers worth highlighting.
- Pending Home and Condo sales decreased in January compared to January of 2021 by 21.3 and 31.3% respectively.
- The decrease in activity is due largely to decreased supplies. The volume of homes and condos for sale are down 34.6% and 75.8%. As it stands, there is about 1.8 months of home inventory and .8 months of condo inventory on the market. Six months supply is typical of a balanced market.
- The limited supply is translating into upward price pressure. The median home price increased 18.1% compared to last January and the median condo price rose 26.3%. Those numbers aren’t an exact reflection of changes in property values compared to last January as the composition and price point of properties sold is going to have an impact. That said, it is safe to say that prices are up substantially.
- Limited supply is meaning that properties are selling faster. Days on market for homes decreased 26.8% compared to last January. Days on market for condos decreased 39.9%.
- Current market conditions also mean that properties are selling for a higher percentage of list price. On average homes are selling for 100% of list price and condos are selling for 100.1% of list price.
What Does This Mean for Buyers and Sellers?
How are these numbers translating to what we are seeing first hand in the market? We listed a nice home in Haiku last week. Within that first week, we showed the property just over 20 times, received 12 offers and went under contract for well over asking price.
Buyers should expect that properties priced close to market will attract multiple offers. The buyers winning these bidding wars are being aggressive in some cases going well over asking price and waiving some if not all contingencies. Sellers who price close to market can expect a lot of showing activity with their home.
The pricing close to market component is important. While some buyers are really reaching, some sellers may be overshooting the market. We are seeing this in particular with some higher priced parts of the market. Last year, twelve homes sold in the Lanikeha subdivision. The average sales price for the twelve homes was $2,942,347 and the median price was $2,879,500. As of right now, there are seven active listings, no pending sales and no sales. The average price of the $5,439,714 and a median price of $5,200,000. Only one of the seven listings is priced below last year’s high sale for the neighborhood. While the year is young, this is one area where homes are currently sitting.
Maui Following National Trends
The inventory crunch, short days on market and rising prices are not unique to Maui. This is a national trend. Mike Simonsen of Altos Research tracks this on a weekly basis and he reported new national lows for inventory last week.
It’s worth reading through Mike’s whole thread. He also touches on Interest rates. Speaking of rates…
Rising Interest Rates
Mike’s thread mentions the impact of rates on the market. On a national level, the market appears to be relatively unfazed by the raise in rates. It hasn’t been insubstantial. Talking to one Maui lender today, she indicated rates are up .5 to .6 percent over the lat 45 days and .35% in just the last 15 days. With rates predicted to rise further, it will be interesting to watch the market overall and the lower price points in particular. Maui residents are already struggling with affordability.
The Vacation Rental Condo Market
One of the stronger areas of the Maui market is vacation rental condos. Low inventory and strong demand is pushing prices up. Last week, I came upon an an analysis that claimed Maui is the best market for vacation rental investments in 2022. I have to say, I question that analysis. There is no doubt Maui is a desirable place to own a vacation rental condo, but that isn’t based on rental returns. It seems if anything that the vacation rental market is doing well in spite of rental returns. While rental rates are going up, they aren’t quite keeping up with appreciation. Buyers looking at proformas for vacation rental condos are finding mostly 2-3% CAP rates. It seems like more buyers are looking at their condos as use assets where income helps to defer a portion of the costs.
Last Day for Hoku’ula Lottery Registration
Tomorrow is the last day to register for the Hoku’ula market rate housing lottery . This Upcountry subdivision will bring a significant amount of new inventory to market over the next year. There are already 98 workforce housing homes under contract with 98 market units coming. The price point for the homes available range from $1,285,000 to $1,650,000. The neighborhood offers good views, new construction, and about as convenient an Upcountry location as you could find.
Contact The Maui Real Estate Team
We hope this first edition of the Maui Market Musings offer some insight into current conditions. Contact The Maui Real Estate Team if there are any subjects you want us to touch on or if you need assistance. We look forward to being of service.