North Shore and Upcountry Luxury Real Estate Market Update

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We have received positive feedback on our Wailea Real Estate Market and Luxury Real Estate Market Updates. Based on that feedback, I thought I would take another granular look at the performance of Maui’s high end real estate. Today, I am comparing 2007 and 2008 sales stats for the North Shore and Upcountry areas of Maui. Since there is a smaller luxury market than the resort communities, I have combined these two geographic areas. Luxury homes in this market tend to be similar in that they often have more acreage. The following is a break down in sales for single family homes over $1,500,000.

  • Homes sold for more than $1,500,000Sales between January 1, 2007 ->June 23, 2007 = 16
    Sales between January 1, 2008 ->June 23, 2008 = 11

On a high level, it appears pretty straight forward with sales off about 31%. This is actually a little better than the performance of the Wailea Home Market between $1,500,000 and $5,000,000 which showed a decrease of 38% between 2008 and 2007. It is clear that there has been a slow down. However, with a nice small sample size, these numbers were ripe for further digging. I was able to make some interesting observations when I looked at each of the individual sales year to year.

One question I asked myself was whether the luxury real estate market was performing equally in all price ranges. The first thing that I noticed was that there were a lot more sales between $1,500,000 and $2,000,000 in 2007. There were 7 sales in 2007 in that price range vs 3 for 2008. That is a 57% decrease.

Conversely, the difference in homes sold above $2,000,000 between 2007 and 2008 was negligible considering the sample size. There were 9 sold in 2007 vs 8 homes sold in 2008. It is also worth noting that the very high end of the market has been stronger in 2008. There was one home sold for $4,000,000 among the 2007 sales. That was the high water mark for North Shore and Upcountry for the first half of the year. There have been three sales that eclipsed that mark thus far this year with homes selling for $4,500,000, $5,000,000 and $6,125,000 respectively. Those are the three of the four highest recorded home sales for this part of the island per MLS records.

It is clear when looking at the North Shore and Upcountry as well as the overall luxury stats, that the low end of the high end seems to be slowing the most. In the last year, we have seen pretty big changes in the mortgage market. The rates for Jumbo loans have increased significantly since the mortgage meltdown of August 2007. Is that the cause of the low end slow down? It is hard to tell definitively, but I could at least look at the data. MLS sales records indicate if a home was financed or purchased with cash. In 2007 6 homes were purchased with cash and 10 homes were financed. When you look at 2008, four homes were financed and 7 were purchased with cash.

I thought the shift towards cash was pretty interesting so I shared the data with Billy. He thought it was worth noting that there should be a caveat when looking at financing numbers. The MLS lists all homes that have financing as being purchased conventionally. Billy noted that it does not differentiate between homes financed through private banking and those that are financed through conventional jumbo loans. While we don’t have any empirical data, Billy had observed first hand that more of these high end transactions involve private banking resources. Private banking resources can offer significantly better rates to financially strong buyers than a conventional jumbo loan.

Overall, it looks like there is still pretty good interest in the Maui North Shore and Upcountry Luxury Real Estate market. We will continue to track this market on THE Maui Real Estate Blog. I hope these posts have been of value. I know that the research has been educational for me. I will try to take a look at another segment of the Maui luxury market sometime next week. In the interim, please feel free to contact us with questions or for additional assistance.

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