When the Headlines Diverge from Reality
As Maui’s Real Estate market has showed steady and significant appreciation over the last five years, there have been a number of sensationalistic headlines in the Maui News. The release of the Realtors Association of Maui’s monthly statistics was often met with a front page article citing a drastic price increase over the previous month. While there is no doubt that our market has seen appreciation, the headlines and the ensuing articles often overstated the increases. The writer’s of the articles erred in looking at month to month stats as a sign of market trends. When you have a small enough market like Maui, statistics should be looked at from a broader perspective. The sales of individual high end homes can help raise average prices. The sale of a number of condos in a new development can skew median and average prices on a month to month basis.
As our market has shown signs of cooling off, the headlines on real estate appreciation have been less frequent. However, today’s Maui News had a headline stating “Condo Sales Through the Roof.” The headline suggests the continuation of a scorching hot market. The ensuing article paints a somewhat different picture. While average and median prices have been increasing, the article reveals a major driver of price gains has been the upscale project Wailea Beach Villas. Sales prices in the complex have ranged between $1,150,000 at the high end up to $6,000,000. It is easy to see how this can drive up average prices. With enough of these units closing over the last few months, it can also drive up median prices. While sales statistics are a reflection of recent market activity, it is also worth noting that most of the closings at Wailea Beach Villas are based on contracts that were originally signed two to two and a half years ago.
Sensationalistic headlines aside, the one thing that is interesting in today’s article is the statistic that prices are increasing as the number of sales are decreasing and inventory is continuing to increase. Similar dynamics in many mainland markets have led to flat or even decreased home prices. While not as sexy a headline, this is probably the most interesting kernel from today’s front page story. It would be easy to dismiss this statistic as a reflection of the Wailea Beach Villas effect, but that does not appear to be the case. We are seeing this trend in other communities than Wailea. It will be interesting to follow this trend and see if continues over the next few months.
While there continue to be price increases in the market, the state of our market does not always reflect the headlines. Things are becoming more complex with some communities and condo complexes continuing to appreciate and other communities flattening or decreasing. To get a better idea of what is happening in the Maui market without the headline hype, contact the Jalbert brothers today.
