Maui Real Estate Blog
Maui Market Musings Volume XIX
It’s been a few weeks since our last Maui Market Musings. With that in mind, this post delves into the numbers that help cast a light on current Maui market conditions. Since our last post, interests rates surged higher again putting additional pressure on affordability for some buyers. This post looks at what impacts if any higher rates are having on the Maui market. We also look at current inventory levels by price point and community. Other subjects for discussion include cancellations, price reductions and the recent market response to new listings. This is a longer read so you may want to grab your favorite caffeinated beverage before proceeding further. It is not advisable to operate heavy equipment after reading.
It’s hard not to lead with interest rates when discussing the state of the market. Rates continued their climb since our last update. While they fluctuate daily, they’ve been somewhere between 6.5% and just over 7% over the last few weeks. Needless, to say, we are a long way from the sub 3% interest rates we saw during periods of 2021. For those hoping that this increase is going to be short lived, the recent comments of Fed Chair Jerome Powell suggest that is unlikely to be the case. Powell said higher rates are needed to bring about a “correction” and balance to the housing market. While the Fed doesn’t directly control mortgage rates, they can exert a strong influence with changes to the Federal Funds rate.
Higher rates (even rates lower than current rates) were already impacting real estate markets around the country. Values are starting to retreat in many markets, particularly in some of the frothiest markets of the last couple of years.
So what kind of impact are we seeing on Maui from higher rates? There are a couple of numbers that we look at in this musings that might reflect the impact of higher rates. Pending sales is one with decreased affordability likely to impact the number of buyers. Price decreases is another metric that would or should reflect sellers adjusting to decreased buyer demand. Keep reading to see what those numbers look like recently on Maui.
Maui Home Inventory
|<$750,000||11||14||11||11||7 (-4)||14 (+3)|
|$750,000-$999,999||25||62||31||44||21 (-10)||46 (+2)|
|$1,000,000-$1,499,999||65||34||58||28||45 (-13)||33 (+5)|
|$1,500,000-$1,999,999||41||19||46||13||44 (-2)||17 (+4)|
|$5,000,000-$9,999,999||24||7||26||5||27 (+1)||6 (+1)|
|$20,000,000+||5||1||5||0||2 (-3)||1 (+1)|
|Totals||239||156||256||124||225 (-31)||140 (+16)|
|Hana||4||1||8||2||9 (+1)||1 (-1)|
|Kahului||13||21||11||25||7 (-4)||26 (+1)|
|Kula||19||16||24||10||22 (-2)||11 (+1)|
|Lahaina||18||14||23||7||21 (-2)||10 (+3)|
|Napili/Kahana/Hono…||10||6||14||4||9 (-5)||7 (+3)|
|Pukalani||7||6||8||5||6 (-2)||7 (+2)|
|Spreckelsville/Paia||10||2||15||3||10 (-5)||4 (+1)|
|Wailea/Makena||15||5||16||4||10 (-6)||8 (+4)|
|Wailuku||39||35||41||22||36 (-5)||26 (+4)|
End of September Home Inventory Review
The information above is provided with the usual framework. The home inventory data by price point includes all of the island of Maui, but excludes the islands of Molokai and Lanai. The district information is limited to the districts with the most activity.
- The inventory of active homes fell 12.2% between the last day of August and the last day of September.
- Active inventory decreased in all price ranges below $3,000,000. There was a modest increase in inventory between $3,000,000 and $10,000,000, no change between $10,000,000 and $19,999,999, and a decrease in inventory above $20,000,000.
- Pending sales activity increased 12.9% over last month! This is a surprising reverse of recent trends. It is an especially big surprise with the recent mortgage rate increases.
- The biggest increase in pending sales occurred below $2,000,000. Above that price range the number of pending sales was either steady or increased by one. No price ranges experienced a decrease in pending sales activity. It is worth noting that the $10,000,000 to $19,999,999 range had no pending sales as of the end of August and still has no pending sales.
- Looking at the different communities around the island, only two communities saw an increase in inventory. Haiku and Hana both saw modest increases in active listings. Anecdotally, it seems like some sellers in these windward communities try to get homes on to the market before the start of the rainy season later in the fall. I haven’t taken the plunge to determine if there is any quantitative evidence to support that claim.
- After seeing big growth in inventory in late Spring and early Summer, Kihei saw the biggest decrease in active inventory for the second month in a row. Notably, the total number of pending sales in Kihei did not change. With that in mind, I decided to look a little closer at the Kihei market activity. While Kihei added 8 new pending sales this month, 7 sales closed, 8 listings cancelled and 2 expired. Only 4 new listings came to market. Based on those numbers, the reason for the decrease in inventory is multi-faceted. The cancellations could be a sign of seller capitulation (more on that below) or just sellers taking a break. We shall see.
- Wailea and Wailuku are the two communities that saw the biggest increase in pending sales with 4 net new pendings. Wailea’s increase is a little more notable due to the percentage increase in pending sales. It’s worth mentioning that 4 of the 5 overall new pending sales in Wailea and Makena reduced prices before going under contract. There’s something to be said for listening to market feedback and adjusting price.
Maui Condo Inventory
|$250,000-$499,999||11||23||14||17||11 (-3)||16 (-1)|
|$500,000-$749,999||43||39||34||43||28 (-6)||40 (-3)|
|$1,000,000-$1,499,999||30||31||29||31||19 (-10)||36 (+5)|
|$1,500,000-$1,999,999||30||33||24||35||18 (-6)||34 (-1)|
|$2,000,000-$2,999,999||20||36||22||38||14 (-8)||43 (+5)|
|$3,000,000-$4,999,999||12||18||12||19||10 (-2)||17 (-2)|
|$5,000,000-$9,999,999||10||3||8||1||7 (-1)||0 (-1)|
|Totals||205||234||181||233||145 (-36)||222 (-11)|
|Ka’anapali||24||13||25||16||17 (-8)||14 (-3)|
|Kapalua||10||10||11||6||10 (-1)||4 (-2)|
|Kihei||67||60||50||63||48 (-2)||61 (-2)|
|Lahaina||16||8||9||10||5 (-4)||7 (-3)|
|Ma’alaea||5||6||3||6||4 (+1)||4 (-2)|
|Napili/Kahana/Hono||40||34||45||25||29 (-16)||30 (+5)|
|Wailuku||14||13||9||14||8 (-1)||12 (-2)|
End of September Condo Inventory Review
Again, the tables above come with the usual framework for our end of month inventory. The table by price point includes all condos on Maui, but it does not include condos on the islands of Molokai or Lanai. The table with districts is limited to the communities with the most activity. Pending sales at La’i Loa at Wailea Hills skew the data in Wailea and the $1,500,000-$5,000,000 price ranges. There are 75 pending sales in that development based on contracts penned in 2020 and the first quarter of 2021. Pending sales in La’i Loa won’t start to close until sometime in 2023. Paradise Ridge Estates in Kihei also skews the data albeit to a lesser extent. There are 18 pending sales with that development based on contracts penned between 2018 and the first quarter of 2022. Overall, 41.89% of current pending sales are long term new developer contracts.
- The number of active condo listings at the end of September is 19.89% lower than at the end of August.
- Active inventory decreased in seven out of ten price ranges in the table above. Net inventory was unchanged in the remaining 3 ranges.
- Pending condo sales dropped 5.2% compared to the end of August. Is this a reflection of reduced inventory, reduced demand or both? It’s hard to say. That said, I did get a surprising number of e-mails last month from fellow Realtors seeking out condo inventory for buyers struggling to find what they want.
- Pending sales dropped in seven of ten price ranges. Pending sales increased between $1,000,000-$1,499,999 and $2,000,000 and $2,999,999.
- Ma’alaea is the only community where inventory increased last month albeit with just one more active listing than at the end of August. Kahului’s inventory is unchanged.
- Napili, Kahana and Honokowai experienced the biggest decrease in inventory with 16 fewer listings at the end of this month. It was also the only community where pending sales increased. The eighteen new pending sales shows pretty healthy activity. It seems that the increase in pending sales is the biggest driver for the decrease in active listings in this market, but cancelled listings were also a factor. Seven sellers pulled their listings off the market.
September is a transitional month on Maui. The summer tourism season is over and we are still a few months from our peak winter season. Anecdotally, I always thought of this as a month where some sellers will opt to take a pause from selling their home only to relist when it gets closer to winter tourism season. With the sharp decrease in active listings this month, I wanted to look closer at cancelled and expired listings. Is September actually a bigger month for cancellations historically? If so, how does this year compare to previous years? Is there anything that can be gleaned from this September’s high cancellations?
|September||40 (1)||28 (2)||39 (t6)||50 (1)||41 (11)|
|September||29 (1)||13 (11)||43 (t2)||44 (3)||41 (11)|
Before discussing the numbers above, it is worth noting that there is some noise when it comes to cancelled listings. An agent changing brokerages or one brokerage buying another can inflate cancelled listings. The change in brokerages results in cancelled listings immediately replaced by new listings as old listing contracts are cancelled and new contracts created. I noticed some noise in this month’s cancelled home listings. Hoku’ula, a new development Upcountry, cancelled their MLS listings last month and put them back on the market as new listings at a higher price.
With that framework, let’s address the first question that I posed above. Is September a bigger month historically for cancellations? It appears to be one of the biggest months for canceled home listings albeit with some notable exceptions in the chart above. For condos, it is a little more extreme. Some years it is near the top and others near the bottom with no clear cut reason for the variability.
So what does that say about this year? Even without those five Hoku’ula cancellations, September would still be the highest month for home cancellation for the year to date. September is also leading for cancelled condo listings despite rather limited inventory. It’s hard to say definitively if this is strictly seasonal or if any of those cancellations are due to seller capitulation. That said, it would make sense if we start to see some sellers retreat from the market for non-seasonal reasons. Sellers who were fishing for ultra high prices, don’t need to sell or need to borrow at higher rates to buy a new place could all have reason to pull their listing under current conditions.
Recent increases in interest rates are generating more price reductions nationally. Sellers are reacting to the decreased affordability posed by higher rates. What about the Maui market? Are we seeing similar trends? I looked at price reductions for active inventory on September 29th.
As of the 29th, 95 out of 224 active listings or 42.41% of all properties reduced their price one or more times. As of September 2nd, that numbers was 42.97%. On August 15th, it was 39.67%. While price reductions are up since the early summer, the more recent decrease in price reductions is somewhat surprising in light of the recent increases in rates.
On the condo front, 36 out of 144 active listings reduced their price one or more times. That calculates to 25% of active inventory. That is down from 27.84% on September 2nd and 29.62% of all listings on August 15th.
With inventory shrinking, perhaps sellers are feeling emboldened to stick to their guns on pricing. The higher level of cash and or low inventory levels seem to be making this market less responsive to interest rate changes thus far.
How Quickly Are New Listings Going Under Contract?
Another metric we continue to watch in the musings is how quickly things are going under contract. Specifically, what percentage of listings are going under contract within 10 days or less. We started tracking this in mid-February when the number was right around 56%. That was pretty much the peak of our winter frenzy. For properties that were listed between September 12th and 19th, 34% of all listings went under contract within 10 days. That is actually up from 29.79% between August 10th and 17th.
For home listings, 32.14% of new listings between September 12th and September 19th went under contract within 10 days or less. By comparison, 38.1% of all homes listed between 9/12/21 and 9/19/21 went under contract in 10 days or less. For a pre-covid comparison, 41.18% of all homes listed between 9/12/19 and 9/19/19 went under contract within 10 days or less. It is worth mentioning that 41% is a much higher percentage than other weeks we’ve looked at in 2019. For example, only 19.04% of homes listed between 9/27/2019 and 10/3/2019 went under contract in 10 days or less.
For condo listings, 36.36% of all new listings went under contract within 10 days between September 12th and 19th. Last year, an eye popping 67.74% of condos listed between 9/12 and 9/19 were under contract in ten days or less. In 2019, 27.27% of all condos listed between 9/12 and 9/19 went under contract within 10 days or less.
Overall, the market is way less frenzied than last year. However, properties are going under contract faster than in a “normal” Maui market. There are definitely fewer buyers, but there are enough buyers out there for the limited supply that over one third of the inventory is going under contract quickly.
A Few Closing Thoughts on the State of the Maui Market
The numbers compiled above paint a picture of a more resilient Maui market than one might expect. We actually saw fewer price reductions for homes and condos while pending home sales increased! Not exactly the market response one would predict when interest rates increase to their highest point in 15 or more years. It appears at this point that limited inventory is still having a significant impact on the market despite the rising borrowing costs.
Will that sustain itself through the rest of the year and into early 2023? I was suprised by this month so who knows what the future will hold. It’s likely that the market has yet to feel the full weight of higher interest rates. Add in signs of a slowing economy and our market is facing additional headwinds. Ultimately, the Maui market moving forward will be a balancing act between the impact of higher rates and supply constraints. Conditions well vary around Maui by both price point, location and property type.
With interest rates likely to remain elevated into the immediate future, more real estate economists are anticipating price corrections. Reading beyond the headlines, economists expect variability in market corrections across the country. Rates will be a market driver, as will the state of the economy and local inventory. It’s important not to base market decisions on national headlines, but instead on relevant local data. We plan to continue with our Musings and community market updates so Maui buyers and sellers have the data to make informed decisions.
A Little Maui Beauty to Brighten Your Day
Contact The Maui Real Estate Team
Questions about the post above? Wondering about conditions in a specific part of the Maui Market? Need assistance buying or selling a property on Maui? Contact The Maui Real Estate Team for assistance. One of our experienced and savvy agents would welcome the chance to sit down with you to discuss your real estate needs.
Maui Real Estate Blog
The Hana Ranch and A Hana Real Estate Market Update
The highest priced listing on Maui over the last four years has been the Hana Ranch. This 4,500 acre property located in East Maui was originally listed at $65,000,000 and is currently listed for $55,000,000. This is a legacy property that required a pretty unique buyer with A LOT of capital. While Hana is a magical part of the island, the seclusion and the unique character of the area made it a poor match for those that are looking for acreage for development opportunities. For that matter, the sellers were hoping to attract a buyer who would be more inclined to preserve the area. While there is an active agricultural component to the property, it isn’t exactly a cash cow. Ranching operations were cash flow negative. For such a big price tag, this property doesn’t pencil out for most who are looking for business opportunities. That being said, it appears as if the right buyer may have come along. As noted in last Thursday’s Maui News, Bio-Logical Capital is under contract to purchase Hana Ranch. While terms of the contract and a closing date have not been disclosed, Bio-Logical Capital has made its intentions with the Ranch known. They hope to preserve and potentially expand existing cattle ranching operations. They also hope to do additional sustainable agriculture on the property. Indications are that they are sensitive to the rural character of the community. On paper, things sound promising that Bio-Logical Capital will be good stewards of the land. We will provide additional details on the Hana Ranch sale as they become available.
The contract to purchase Hana Ranch cast the spotlight on East Maui Real Estate last week. It is the marquis sale or potential sale in what has been a year of renewed interest in Hana properties. Hana’s real estate market languished last year. During the first half of 2011, only one home and one parcel of land sold. There were only six properties sold in all of East Maui last year. There has been a positive uptick to the market through the first half of 2012. Here are the numbers.
There were seven homes sold in the first six months of 2012 with a median price of $349,900. There were 2 condos sold at the Hotel Hana with a median price of $475,000. There were three lots sold at a median price of $335,000. While we are dealing with small sample sizes, this is a 600% increase in activity over the first six months of last year.
Here were a few other things that I found notable about the Hana real estate numbers for the first six months of 2012.
- Three of the twelve properties included above are in the community of Nahiku.
- Two of the sales in Hana and East Maui were bank owned properties.
- There were no sales in the East Maui Communities of Kaupo or Kipahulu. That being said, inventory has been pretty limited in both communities
- The highest sale was $720,000 for a home on 5.4 acres in the Hana Ag Park. This property was listed by The Maui Real Estate Team.
- The lowest sale was $225,000 for a property with multiple structures of questionable permitting in Nahiku.
- Hana sellers have had to show a little more flexibility on pricing. Only one property sold for full asking price. Many of the properties sold for significantly less than original asking.
The Hana market is showing sings of life after what can only be described as a pretty dismal 2011. One factor in the resuscitation is addressed in my last bullet point directly above. Sellers have become more flexible on pricing and buyers have been responding to the values. This isn’t rocket science, but it is a clear theme coming up with all of my other midyear market updates. Buyers in this market are value sensitive and well priced properties are moving.
With a better first half of 2012, what can we expect for the rest of the year in Hana and East Maui? There is still a sizable inventory in Hana. There are twenty homes listed with three pending. That suggests a pretty good variety of properties for buyers. The pool of Hana buyers isn’t all that deep due to its relative seclusion. This means Hana home sellers are going to need to keep their pencils sharp. The land market is also pretty flush with listings. At this time, three of the twenty-seven land listings are under contract including the Hana Ranch. This is another market segment where motivated sellers will need to keep sharp on pricing to draw interest from the smaller pool of buyers. The Hana Ranch transaction could be an X factor in the Hana Real Estate market for the rest of the year. There have been other examples where high profile closes have drawn attention to a community and bumped real estate activity. It will be interesting to see if that happens with Hana if and when Hana Ranch closes.
If you are interested in the Hana Real Estate market, you can browse the current inventory of East Maui Homes for Sale on MauiRealEstate.com. Feel free to contact The Maui Real Estate Team if you are interested in selling or buying Hana Properties.