Maui Real Estate Blog
September 2022 Ka’anapali Market Update
Post Updated September 29, 2022
It’s time for an excursion to West Maui as we continue our series of posts on market conditions in different communities around the island. The focus of today’s post is Ka’anapali. This resort community experienced a boom in activity during 2021 with rising prices and a high volume of sales. How has the market been in 2022? Find out more below as we look at year to date numbers for 2022 with numbers from 2021 and 2019 provided for comparison. There are also a few thoughts on the outlook for the rest of the year and early 2023.
Ka’anapali Home Market Numbers
- Maui Realtors reported 20 homes sold for the year to date as of September 23. That is 59.2% less than the 49 sales reported over the same period of 2021. It is 11.11% higher than the 18 reported in 2019.
- The median price of homes sold in 2022 is $2,650,000. That is 11% higher than $2,387,000, last year’s median over the same period. It is 77.91% higher than $1,489,500, the median during the same period of 2019.
- The average price of the homes sold in Ka’anapali during 2022 is $2,855,552. That compares to an average of $3,017,891 and $1,994,037 during the same periods of 2021 and 2019 respectively. This year’s average is 5.38% lower than last year and 43.2% higher than 2019.
- 20% of this year’s buyers paid over asking price for their home and 45% paid asking price or above. In 2021, 12.24% of buyers paid over asking price and 28.57% paid asking price or above. In 2019, no buyers paid over asking price and 11.11% paid full price.
- Realtors reported 30% of sales were cash transactions.
- The highest priced transaction this year closed for $5,295,000. The property in the Lanikeha subdivision included a 3 bedroom, 3.5 bathroom home with 3,086 square feet of living space and a 1 bedroom, 1 bathroom, 508 square foot cottage on a .485 acre lot.
- The lowest priced sale for the year to date closed for $1,681,050. The bank owned property in Ka’anapali Hillside actually sold via online auction for 46.17% over asking price. The home needed serious repair and renovation.
- The Ka’anapali Hillside subdivision had the most sales activity with 6 closes. Lanikeha and the Summit were the next busiest with 5 transactions each.
Thoughts on the Home Numbers and the Outlook for the Rest of the Year and Early 2023
After a rip roaring 2021 for sales, transaction activity decreased sharply this year in Ka’anapali coming in just above the pre-pandemic levels of activity during 2019. That said, decreased volume is just one part of the story. There was enough demand that 45% of all home sales closed for asking price or above. That’s even more than last year. When compared to 2019 numbers, that 45% is particularly striking. Back before the boom of the last couple years, above asking price offers were exceptionally rare and just over 10% of the buyers paid full price.
Some of the decreased sales volume can be attributed to a scarcity of listings at lower price points and within a couple of higher priced Ka’anapali neighborhoods. There were no transactions or even inventory in the Pinnacle this year, and just two listing and no transactions in Ka’anapali Coffee Farms. At this time, there is no active inventory for less than $3,000,000, with the only 2 listings below that price under contract.
Inventory isn’t as big of an issue as you move up in price range in Ka’anapali. Fifty percent of all the active inventory is priced between $5,000,000 and $7,000,000. Thus far one home sold in that price range with one additional home listed above $5,000,000 under contract.
It is worth comparing the homes that sold for between $5,000,000 and $7,000,000 last year with the current inventory in this price range. Last year’s sales included two large homes on acreage in Ka’anapali Coffee Farms and a 6,575 square foot home in the Pinnacle. While size isn’t everything when it comes to value, this year’s $5,000,000 and up listings tend to be smaller homes on smaller lots than last year’s sales. The active inventory includes four homes in Lanikeha with the largest home coming in at 4,557 square feet and a home in Kaanapali Coffee Farms substantially smaller than both of last year’s highest priced sales in that neighborhood.
It is also worth noting that all of the active listings in this range appear to be spec builds. There are two more spec builds in Lanikeha priced between $4,000,000 and $5,000,000. This volume of spec building is almost unheard of in the Maui Luxury home market. It will be interesting to watch the sellers of these spec builds through the rest of the year, especially if we see additional shifts in the market and or the economy. I surmise that it may take some pencil sharpening for some of those properties to go under contract.
As for overall Ka’anapali luxury home market activity in late 22 early 23, inventory constraints at lower price points will impact sales volume. Any additional sales beyond the current pendings will mostly come via new inventory or price adjustments. Rising borrower costs may also curtail activity. While there is a fair amount of cash in the market, rate increases will impact affordability for some buyers. Negative economic news and declines in the equity markets could also cause some buyers to put second home purchases on hold.
Ka’anapali Condo Market Numbers
- As of September 23rd, Maui Realtors reported 123 condos sold in Ka’anapali for the year to date. That is 37% fewer than the 194 that closed over the same period of 2021. It is 14.95% more than the 107 that sold during the same period of 2019.
- The Median price of the condos sold for the year to date is $1,450,000. This is 52.63% higher than the median of $950,000 from last year over this same span. It is 63.66% higher than the median for the same period of 2019.
- The average price of the condos sold for the year to date is $1,724,465. That is a 31.67% increase over last year’s average through September 23rd. It is 54.15% above the 2019 average during the same time span.
- 23.58% of all of the condos sold thus far this year sold for over asking price, and 47.15% sold for asking price or above. That’s well above last year’s numbers of 8.76% over asking and 44.33% for asking price or above. Just to give some context as to what is was like pre-Covid, in 2019 only 2.8% of sales sold for over asking and 16.82% sold for asking price or above.
- Maui Realtors reported that 51.21% of all sales were cash transactions. That’s up a little over the 50% reported last year. Cash purchases were actually higher at 59.81% in 2019.
- The lowest priced condo to sell in Ka’anapali is a leasehold studio unit in Ka’anapali Shores that closed for $325,000.
- The highest priced condo to sell closed for $5,899,000. The 3 bedroom, 3 bath unit in the Konea Tower at Honua Kai has 2,280 square feet of living space.
- Honua Kai is the busiest condo development thus far this year with 37 closed transactions. Ka’anapali Shoes is second busiest with 20 sales for the year to date. The Masters had the third most inventory with 15 sales.
Ka’anapali Year to Date Review and Late 2022 Early 2023 Market Outlook
While the Ka’anapali Condo market for the year to date did not see a repeat a the astounding sales volume of 2021, it remained a busy market well above the levels seen in 2019. If anything, constrained inventory and continued demand made for a more competitive market than last year with more properties closing for over asking price. The market conditions meant continued upward pressure on prices.
As it stands, the vacation rental and second home condo market continues to be resilient as some other types of property on island start to feel a market shift. As of the 26th of September, there are only 17 active condo listings on the market in all of Ka’anapali. Limited inventory improves the position of sellers and continues to exert at least some upward pressure on pricing. It will be interesting to see how the limited supply balances out against demand. Again, the cash in this market makes it a little less interest rate sensitive, but there is still some impact. As of right now, a 30 year fixed on a vacation rental condo is being quoted as high as 8.5%. Needless to say, a lot of borrowers are opting for ARM products. Even those are a lot more expensive.
The chart above shows pending condo sales by month in Ka’anapali over the last five years. A few things worth noting when looking at the chart. The first things is that 2021 and 2020 are anomalies with 2019 and 2018 more normal markets. If you are wondering about the April 2018 spike in pending sales, the market got a boost from a new development, Honua Kai Luana Gardens Villas. It’s also worth noting that while 2022 pending sales started stronger than 2019 and 2018, monthly pendings for 2022 are running behind both 2019 and 2018 since May. The last thing is that while there is a little more activity in the first half of most years, the second half of the year sees steady activity. I would suspect that we will see “below normal” market activity through the rest of the year.
Based on inventory and seasonality, I would anticipate relatively limited sales volume to close out the year. With the amount of inventory available, the economy in flux and borrowing costs the highest since 2002, it looks like a quieter start to 2023 could be in order. We shall see what happens going forward.
Contact The Maui Real Estate Team
Contact The Maui Real Estate Team if you have questions about this post or if you need assistance buying or selling property in the Ka’anapali area. You can find all of the current active Ka’anapali Homes for Sale, Ka’anapali Condos for Sale and Ka’anapali Land for Sale on MauiRealEstate.com.
Maui Real Estate Blog
Maui Market Musings Volume XVI
Sweet sixteen! This is the 16th edition of our almost weekly look at the Maui Real Estate market. This latest edition is highlighted by our monthly inventory check. We break down end of the month home and condo inventory by both community and price point. We also check in on the percentage of the active inventory with price reductions, and the percentage of new listings going under contract in ten days or less. Collectively, the three metrics give us a better sense of current market conditions. Last but not least, this edition highlights a couple of national perspectives on the real estate market.
Inventory Watch for Single Family Homes
|<$750,000||6||22||6||16||11 (+5)||14 (-2)|
|$750,000-$999,999||19||54||32||63||25 (-7)||62 (-1)|
|$1,000,000-$1,499,999||43||37||58||34||65 (+7)||25 (-9)|
|$1,500,000-$1,999,999||30||27||44||22||41 (-3)||19 (-3)|
|$2,000,000-$2,999,999||37||14||34||15||31 (-3)||19 (+4)|
|$3,000,000-$4.999,999||24||11||27||10||25 (-2)||9 (-1)|
|$5,000,000-$9,999,999||22||8||23||8||24 (+1)||7 (-1)|
|Totals||193||176||241||169||239 (-2)||156 (-13)|
|Haiku||15||12||20||13||22 (+2)||11 (-2)|
|Kahului||11||24||8||27||13 (+5)||21 (-6)|
|Kihei||27||25||45||22||48 (+3)||14 (-8)|
|Kula||24||12||25||13||19 (-6)||16 (+3)|
|Lahaina||15||15||20||18||18 (-2)||14 (-4)|
|Makawao||11||17||13||12||14 (+1)||9 (-3)|
|Napili/Kahana/Hono…||12||5||12||3||10 (-2)||6 (+3)|
|Pukalani||5||12||12||7||7 (-5)||6 (-1)|
|Wailea/Makena||8||5||13||4||15 (+2)||5 (+1)|
End of July Home Inventory Review
Here are some notes about the data above to provide some framework. The price range chart includes all of the island of Maui, but not the islands of Lanai or Molokai. The list of districts above is limited to those with the most activity.
- After seeing an increase in inventory in June, the inventory of active home listings actually decreased in July by approximately 1%. We just aren’t seeing the substantive increase in home inventory that many mainland markets experienced this spring and early summer.
- The decrease in pending sales continues. Pending sales are 8% below the end of June and 12% below the end of May.
- Looking at the different price points, I think the two most notable price ranges are homes priced below $750,000 and listings between $1,000,000 and $1,499,999.
- The below $750,000 range turned my head at first glance. The “entry point” to the Maui market’s been one of the most competitive parts of the market for some time. When I looked at the actual inventory, the increased inventory in this range consists of properties that need a lot of work. Fix and flip buyers who might pursue opportunities like this seem to be less active.
- The $1,000,000 to $1,499,999 price range is the one segment of the market that saw increases in inventory in both June and July. Inventory at the end of July is 51% higher than it was at the end of May. This price range also had the biggest drop in pending sales over July. This is a price range that is likely feeling the effects of affordability challenges. It is out of reach for most Maui residents particularly with higher borrowing costs.
- The $2,000,000-$2,999,999 price range is the one market segment that saw an increase in pending sales.
- Looking at the different communities around the island, Kihei is noteworthy for both an increase in inventory and a decrease in sales. Inventory is up 77% from the end of May and pending sales are down 37%. Billy and I were discussing why Kihei may be seeing the biggest increase in inventory. It’s hard to say definitively. That said, we both noticed a fair amount of aspirational pricing among the active inventory.
- The other thing to note about the community chart is some of the variability evident. Some places that saw increased inventory last month saw decreases this month and vice versa. With these small sample sizes, I surmise we may continue to see month to month shifts in a number of communities.
Inventory Watch for Condos
|$250,000-$499,999||12||23||19||25||11 (-8)||23 (-2)|
|$500,000-$749,999||18||55||31||40||43 (+8)||39 (-1)|
|$1,000,000-$1,499,999||23||49||29||30||30 (+1)||31 (+1)|
|$1,500,000-$1,999,999||21||34||28||34||30 (+2)||33 (-1)|
|$3,000,000-$4,999,999||12||22||11||25||12 (+1)||18 (-7)|
|Totals||149||293||199||247||205 (+6)||234 (-13)|
|Ka’anapali||23||23||23||15||24 (+1)||13 (-2)|
|Kahului||5||8||4||3||2 (-2)||8 (+5)|
|Kapalua||7||15||12||9||10 (-2)||10 (+1)|
|Kihei||35||95||55||74||67 (+12)||60 (-14)|
|Wailea/Makena||16||91||23||85||25 (+2)||82 (-3)|
|Wailuku||9||11||12||12||14 (+2)||13 (+1)|
End of July Condo Inventory Review
The price points table includes all condos on Maui, but it does not include condos on Molokai or Lanai. The table with districts is limited to the districts with the most activity. As mentioned in previous musings that look at inventory, 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.
- After a big 33% jump in inventory between the end of May and June, the inventory of active listings increased a modest 3% by the last day of July.
- Pending sales also continued to drop with a 5.3% decrease in pending sales on July 31st compared to June 30th. That compares to the 16% drop between the end of May and the end of June.
- When you hone in on the different price points, only 4 out of 10 of the price ranges actually experienced increases in inventory. Two of the four only increased by a single condo.
- The lion’s share of the increase in inventory occurred in the $500,000 to $749,999 price range. Looking at the listings in that price range, the majority of those units are non-vacation rental condos geared toward island residents. This segment of the market showed surprising resiliency as rates increased. It seems to be cooling with inventory and days on market both increasing.
- Pending sales decreased across 5 of 10 price points. The $3,000,000 to $4,999,999 price range experienced the largest dip in activity with 7 fewer pending sales.
- Looking at the inventory changes by community, Kihei stands out with the biggest increase in active listings and the biggest decrease in pending listings. Again, I am not sure I can pin point a single reason. As with Kihei homes, I surmise sellers with aspirational pricing play a part. There are also quite a few non-vacation rental Kihei Condos in that $500,000-$750,000 range.
- The Napili, Kahana and Honokowai area took a different trajectory from Kihei with 8 fewer listings on the market.
- Looking at the resorts, Ka’anapali and Wailea both saw modest increases in inventory while Kapalua inventory decreased modestly.
While inventory remains limited, we are seeing an increasing number of price reductions. As of August 15th, a total of 39.67% of active home listings reduced price one or more times. That compares to 34.03% as of July 4th. In the condo market, 29.26% of condo listings reduced asking price as of August 15th. On July 4th, 24.63% of all condo listings reduced list price.
It’s worth taking a minute to delve into exactly what an increase in price reductions might mean. To be honest, it really varies on a case by case basis. It’s pretty clear that a number of sellers in this market priced with first quarter market conditions in mind. During that time, prices increased upwards rapidly. Sellers could get away with being ambitious. Fast forward 5 months and the rate of appreciation is slowing significantly. If someone wants or needs to sell sooner, they are going to have to price closer to recent comparable sales. More sellers hoping that frothy market conditions continued into the 2nd and 3rd quarter are adjusting their expectations.
It’s also worth noting that pricing on Maui can be challenging. There is enough heterogeneity in the market that even sellers trying to price near comparable sales can miss the mark. If sellers and their agents struggle to value a property due to its unique characteristics, they may need to receive market feedback and adjust accordingly.
At this point, the price reductions that occurring appear to be sellers either the ambitious adjusting expectations or those struggling to come up with a value responding to the market. I haven’t seen any price reduction data that shows sellers on Maui adjusting prices below recent comparable sales. If we do start to see any shifts in value, it is likely going to occur first in the pockets of the market where inventory is higher.
Demand for New Listings
In February, we started tracking what percentage of properties went under contract in ten days or less. Back then, 56% of all listings went under contract within 10 days. That percentage slowly decreased throughout the spring with a more pronounced shift after interest rates spiked above 5%. For the period between July 25th and August 1st, the number dipped down to 22.45% of all active listings. For comparison, 50.94% of all new listings went under contract within 10 days between July 25th and August 1st of 2021. During the same period of 2019, 28% of new listings went under contract within 10 days of coming to market.
There is some discrepancy between homes and condos for this metric. For the 25th through the 1st, 26.92% of new condo listings and 17.36% of homes went under contract within 10 days of hitting the market. Again for comparison’s sake, between 7/25/21 and 8/5/21, 48% homes and 57% of condos went under contract within 10 days or less of being listed. For the period between 7/25/19 and 8/1/19, 25% of homes and 30.23% of condos went under contract within 10 days or less of being listed.
The numbers above would suggest that market conditions are definitely a lot cooler than earlier this year or this time last year. It would also seem to suggest that the market is cooler than pre-covid conditions in 2019. That said, it is worth noting that 2019 was a pretty strong year for real estate on island.
A Few National Real Estate Perspectives Worth Sharing
It’s been a while since we posted some national perspectives on the real estate market. I thought it might be worth sharing some thoughts I recently came across on social media.
I am not sure that the tweet above is a new perspective to all of our readers, but I thought it was one worth reiterating. While there’s been a demand slow down across the board in the national market, local market conditions are strongly impacted by available inventory. Some former hot spots for real estate appreciation are seeing stronger market shifts and signs of price decreases as inventory ballooned over the last few months. Other places where inventory growth remains limited aren’t experiencing downward pressure on pricing. Maui more closely resembles the latter than the former.
If you have a little time, I also included this video from the folks at Altos Research. It discusses some of the recent changes in their market analysis and forecasts as the rate of inventory growth is slowing around the country.
They suggest that the chances of broader price reductions are lowering due to the more limited inventory growth. It will be interesting to compare their current projections to the actual conditions in the fall market.
Some Maui Beauty to Brighten Your Post
Contact The Maui Real Estate Team
If you have questions or comments on this post, Contact The Maui Real Estate Team. Thinking of buying or selling property on Maui? Call us or send us an e-mail, we would welcome the chance to sit down with you to discuss your real estate needs.
Maui Real Estate Blog
Taking the Pulse of the West Maui Vacation Rental Condo Market
We recently posted on a surge in activity in the South Maui Vacation Rental Market. Wailea and Kihei both saw a big increase in condo sales for the year to date. West Maui is home to the other big concentration of vacation rental condos on island. The West side has not been the best side for sales this year. Condo activity is off compared to 2016. This post takes a look at sales activity in the different areas of West Maui, looks at a few condos that have seen stronger activity and takes a look at a couple of factors that could be driving the slower sales on this side of the island.
As of June 7th, there have been 145 vacation rental condos sold in West Maui this year. As of the same time last year, there were 176 vacation rental condos that sold in West Maui. That is an 18% reduction in sales volume. I broke down the sales by price ranges to try to see if the decrease in activity occurred across the board. Condo sales $500,000 and under were down 22%. There were 57 sales this year as compared to 73 last year in this price range. The middle part of the market between $500,001 and $1,000,000 performed the strongest of any market segment with a modest increase of 4.6% over last year. There were 67 sales compared to 64 over the same period of 2016. The high end of the West Maui vacation rental market saw the steepest decline in activity of any market segment. Sales were down 51% for vacation rental condos priced from $1,000,001 on up. There were 23 sales compared to 45 sales over the same period of 2016.
The Lahaina condo market was the one area of West Maui that saw an increase in activity compared to last year. Lahaina has a small number of vacation rental condo complexes with four total properties. Those four complexes saw activity increase by 35% for the year as of June 7, 2017. It was a good five plus months of sales in Lahaina, but one condo stood out above the others.
Aina Nalu is located one block off of Front Street in historic Lahaina Town. There are 190 units at the complex spread over 11 buildings on 18 acres. There are studio, one bedroom and two bedroom floor plans. Prices range from the $300,000s for one bedrooms to the low $400,000s for two bedrooms. Owners value the grounds, the two nice pools, the tropical design elements and the location. If you were so inclined, this is a place where you could stay without driving your car with Front Street so close by. The property had 5 sales through just over five months of 2016. As of June 7th, there were 12 sales in Aina Nalu. That is an impressive 240% increase in sales activity.
As you head North from Lahaina, the Ka’anapali condo market has seen a dip in condo sales activity for the first five months of the year compared to the same period of 2016. Sales slipped from 63 sales to start 2016 to 42 sales as of June 7, 2017. That is a 33% decrease in activity. The decrease in sales was almost across the board with only Ka’anapali Royal registering more sales this year than last year with 4 sales compared to 2. While I typically focus on the condos that stand out among the crowd for higher sales activity, I wanted to take a look at the condo complex that saw the biggest dip in activity.
Honua Kai is the last fee simple whole ownership condo to be built in the Ka’anapali Area. It has 711 units spread over two seven story towers on 40 acres. The Hoku Lani tower was completed in 2009 and the Konea tower was completed in 2010. Honua Kai has extensive amenities including three separate pools and an onsite restaurant, grocery store and spa. It has studio, one bedroom, two bedroom and three bedroom condominiums. Prices range from the high 600s for a select few mountain view one bedrooms up to over $5,000,000 for the best located three bedroom units. People who own at Honua Kai appreciate the significant amenities, the beachfront location, the newness of the location and the rental demand.
Honua Kai has had a big impact on the West Maui Condo market since 2005 when they started taking the first round of pre-construction reservations. Those reservations generated a significant number of sales during the doldrums of the post crash real estate market. This goosed the condo sales numbers when overall demand was low. I dubbed this distortion of the statistics The Honua Kai Effect.
June of 2016 was the last new developer sale at Honua Kai. There were 15 new developer sales between January 1, 2016 and June 7, 2016. That gives some context before I provide this year’s sales numbers. There were 14 Honua Kai Sales for the year as of June 7th. Last year, there were 32 over that same period of time. That is a 54% drop in sales volume. The new developer sales account for most, but not all of the difference between this year and last year’s sales volume.
Honua Kai remains a popular choice for West Maui condo buyers. While we saw a big dip in activity, it still saw more sales than any other West Maui condo.
Napili, Kahana, Honokowai
The three communities located between Ka’anapali and Kapalua offer the greatest concentration of oceanfront condos in West Maui. It was another area that has seen a decrease in activity in 2017. There were 57 sales in this area five months and a week in to 2017. That is down 22% from the 73 sales through the same period of 2016. The bulk of the condo complexes in this area saw a decrease in activity with a few exceptions.
Papakea is an oceanfront complex in the Honokowai area. It has 364 condos spread over 11 buildings on just over 12 acres. There are studio, one bedroom and two bedroom floor plans. This complex is predominantly fee simple, but there are some leasehold units. Papakea has a pretty broad range of prices. Leasehold one bedrooms start right around $200,000. The most expensive units are direct oceanfront two bedroom units. They sell for as much as $1,000,000. Owners like the oceanfront location, amenities and relaxed feel. Papakea had a pretty good start to 2016 with 10 sales in just over five months. This year was 40% better with 14 sales in the same period of time.
While most of West Maui was either markedly stronger or weaker this year compared to last year, Kapalua has been pretty steady with the same number of sales this year as last year. There were 14 vacation rental condos sold this year as of June 7th, compared to 14 over the same period last year. While the overall numbers were the same, there were some shifts in activity among the five complexes that allow vacation rentals. I wanted to highlight the one condo that saw the biggest increase in activity and the highest number of sales overall.
Kapalua Golf Villas
Kapalua Golf Villas is situated along the beautiful Kapalua Bay Course. There are 186 units spread over 16 buildings on 15.8 acres. Amenities include three pools. The property went through extensive renovations in 2014. Prices range from the high $500,000s for one bedrooms lower on the golf course to just under a million for fully upgraded two bedrooms with good ocean views. Views, finishing and floor plans are the primary drivers on price. Kapalua Golf Villas offer the lowest priced entry point into the Kapalua Real Estate market. Owners appreciate the location on the Bay course, the views and the proximity to Kapalua Beaches and to other resort amenities.
Kapalua Golf Villas has been the busiest of the Kapalua condos in 2017. There have been 7 units sold as June 7th. There were 4 sold over the same period last year. That is a 75% increase in sales activity.
What’s Driving the West Maui Market
South Maui vacation rental condos have been booming this year while West Maui has been slower. They are two seemingly similar markets. What is driving the difference in market behavior? I was able to give some pretty good reasons as to why I think the South Maui market has surged to start the year. Determining what might be holding things back in West Maui is a little more challenging. The one clear cut cause was already discussed. Honua Kai is seeing less activity now that it is just resales and there are no more new developer listings.
Are there any other factors keeping down West Maui sales numbers? The state of Kahana Bay may be impacting sales. This section of West Maui coastline has significant erosion issues. Hololani has been struggling with erosion issues for a number of years. Those issues expanded down the coast last year. Royal Kahana and Valley Isle Resort had to put up emergency sandbags during the winter of 2016 to halt a rapid loss of shoreline. There are now nine condo associations that are a part of efforts to develop a shoreline replenishment plan. With the cost of beach replenishment expected to approach ten million dollars, the individual owners in those nine complexes are facing a big assessment to pay for the project. While the numbers of condos sold in the nine complexes this year is pretty similar to what we saw last year, the uncertainty over this coastline and the potential future costs may be limiting the potential for growth in this market.
The one other factor that could be at play is plain old variability. We see that in the market from time to time. Some years West Maui has stronger years for sales activity and some years it is South Maui that has a big year. The underlying reasons aren’t so clear cut. This may be just one of those years for West Maui. When you add in the other factors previously mentioned, those three things in and of itself could account for the 18% drop we have seen. If you are a close follower of the West Maui market and you have any other theories, we would welcome your input in the comments below.
The good news for potential buyers is that there is still a lot of inventory in this market. This is particularly the case with condos priced from $500,000 and up. You can search through the current inventory of Kapalua Condos for Sale and Ka’anapali Condos for sale on MauiRealEstate.com. You can also search the MLS for condos listed in Lahaina, Napili, Kahana and Honokowai. Contact The Maui Real Estate Team if you want to talk to a real estate agent about West Maui Vacation Rental Condos. We would welcome the chance to learn more about what you are looking for and to assist you in your search for a condo that will fit your needs.
Maui Real Estate Blog
Three Takeaways from the Maui Real Estate Market During the First Quarter of 2017
It has been a while since I have done an island wide stats post. After over ten years, I was struggling with rehashing the same format on a monthly basis. I decided to take a different approach this month. Rather than barraging you with lots of numbers, I wanted to try to distill the numbers into a few key takeaways. I also am gong to try to do this on a quarterly basis. With our smaller market, I think there is some merit to looking at slightly longer time horizons to overcome some of the variability we get on a month to month basis. Hopefully, those two changes will make for a better and more informative read. Without further ado, Here are my three key takeaways from the first quarter of 2017 followed by a some thoughts on what we may expect over the next few months.
1. Scarcity was the biggest driver of the Maui Real Estate market for the first three months of 2017. This was particularly true in the home market under $1,000,000. The lack of inventory in this price range has resulted in a lot of bidding wars and upward pressure on pricing. It also meant a decrease in sales volume as there just aren’t as many homes to sell. Buyers are out looking, but they are having a tough time getting into places. This is reflected in the stats with median prices up 15% compared to the first three months of 2016 and sales volume down 5%. The March median home price of $769,000 was the highest that we have since 2006. Again, this really hammers home the scarcity of listings at lower price points.
Scarcity is not a Maui specific phenomenon. It is happening throughout the United States. I was listening to Jill Schlesinger of CBS on Here and Now. She talked about the factors constraining the housing stock nationally. She cited a Baby Boomer generation that has not been quick to sell their homes at retirement. There are quite a few members of that generation who are choosing to modify their homes so they can age in place. Schlesinger also said that a lot of homes were acquired by private equity companies during the last downturn. They have kept those properties as rentals rather than putting them back on the market. I am not sure that the same factors are in play on Maui. For one, private equity firms were not buying property in big numbers on island. I think the biggest constraint we are seeing on Maui is a lack of new construction. New construction is not even coming close to keeping pace with population growth. It takes a longer period of time for new developments to get off the ground on Maui and many times they will fizzle out in between market cycles. We are also seeing a lot of new development occurring at higher price points in the market and less development occurring at the entry points of the market where demand is highest.
2. Luxury Real Estate Sales Trend up and Shift South. Luxury home sales were up in the first quarter of the year. There were 16 sales over the first 3 months of 2017 compared to 11 over the first 3 months of 2016.
Over the last couple of years, luxury home sales have been stronger in West Maui compared to South Maui. Launiupoko has led the charge with Kapalua and Kaanapali following close behind. There were eight sales in West Maui over $2,000,000 during the first 3 months of 2016. There was a a solitary sale in South Maui during that period. This year, there were four sales in West Maui over $2,000,000, and there were eight sales in South Maui over $2,000,000. Makena market activity was particularly notable with four sales over $9,000,000. It is hard to account for the shift in sales volumes between the different part of the island. Sometimes it just depends on the comparative quality of the inventory. Makena may also be seeing a bump due to the development of the Makena Golf and Beach Club. While none of the four sales in Makena were part of this development, this ultra high end development from Discovery Land Company may be drawing some affluent buyers to explore more immediate options for purchase outside of the new development.
There was also an uptick in luxury home sales outside the resort areas. There was a single sale in each of the communities of Hana, Haiku, Kula and Paia.. That compares to a single sale outside the resorts during the first three months of 2016.
The luxury condo market saw some similar trends. Sales were up overall. There were twenty-three sales over $1,500,000 during the first few months of this year compared to seventeen during the first three months of 2016. Twenty of the sales were in South Maui during 2017 compared to nine last year. Conversely, West Maui has seen a dip in activity with three closes compared to eight in 2016. Some of that can be attributed to a decrease in inventory in Honua Kai. All of the developer units have sold there which means we are now depending exclusively on resales.
3. Overall, the condo market had strong start during the first quarter of 2017. Condo sales do not seem quite as constrained by inventory when you look at the sales volume. Sales volume is up 17% compared to last year***. Almost all of that growth in activity can be traced back to the vacation rental condo market.
The vacation rental market had been in the doldrums for the previous couple of years. Much of that can be attributed to a decrease in demand from our neighbors North of the border. The Canadian Dollar has slumped after a number of years of parity. As a result, we saw relatively limited activity and a glut of inventory in some of the more popular vacation rental condos in the Kihei area. That appears to have shifted during this buyer’s season. Overall, sales of vacation rental condos were up 48% county wide. In Kihei, sales of vacation rental friendly condos were up 73%.
It is hard to attribute an exact reason for the sudden boom in the Kihei condo vacation rental condo market. While we may be seeing a few more Canadian buyers, the Canadian dollar remains far below the peak that prompted the last wave of Canadians. I surmise that there may be a number of factors at play. The concept of vacation rental ownership is being more ingrained into people’s psyche as companies like Airbnb become more prominent. A number of our domestic feeder markets are feeling their own real estate booms. West coast markets like Seattle, Portland and much of California continue to see strong activity. We also have seen a sustained bull run in the stock market that may provide people with the discretionary capital to make a second home purchase.
As with the luxury condo market, West Maui hasn’t seen quite the same level of activity for the general vacation rental condos. Numbers are down slightly in West Maui for condo sales. Again, Honua Kai plays a part in the lack of activity. This condo complex has been the driving force in West Maui condo sales in all price ranges since 2010. With the remaining inventory higher priced resale units, sales have slowed substantially at Honua Kai.
What can we expect over the next few months?
There is no immediate relief coming with the housing supply issues on Maui. On the demand side, island rents remain high and interest rates are still comparatively low. Barring a cataclysmic shift in the economy or a major upheaval in global politics, market conditions should remain similar to what we saw in the first quarter of the year. That means that competitive bidding will likely remain the norm for well priced homes in the $1,000,000 and under price range. You may even see a few bidding wars at well priced homes over $1,000,000. This can be a frustrating time for buyers as strong offers can still be trumped by irrational exuberance. That said, buyers should remain patient, make sure they have their ducks in a row when it comes to financing, be realistic about their financial picture and act decisively when properties that meet their needs come to market. While this is a seller’s market, there is some variability in demand by town and even neighborhoods on the island. Not everywhere is booming so sellers should consult closely with their Realtor and study recent sales to develop a realistic market price. Contact the Maui Real Estate Team if you are considering buying or selling property on Maui. We would welcome the opportunity to sit down with you face to face or to talk on the phone to discuss your real estate needs.
***Note the numbers reported for vacation rental condo sales are not 100% accurate. It is not a mandatory field in the Maui Multiple Listing Service to report whether or not a condo may be vacation rented. As a result, vacation rental condo sales can be under reported.
Maui Real Estate Blog
July 2016 Maui Real Estate Statistics
Why is the Maui condo market showing signs of improvement in 2016? That is one of the questions, I asked myself in this post and did my best to answer by taking a deeper dig into this year’s condo sales. You will find all of those thoughts and a rundown on the overall July 2016 Maui Real Estate Stats. Without further ado, here are the July numbers and some thoughts and context on the market.
July 2016 Median Prices and Sales Volumes
There were 93 home sales with a median price of $600,000. In July of 2015, there were 129 sales with a median price of $590,000. That is a 28% decrease in volume and approximately a 2% increase in median price.
There were 110 condos sold for a median price of $440,000. Last July, there were 94 sales with a median sales price of $394,000. That is a 17% increase in median price and a 12% increase in median price.
There were 7 land sales with a median price of $490,000. There were 13 sales in July of 2015 with a median price of $250,000. This is a 46% decrease in volume and a 96% increase in median price.
Notable Numbers from the July Real Estate Sales Activity
While compiling the sales volumes and median prices, I came across some other noteworthy numbers.
- The highest priced home sale in July closed for $18,000,000. The Beachfront Oli Oli Kai Property on Stable Road in Spreckelsville closed for a new North Shore record. That said, it could of or maybe should have been classified as three separate sales. The property was condominiumized into three separate units. The three units included a total of three homes and approximately 3.6 acres.
- This was one of 7 home sales over $2,000,000. The six other sales included three properties in Lahaina and one sale each in Wailea, Kula and Ka’anapali.
- The highest priced condo sale closed for $3,850,000. The 3 bed, 3.5 bath unit at Montage Kapalua has 2,789 square feet of living space.
- That was one of 10 sales over $1,500,000 to close in July. The other sales included 2 closes at Ho’olei and one each at Ka’anapali Ali’i, Sugar Cove, Wailea Elua, Makena Surf, Honua Kai, The Whaler and The Palms at Manele.
- The high land sale for the month closed for $1,800,000. The four acre lot is located in Kapalua Plantation Estates. There was one other $1,000,000 plus land sale this month. That 17.47 acre lot is located in the Makila Ranch Area of Launiupoko.
- There were 13 bank owned properties that closed in July. That is down from the 20 that closed in July of 2015. There was only one successful short sale completed last month compared to the 8 completed in July of 2015.
New July Pending Sales Contracts
We track the number of properties that go pending in a particular month. It gives us a more recent data point on buyer demand and it also helps us to better suss out whether the prior month’s sales activity is something of a one off event or part of a broader trend. I will spell that out a little better as we review last month’s pending data.
Looking at the pending sales activity, the number of homes that went under contract in July was down compared to last year. The number of condos that went under contract was the same as last year and land pending sales were up ever so slightly. The decrease in home sales is part of what appears to be a continuing trend that we have seen over the last few months. Shrinking home inventory, particularly at lower price points, has led to a reduction in sales activity. The condo market appears to be continuing a recent trend of sales at or above last year’s totals. I will delve into that in more detail below. While land sales aren’t exactly booming, it was good to see that they were up slightly from last year. That would suggest that the low July land sales numbers were more of an outlier than the start of any sort of trend.
Thoughts on the Market
We have discussed the decreases in home sales volumes over the last few posts, but I haven’t talked a whole lot about the increase in condo sales activity. Of the 7 months of sales this year, one month had the same sales volume as the same month from 2015, and one month was down from the same month last year. Five of the months have experienced greater sales volume than the same month of 2015. The last four months have all seen an increase over the same month of 2015. Over that period from April-July, sales volumes are up 14% compared to the same period of 2015. That raised the question of why we may be seeing an increase in activity. I dug into the sales data a few different ways to try to see if I could come to any conclusions as to what is driving the increase in sales activity.
The first thing I did was break down the sales volume over the last four months by price point.
I can’t say that this breakdown provided me with a clear picture of the driving force behind price increases. We can see an increase in sales below $300,000 and an increase in the $1,500,000 and higher range. The middle price ranges tend to be a mixed bag. The biggest increase in activity of any price range occurred between $500,000-$749,999. I can’t say off the top of my head why that would have occurred. The middle of the market, so to speak, also included the only two price points where sales were down compared to last year. The remaining price ranges saw relatively limited increases over 2016.
Not feeling like I had a clear answer, I took a look at two other data points. The first data point is is whether or not the property allows short term rentals. This data is somewhat flawed as it is not a mandatory field in our multiple listing service. In other words, not every condo sale that occurred over the last month reported whether or not the condo allowed vacation rentals.
It is pretty clear that there was an increase in sales for properties that are reported to be vacation rentals. I calculated a 26% increase over the period between April 1, 2015 and July 31, 2015. It was interesting to note that the increase in vacation rental condo sales was particularly evident in the $500,000-$749,999 price range. That appears to point to a significant driver for sales activity in that price range.
The one other data point I wanted to look at was new developer sales. New developments can be market drivers that boost the overall sales activity. In some cases, the boost can mask other market trends. An example of this is when Honua Kai started to close a lot of condos while we were still in the thick of the downturn. Overall condo demand was low, but sales numbers were relatively high as buyers were closing on contracts that were originally written pre-construction during the peak of the real estate boom. From what I could glean, we haven’t seen a similar phenomenon over the last four months. There was an uptick in new development sales. I counted 29 new development sales from April 1, 2016-July 31, 2016. That is up from 23 sales during that same period last year. However, the vast majority of these contracts were written recently.
While I can’t say I have definitive answers on what is driving the recent uptick in condo sales, the data above points to three price ranges where the improvement was most prevalent and a type of condo that saw more activity. Based on anecdotal evidence and the quantitative evidence, I am going to postulate a few reasons for the increases in each of these segments. The increase in sales at the low end is a reflection of the continued strength of the buy over renting argument on Maui. Maui rental rates have soared. Low borrowing costs make owning a number of Maui condo less expensive than renting. As long as rents remain high and rates remain low and inventory is sufficient, that part of the market should continue to be busy. I can’t say definitively why the high end market is outperforming last year in terms of sales. When I look at the luxury home market, sales totals between 2015 and 2016 have been almost identical. It just seems as if high end buyers are gravitating more towards condos this year. I believe the increase in vacation rental condo sales, and in the $500,000-$749,999 range in particular, is a reflection of pretty strong consumer confidence among some mainland buyers. West Coast real estate markets have been strong and the stock market has performed well. This means more cash for discretionary purchases like a vacation rental condo on Maui.
A Few Closing Thoughts for Maui Buyers and Sellers
I think there are some things to be learned for the overall Maui market from my review of the condo numbers. The biggest is that there is variability in the strength of the market by price point. I think you can also add geographic variability as another factor. Not all communities are seeing equal levels of buyer demand. While these stats tend to paint the market in broad brushes, how buyers and sellers approach the Maui market is going to be a reflection of their specific segment of the market. Contact The Maui Real Estate Team if you are interested in buying or selling a property on Maui. We would welcome the chance to hear about your needs and to discuss market conditions that are most relevant to you.
Maui Real Estate Blog
April 2016 Maui Real Estate Statistics
As we hit the midpoint of May, I wanted to give an update on the April Maui Real Estate Statistics. April is the last month of Maui’s “peak” home buying season. Once we get past April 15th, visitor numbers typically dip reducing the number of potential buyers. That said, the bulk of the sales that we see in April are from contracts written earlier in the buyer season. These stats take a look at the number of properties sold, median prices, properties that went under contract in April and notable numbers from the April sales activity. I also give a few thoughts on the state of the market and the numbers that stood out to me in April. Without further ado, here are the April numbers.
April Maui Real Estate Sals Volumes
There were 99 home sales reported in Maui County during April with a median sales price of $680,000. In April of 2015, there were 87 homes sold with a median price of $581,000. That calculates to roughly a 14% increase in sales activity and a 17% increase in median price.
There were 125 condo sales reported in Maui during April with a median price of $445,000. Last April there were 105 condos sold with a median price of $410,000. That is a 19% increase in sales volume and roughly a 9% increase in median price.
There were 10 land sales reported in Maui County for the month of April with a median sales price of $453,500. In April 2015, there were 12 sales with a median price of $417,500. That calculates to a 17% decrease in sales and an 8% increase in median price.
While compiling the median sales prices and sales volumes, I came up with some numbers that I thought were worth sharing from the April numbers.
Notable Numbers from the April Maui Real Estate Sales
- The highest priced home sale in April closed for $6,550,000. This Kula Estate included a 4 bed, 4 bath home with 7,809 square feet of living space, 2 cottages, a 9 car garage building and a lot more on 23 acres.
- It was a busy month for luxury home sales with 13 closes more than $2,000,000. In addition to the big Kula sale, there was one additional Kula sale, 3 sales in Wailea, 3 sales in the Launiupoko area of Lahaina and one sale each in Paia, Haiku, Kapalua, Kihei, and Ka’anapali.
- The highest priced condo sale in April closed for $5,490,309. This Honua Kai Condo has 3 beds, 3.5 baths with 2,770 sq feet of living space and a 2,200 square foot lanai.
- The big Honua Kai close was one of 13 condo sales over $1,500,000. Other sales included 4 more closes at Honua Kai, 2 Wailea Point Condos, a Montage Kapalua Bay, a Polo Beach, an Alaeloa, Mahana, Kaanapali Shores and a Masters Ka’anapali Unit.
- The highest priced land sale in April closed for $850,000. The 1.45 acre condominiumized agricultural lot in Launiupoko has the entitlements to build the main house for the condo.
- There were 11 bank owned transactions that closed in April. That is up slightly from the 9 bank owned sales in April of 2015. There were 4 successful short sales that closed in April 2016. That is the same total as April 2015.
Pending Real Estate Sales in April
Sales are a lagging indicator. They do not show current buyer demand. That is why our stats posts include the number of properties that go pending in that particular month.
The number of properties that went pending in April was lower compared to April of 2015. New contracts for homes and lots were down while condos were up. I am not sure that is indicative of any sort of trend. As a whole it is something of a reversal of what we saw during the first quarter of the year where home sales were up significantly, land was up slightly and condo sales were down. One month of varied market activity is one thing. If we were to string a few months together, we might be seeing a trend.
Thoughts on the April Sales Number and The Maui Real Estate Market
Of all of the sales figures from April, the luxury property sales stood out the most to me. There were more homes sold over $2,000,000 in April than the previous three months of the year combined. The 13 condo sales over $1,500,000 wasn’t too far behind the 17 total sales during the first quarter of 2016. After a slower start to the year, there appears to be a little bit of a bump in high end sales activity. It makes some sense as the stock market has seen a recovery from the doldrums of earlier this year. It will be interesting to see if that was just one month or if this increased activity will sustain itself.
The high median sales price for homes was noteworthy. This was the second highest median sales price since the recovery of the real estate market. The high median is related to the high number of higher priced sales. It is also due in part to a shrinking inventory of lower priced homes. Rising values and just a tight overall market have resulted in a shrinking pool of homes available for sale for less than $500,000.
The condo market numbers were also somewhat notable in that sales were up and pending sales were up compared to April 2015. The condo market was slower during the first quarter of 2016 when compared to 2015. This may be a blip or it may be the start of an uptick in activity in the condo market. It will be interesting to see the numbers in the next couple of months.
While the April condo market bucked the first quarter trends, the home market continued the momentum of the first quarter. April home sales were well above the totals for April 2015. That made it something of a surprise to see April pending home sales were well below April 2015. As mentioned above, one month may just be due to variability in the market. We will see what unfolds in the coming months.
If you are a buyer or a seller thinking of entering the Maui Real Estate market, you will find that market conditions are not monolithic. While this blog post discusses the generalities of the Maui market, market demand and inventory varies by geography and price point. Contact The Maui Real Estate Team to discuss market conditions specific to your real estate needs. We look forward to being of service.