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
Kapalua Real Estate Mid Year Market Update
This is a continuation of our mid year market update series. After looking at the North Shore communities of Paia and Haiku and the South Maui resort community of Wailea/Makena, we decided to turn our attention to the beautiful resort community of Kapalua in West Maui. Kapalua is a renowned destination resort known for championship golf, stunning scenery and beautiful beaches. We took a look at the sales volume and median sales prices for the first six months of 2012 and compared them to the first six months of 2011. You can see the numbers below followed by some thoughts on what they mean, and what we might expect for the Kapalua Real Estate market for the rest of the year.
There were 3 homes sold in Kapalua Resort during the first half of 2012 with a median price of $2,760,000. During the first half of 2011, there were seven homes sold with a median price of $2,220,000. That is a 57% decrease in volume and a 25% increase in medians. There were 24 condo sales in the first six months of 2012 with a median sales price of $565,000. By comparison, the first six months of 2011 saw 11 sales at a median price of $830,000. That is an 118% increase in sales volume and a 32% decrease in median prices. There were three land sales during January through June of 2012 with a median price of $870,000. The numbers for the same period of 2011 were four sales with a median sales price of $975,000.
Here are a few other notes and numbers from sorting through this year’s Kapalua real estate sales.
- The high sales price for a home was $3,000,000 for a 5,123 square foot home on a 2.35 acre lot in Plantation Estates. Last year’s high was $14,000,000 for an 11,399 square foot home on 2.48 acres in Plantation Estates.
- The high condo sales price was $3,425,000 for a 3 bed/four bath oceanfront condo at the Ironwoods. The high sale during the first six months of 2011 was 3,300,000 for a three bedroom unit at The Residences on Kapalua Bay.
- The Kapalua Real Estate market didn’t provide many opportunities for mortgage professionals during the first six months of the year. All of the home and land transactions were cash. Only five of the 24 condo sales were financed. The other 19 condo sales were cash purchases.
- Six of the condo sales were bank owned properties. Four of the six were at Golf Villas. One of the home sales was a short sale.
I have quite a few thoughts running through my head after compiling the numbers above. One of the more interesting components of these numbers was the contrast with the Wailea mid year real estate update. During the first half of 2012, the Wailea/Makena Real Estate market saw a pretty healthy increase on home transactions over the same period of 2011. On the other hand, Wailea Condo sales slumped from the levels seen in the first half of 2011. This is of course, the exact opposite of the numbers reported above for Kapalua. Why such a discrepancy between the two major luxury resort communities on Maui?
I am not sure there is an easy answer to that question. This isn’t a case where the same pool of buyers are choosing Wailea Homes at the expense of Kapalua Homes. Seldom, do we have buyers looking closely at both markets. More often our luxury buyers looking at resort communities are focusing their search on one of the two communities. While both markets attract affluent buyers, the performance of the two markets are not tied to each other. Real Estate can be local even on our relatively small island.
If there is a common element between the luxury buyers of Kapalua and Wailea, it could be argued that both pools of buyers are putting a premium on values. If you look at the home sales in Kapalua during the first six months of the year, all appear to be pretty good values. The sales in Plantation Estates and Honolua Ridge were the two lowest sales for homes on more than two acres since January 1, 2000. The home in Pineapple Hill isn’t quite the standout in value, but it was still sold for almost 20% below original asking price.
You can see the search for value on the condo side as well. Twenty-five percent of the condo sales were bank owned. Fifty percent of the sales were in Kapalua Golf Villas. This complex has seen some turmoil over the last six months as the association had to levy a big assessment on all of the condo owners. A moderate sized project that was upgrading the physical plant uncovered much bigger issues that needed to be addressed. With a minimum assessment of $30,000, there was a flood of new inventory to hit the market with many of the sellers quite motivated. Buyers with the cash to cover the assessments were happy to snatch up condos priced at 2002/2003 price points.
One quick thing to note, the condo market saw a big drop in median values between this year and last year. I think it is safe to say that property values decreased for Kapalua condos. That being said, the big drop in median was also driven by a shift in where buying occurred. While there was a big upswing in activity at the lower priced Golf Villas, there was also a substantial decrease in activity among the higher priced Bay Villas.
What can we expect for the Kapalua Market in the second half of 2012? I would imagine that buyers will continue to gravitate towards value and quality in the Kapalua Market. While some segments of the Maui market are suffering from a lack of inventory, the same can not be said for Kapalua. Based on current absorption rates, there are more than four years worth of inventory in the home market and more than two years of land inventory. The condo market has a little over a year’s supply, but there are some complexes that have a surplus of condos for sale. There was only one Kapalua Bay Villa sold during the first six months of 2012, yet there are 24 current listings with only one under contract. While Golf Villas has shown healthy activity, there are still seventeen listings active. If there are motivated sellers in either complex, they may need to sharpen their pencils to stand out from the competition. There is potential for more luxury condo inventory when the Residences on Kapalua Bay emerge from their current foreclosure situation. There are rumors that it may be settled soon. Kapalua area residents and Realtors are all looking forward to a fresh start up at the Residences.
You can check out the inventory of Kapalua Homes for Sale on MauiRealEstate.com. We also have all of the current active Kapalua Condos for Sale. Contact The Maui Real Estate Team today with questions or for assistance buying or selling Kapalua Properties.