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.

Lahaina Condos
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
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.

Ka’anapali Condos
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
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.

The deluxe kitchen area of one of the three bedroom units in the Konea Building of Honua Kai.

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
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.

A couple of palm trees frame the ocean views of a direct oceanfront unit at Papakea.

Kapalua
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.

Pete Jalbert

Maui Real Estate Blog

August 2014 Maui Real Estate Statistics

September on Maui marks the start of the quiet season for visitors. The beaches and restaurants are a little quieter. Most years the real estate market slows as well. September also brings the first Northwest Swells of the season much to the delight of island wave riders. The air also starts to get a little cooler at night. I live Upcountry and I have found myself reaching for a sweater at night over the last week. The start of September also means it is time to look at the August Maui Real Estate Statistics. As usual, this post features a comparison of the number of sales and median prices verses what we saw in August a year ago. I also highlight some of the interesting notes and numbers that I came across while compiling the stats. I give my thoughts on the state of the market and what it means for buyers and sellers. This post also gives some insight into what we might expect to see in terms of sales in the coming months by looking at the pending sales for August. Without further ado, here are the numbers for August.

August 2014 Maui Real Estate Sales Volumes and Median Prices

This table shows the real estate sales volumes in Maui County, Hawaii during August 2013 and August 2014
This chart compares real estate sales volumes in August of 2013 and August of 2014 in Maui County, Hawaii

There were 68 homes sold in Maui County during August with a median sales price of $567,500. Last August, there were 81 homes sold with a median price of $585,000. That is a 16% drop in volume and a 3% drop in median when comparing this August to last August.

During August, there were a total of 94 condo sales reported by Realtors in Maui County with a median price $410,000. The August 2013 condo sales figures were 113 transactions closed with a median price of $420,000. That is a 17% drop in volume and a 2% drop in median comparing this August to last August.

The August 2014 land transactions in Maui County totaled 14 with a median price of $395,000. Last August, there were 25 sales with a median price of $350,000. That is a 44% drop in volume and a 13% increase in median price comparing this August to last August.

Other Interesting Notes and Numbers from the August Maui Real Estate Stats

While compiling these numbers, I found a few other numbers that I thought were worth passing along.

  • The highest priced home sale last month was $2,500,000 for a 5,222 square foot home on 2.58 acres in the Launiupoko subdivision in Lahaina.
  • It was a quiet month for luxury home sales with only one other transaction recorded above $2,000,000. That home was located in Ka’anapali Hillside.
  • Believe it or not, the lowest priced home sale in Maui County for month and this year for that matter was $1. The leasehold home in Molokai was bank owned. Its lease is set to expire in December when the property will revert back to the lessor who owns the underlying land.
  • While luxury home sales were relatively slow, luxury condo sales were strong in August. The high sale for the month was $8,250,000 for a four bedroom condo at Montage in Kapalua. That is the highest ever sales price for a condo in West Maui.
  • That was one of eight condo sales last month priced over $1,500,000. There were three additional big sales at Montage including closes of $7,750,000 and $7,500,000. There is a buzz about Montage and we recently looked at the resort’s impact on the market in our Kapalua Real Estate Update. There were also two sales at Papali in Wailea, one sale at Wailea Elua and one at Honua Kai.
  • There were only 8 bank owned sales this year compared to 14 sold last year. This isn’t necessarily due to a lack of inventory. June and July saw more bank owned inventory hit the market than what we had seen at any time in the last 24 months. However, the banks have different pricing strategies at this stage of the market. Many of the bank owned listings are being priced above market values.
  • There were six successful short sales completed last month compared to 14 completed in August of 2013.
  • While land sales were relatively quiet, there were 2 transactions that closed for over $2,000,000 in Kapalua.

Thoughts on the August Stats

This was not exactly a robust month for sales on Maui. This is the fifth straight month where condo sales have been lower than same month in 2013. Home sales have been a little stronger than condos, but we have still seen fewer sales overall compared to last year. Land sales are also down compared to last year after two straight months of lower sales. Inventory or lack thereof is clearly playing a part in the reduced activity. Prices are higher and the selection at the entry levels of the market is limited. That is leaving some buyers on the sideline. A reduction in the percentage of cash purchases on Maui suggests that we may be seeing fewer institutional and professional investors buying properties as well.

There are also some sellers who have overshot the market. They are pricing well above what the market is willing to pay. That may also be reducing the volume of sales. Prices in some parts of Maui have surged from market lows at high rates of appreciation. Limited inventory and pent up demand helped bring prices up rapidly. However, the initial rates of appreciation weren’t sustainable over the long haul. The memories of the last real estate bubble are a little too fresh in the minds of some buyers. This phenomenon is apparent in the Kihei entry level condo market. Places like Kihei Villages and Southpointe were selling in the low $100,000s at the bottom of the market with a handful of units in particularly poor shape closing below $100,000. We started to see sales prices as high as the low to mid $200,000s by the second half of 2013. Prices have since held in that range with little or no upward appreciation. Inventory has increased and days on market has gone up significantly. We are seeing this in other parts of the market as well. Kapalua Golf Villas is a nice vacation rental friendly property in the Kapalua Resort. It saw prices bottom out in 2012 when a large assessment was required to address a big maintenance project. Prices began to rise again rapidly in 2013 with the median price rising from $480,000 to $650,000. The median for this year’s sales has pushed all the way into the $700s. Each significant increase in median has been accompanied by a decrease in sales volume.

Are there any other factors at play with the decrease in sales volumes? That is tough to say at this point. The broader economic picture appears to be good at this time. National sales of existing homes continue to increase as of the last National Association of Realtors report in July. However, California saw a decrease in the number of properties sold compared to the same period last year. That is a continuation of a trend for that state. California is far and away the biggest feeder state for Maui Real Estate buyers. Maui tends to follow the same trends as the California market albeit a few months behind.

August Pending Sales

In addition to tracking closed sales. We also like to keep tabs on the number of properties that went under contract during any one month. This gives us some sense of what the stats might look like in the next couple of months.

This chart compares the number of properties that went pending in August of 2014 in Maui County with the number that went pending in August 2013.

After seeing an uptick in land and condo pending sales in July, the pending sales are down again. It appears as if the continued trend of lower sales activity will continue in the September and October sales numbers for Maui.

What Buyers and Sellers can expect under Current Market Conditions

While the market has slowed in terms of sales volume, buyers will find that well priced properties remain competitive. This is particularly true with lower priced homes. Buyers looking in this market should be pre-approved by a qualified mortgage professional as they are starting their home search. When the right property comes on the market that meets their needs, buyers will need to be decisive and act quickly to improve their odds of a successful offer. Sellers can see some of the cautionary tales reflected in the paragraphs above. Buyers are balking at overpriced properties and rates of appreciation appear to be slowing. That makes determining your go to market pricing that much more important. Both buyers and sellers should also be aware that market dynamics vary throughout the island depending on price points and neighborhoods. If you are a buyer or seller interested in Maui Property, we would welcome the chance to sit down with you for a free consultation. Contact The Maui Real Estate Team today to discuss your real estate needs.

Pete Jalbert

Maui Real Estate Blog

Kapalua September 2014 Midyear Real Estate Market Report

The Kapalua Real Estate market has had a tumultuous last five years. The real estate downturn battered the Kapalua Resort’s parent company Maui Land and Pineapple. The financial difficulties and eventual foreclosure of the Ritz Carlton Residences was perhaps the biggest symbol of the recent struggles of the resort. All of that said, the Kapalua Real Estate market showed signs of life in 2013 and the Ritz Carlton Residences are under new ownership and management. The relaunch of the Residences under the Montage brand has brought a buzz back to Kapalua. While Montage brings the buzz, Kapalua wasn’t exactly going to seed. This remains one of the more beautiful resort communities on the planet with renowned golf courses and some of the prettiest beaches in the country. This post takes a look at the state of the Kapalua market for 2014. We compare how the market performed compared to 2013.We take an even deeper dive into recent market history with some of the condo complexes. We also give our thoughts on what some of the numbers mean and the current state of the Kapalua Real Estate Market.

Kapalua Condos

When comparing the first eight months of 2014 to the first eight of 2013, the Kapalua Condo market has seen a modest decrease in sales activity. There have been 22 condo sales to date this year vs 24 in the same period last year. There are seven different condominium communities within the Kapalua Resort. The difference in sales between those communities year to year has been more substantial.

This chart compares the sales volume at the seven different condominium communities of Kapalua during January through August of 2013 and 2014.

With the differences in sales volume, I thought it might be worth delving into the market dynamics at a number of the seven different condo communities.

The Montage Residences at Kapalua Bay
Montage has grabbed the most headlines of the Kapalua Condo communities this year. The project was previously known as the Ritz Carlton Residences on Kapalua Bay. It came to market in 2009. Developer sales at the upscale condo complex were shut down in 2011 as the development faced headwinds in a more difficult real estate market. While the property has always been impressive, so were constructions costs. Coming to market in the doldrums of the real estate downturn was too tall of a task. The property was foreclosed on in early 2013. Lantern Capital, the new owners, subsequently appointed Montage Hotel and Resorts to manage the property. Montage is a well established luxury brand with a loyal following thanks to communities in Deer Park, Beverly Hills and Laguna Beach. Prior to coming back to market, significant improvements were made to what was already arguably the nicest physical plant of any condo community on island. Among the improvements was the opening of a new restaurant and bar Cane and Canoe. It has been receiving rave reviews since it opened.

One of the Pools at The Montage Residences at Kapalua Bay

The combination of the Montage brand, the beautiful property and the five star service create a package that has been very well received since the property came back to market in June. There have been five developer sales and one resale over the last few months. This is particularly impressive considering the price points that are involved. The lowest priced sale was $4,300,000 while the highest sale was $8,250,000. The high sale was the highest priced condo sale in Kapalua history. The second and third highest priced sales in Kapalua history also occurred at Montage over the last couple of months. There was one other thing that I found to be notable among the sales that have occurred. Four of the Montage buyers were represented by Wailea based agents. While Wailea and Kapalua are both world class resort communities, they each have their own distinctive feel. You seldom have buyers torn between the two communities. The buyers tend to gravitate toward one community over another. While the agents in our office are location agnostic, you tend to see more agents who focus on one of those communities instead of both. It says something about the compelling nature of the The Montage Residences at Kapalua that you are seeing Wailea based agents, and presumably Wailea type buyers making the trek up the coast to Kapalua.

At this time, there are two additional Montage Kapalua condos that are currently under contract with five others units listed. They will slowly release the remaining developer condos out on to the MLS as other units are sold. We anticipate that this luxury development will remain a popular offering for Maui Luxury condo buyers for some time to come.

Coconut Grove and The Ironwoods
I thought it was worth touching on these properties as they formerly had the distinction of being Kapalua’s most upscale condominium developments. One might think that the introduction of Montage into the market might have an adverse effect on both of these condos. I am not so sure that will be the case. It could be argued that Montage will be a complimentary rather than a competitive offering. All three condominiums have their own diverse personalities, locations and physical plants. Coconut Grove offers a lower density complex with an incredible location right on Kapalua Beach. The Ironwoods are also lower density and have their own beautiful setting nestled between Oneloa Beach and the fifth hole of the Kapalua Bay Course. The Ironwoods are also available at a lower price point than either Montage or Coconut Grove. Both the Ironwoods and Coconut Grove are different from Montage in that they prohibit vacation rentals. Neither condo complex tends to see a high volume of real estate transactions in any one year. It will likely take a few years before we get a better sense of how those properties continue to be received by the market with Montage available as another options for Ultra Luxury Condo buyers.

Beautiful Oneloa Beach in Kapalua

Kapalua Golf Villas
The condo complex that saw the sharpest decrease in sales activity when comparing this year to last year is Kapalua Golf Villas. I would argue that the decreased activity may be a reflection of the a strengthening situation at Golf Villas rather than a weaker market. To understand my reasoning, it is worth taking some time to look at the history of the complex. Aside from the former Ritz residences, it is safe to say that Golf Villas has seen more upheaval over the last few years than any other condo complex in Kapalua. The challenges stemmed from a large assessment that was imposed on the condos. When crews began work re-roofing the condos in the fall of 2011, they started to uncover some much larger maintenance issues that needed to be addressed immediately. Each of the condo owners were required to pay a special assessment over a 24 month period. The assessment ranged from an extra $700 to well over $1,200 a month depending on the size of the floor plan. Within a couple of months of the assessment being announced, there was a flood of inventory that hit the market. The numbers below provide some interesting context for the market dynamics over the last four years.

  • In 2011, there were 11 sales at Kapalua Golf Villas and the median sales price was $510,000. The low sales price for the year was $425,000. It was November of 2011 when the need for a special assessment was announced.
  • In 2012, there were 25 sales with a median price of $480,000. The low sale was $330,000. That was one of five sales during 2012 below $400,000 at Kapalua Golf Villas.
  • In 2013, the sales volume at Kapalua Golf Villas dipped to 11 sales, but the median rose dramatically to $650,000. The low sale price was $489,000.
  • In 2014, there have 5 condos sold year to date with a median price of $710,000. The low sale was $645,000.

The flood of inventory that hit the market in late 2011 and 2012 forced some sellers at Kapalua Golf Villas to slash prices. It was clear there were owners that didn’t want to pay or couldn’t afford to pay the new assesment. As a result, you saw those five exceptionally low sales prices. The scope of work covered by the assessment was comprehensive and suggests that the heavy lifting for the maintenance should be covered for some time. The high volume of sales suggests that there were quite a few buyers who saw the upside in the improvements and the long term potential. By the beginning of 2013, the pool of discounted condos at Golf Villas was largely gone and prices began began to recover quickly. You can see that reflected in the significant increase in median prices. By 2014, sales volumes have slowed even further. Sellers have been trying to push the envelope at Golf Villas on pricing. As it stands, the low sale for this year is just $5,000 below last year’s median. This should make for lower sales volume and lower potential for appreciation the rest of the year.

The Ridge at Kapalua
The Ridge at Kapalua hasn’t seen the same tumult that was experienced at Golf Villas, but there have been some similarities in recent market dynamics. In 2011, sales at the Ridge were slow with only 3 transactions recorded. In 2012, we saw some more motivated sellers as well as a few bank owned properties hitting the market. That contributed to a stronger year for sales with a total of 14 transactions recorded. Buyers were able to take advantage of some lower priced opportunities, and we even saw some Bank owned sales in the $400s. In 2013, the lower priced inventory was gone and we started to see stronger appreciation. That said, it was interesting to note that the progression wasn’t linear. The first half of the year saw only one transaction, the second half of the year had 12 sales. Buyers appeared reticent to support the higher prices at the first half of 2013, but the barrier was broken as the comparative value of the Ridge was recognized. Well maintained grounds, beautiful views and a good location compared to comparable priced properties helped drive buyers into the market. For 2014, sales volumes have slowed and the rate of appreciation has begun to slow as well. Buyers seem to be putting a premium on quality over the lower priced units. The 2 one bedroom units that have closed have been very high quality condos in the $800s, while 2 of the 3 two bedroom units have been priced in the $1,400,000 range. I suspect we will continue to see a focus on quality for the remainder of the year.

Kapalua Bay Villas
When looking at the year to year sales, Kapalua Bay Villas has seen the same number of sales to date this year as it did over the same period last year. That isn’t necessarily a good thing in light of current inventory. There are currently 24 active listings at Bay Villas with one condo under contract. Bay Villas has had pretty extensive inventory for the last few years. I would anticipate that the depth of inventory will significantly limit the potential for appreciation. Sellers will need to listen to market feedback and adjust pricing if we are going to see any significant increase in sales volumes.

Overall, the Kapalua Condo market seems to be transitioning from a period where a good portion of the transactions were value driven. After seeing significant appreciation at condos like Golf Villas and the Ridge over the last couple of years, the opportunity for bargain hunting is limited. It is safe to say that the surge of activity at Montage is not bargain hunting. More buyers are seeking quality above all else. There is plenty of quality to choose from among the active listings. You can check out the current inventory of Kapalua Condos for Sale at MauiRealEstate.com.

Kapalua Homes

The Kapalua Home market has not been as robust as the condo market for the year to date. There have been five sales thus far with a median sales price of $3,250,000. By comparison, last year there had been nine sales by this point in time at a median price of $3,500,000. There are a few things that I thought were noteworthy about this year’s closes.

  • The five sales included one close in Honolua Ridge, two closes in Pineapple Hill and two more sales at Pineapple Hill Estates.
  • The Honolua Ridge close was a bank owned property. This neighborhood was just coming to market towards the tail end of the last real estate boom. As a result, there have been quite a few distressed sales.
  • The bank owned property was the lowest priced sale at $1,700,000. This was the only home sale under $3,000,000 in Kapalua this year.
  • The high sale was $4,700,000 for Carlos Santana’s home in Pineapple Hill. That home has 7,687 square feet of living space.

Island wide, home sales over $2,000,000 are up 32% compared to last year. It is interesting that Kapalua sales activity has dropped in light of the island wide increase in high end sales. That said, the relatively small sample size of Kapalua sales makes me reticent to read too much into the drop in activity. One thing that I can say is that there have been fewer opportunities for owners looking for bargains. Over the previous two years, a number of the homes that have changed hands have been value purchases priced at the very low end of the various Kapalua neighborhoods. This year there was just the one sale under $2,000,000. There has also just been one other listing priced below $2,500,000. The smaller pool of purchases this year appear to be skewed more towards buyers seeking quality homes that fit their needs.

Moving forward for the rest of the year, Kapalua still has a significant inventory of homes available with 24 active listings. Based on the current pace of sales, that would suggest that there are at least a couple of years worth of inventory still available. While conventional wisdom indicates that more than six months of inventory can lead to price decreases, that isn’t as applicable to a market like Kapalua. Kapalua and other high dollar markets typically have much longer days on market. It is not uncommon for some of the highest priced properties to sit for years. The sellers of these homes are typically high net worth individuals with the staying power to hold on to the property long enough to wait for offers that fit their needs. There may be one or two sellers among the active listings who are motivated; the challenge lies in identifying those sellers. While values are unlikely to fall at this point, the depth of inventory should blunt any movement to push prices upward. You can see the full inventory of Kapalua Homes for Sale at MauiRealEstate.com.

Kapalua Land

The land market on Maui hasn’t seen a ton of transactions as of late. When you look at a smaller community like Kapalua, the number of transactions shrinks even further. There have been three land transactions in Kapalua this year. One sale was located in the Plantation Estates subdivision. The other two were in the Honolua Ridge area of Plantation Estates. That total is lower than the five sales that we saw last year as of this time. There are a total of nine active listings currently. They are spread amongst all of the residential communities including Plantation Estates, Pineapple Hill, Pineapple Hill Estates and Honolua Ridge. Plantation Estates and Honolua Ridge offer acreage for potential buyers with some lots in Honolua Ridge in excess of 20 acres.

Kapalua Long Range Outlook

There is much to like about Kapalua property over the long term. The resort seems to have weathered the storm of the last real estate downturn and is positioned to grow as a destination. Montage will help to draw new visitors to the resort community. Some of those visitors may find themselves compelled to own their own slice of paradise in Kapalua. Some of those will snatch up some of the remaining new developer inventory at Montage, while others may opt to look at one of the nearby condos, one of the residential neighborhoods or identify a lot to build a dream home. The natural environment, beaches, golf and other amenities make Kapalua as a whole offer a world class destination resort and make for a compelling place to own a home. Contact The Maui Real Estate Team if Kapalua appeals to you. We would welcome the chance to speak with you about the various properties available for sale around the resort. There may be one that fits you!

Pete Jalbert

Maui Real Estate Blog

Kapalua Market Report

Kapalua is a beautiful resort community on the Northwest coastline of Maui. The resort boasts stunning natural beauty, renowned beaches, tropical foliage and two great golf courses. One of the courses is the site of the first PGA event of the year. The community is home to beautiful estate properties and luxury condominiums. We wanted to look at how the Kapalua market performed in 2012, how it has done in the first two months of 2013, and the outlook for the rest of the year.

This chart compares the real estate sales volumes for home, condos and land in Kapalua during 2011 and 2012

There were six homes sold in Kapalua during 2012 with a median sales price of $2,880,000. The 2011 numbers were eleven sales with a median sales price of $2,850,000. That is a 45% drop in sales volume and a 1% increase in median values.

The condo market in Kapalua was more active in 2012 with fifty closes at a median sales price of $570,500. There were twenty-seven sales in 2011 with a median price of $830,000. That is a robust 85% increase in activity for 2012, while the median price dropped by 32%.

There were six land transactions in 2012 with a median sales price of $838,200. There were five land transactions in 2011 at a median sales price of $950,000. With sample sizes this small I am reticent to comment on changes in volume and median as they tend to be misconstrued.

Here are some other numbers that I found interesting about the 2012 Kapalua Real Estate Market.

  • The high sale for a home in Kapalua during 2012 was $5,998,000 for a 7,645 square foot home in Plantation Estates
  • All of the home sales in Kapalua were $2,000,000 or higher. Kapalua has the highest entry point of any community on Maui with the exception of Makena.
  • There were four homes sold in Plantation Estates. That was the busiest year of sales ever in Plantation Estates.
  • 197 Plantation Club Drive sold for $2,600,000. That was the lowest recorded sales price for a home in Plantation Estates.
  • The high condo sales price in 2012 was $3,425,000 for a three bedroom, four bath beachfront condo at Kapalua Ironwoods.
  • There were a total four condo sales over $1,500,000 in Kapalua in 2012.
  • Kapalua Golf Villas was the complex with the most activity. There were 25 closes at Golf Villas in 2012.
  • There were seven bank owned sales and five short sales that closed in Kapalua during 2012.

This was an interesting year for the Kapalua Real Estate market. The decrease in home sales follows a market trend we saw with luxury properties around the island. Sales of homes over $2,000,000 were down island wide including other resort markets like Wailea and Makena. For the sales that did close, value appeared to be a driving force among many of the sales. The six sales included the lowest priced sale in Plantation Estates and the second and third lowest sales prices for Plantation Estates. In addition to those three value closes, we also saw the second lowest sales price for a home on two acres or more in Kapalua up in Honolua Ridge.

The Kapalua condo market saw a sharp increase in activity. The focal point for the boost in activity was Kapalua Golf Villas. Last year was a year of transition for Golf Villas. It was discovered late in 2011 that the complex needed to undergo a big maintenance project. That resulted in a significant assessment for all of the owners. The assessment flushed a lot of motivated sellers on to the market. The market absorbed most of these listings in 2012 as buyers took advantage of good values in a complex that should have strong upside with all major maintenance issues in the process of being addressed. Kapalua Ridge was another complex that saw pretty good activity as buyers took advantage of a number of listings offered at good comparative values.

The Kapalua land market saw a very slight uptick in activity during 2012. That is in line with what we saw in general island wide. We did start to see a bigger uptick in land sales on other areas of the island late in 2012, but much of that activity came at lower price points where buyers were looking for alternatives due to a diminished inventory of homes. Kapalua still had a pretty healthy home inventory through much of 2012 as it does during the start of 2013.

What does 2013 have in store for the Kapalua Real Estate market? We have two months of sales / results for some perspective. On the home front, early market feedback shows that buyers are continuing to show a trend towards value purchases among the Kapalua Luxury home inventory. There has been one sale and there are two properties pending. The one sale was $1,795,000 for a home in Pineapple Hill. That is at the low end of pricing for Pineapple Hill historically. One of the pending sales is a short sale up in Honolua Ridge. Construction was abandoned on the home and the price reflects the work remaining to be completed.

In addition to the two properties currently under contract, there are an additional 32 homes actively listed in Kapalua ranging in price from $2,295,000 to $28,000,000. The depth of inventory makes for good selection for buyers. Typically, this type of inventory may create some motivated sellers. That being said, luxury home owners tend to have more staying power when it comes to waiting out the market.

It will be interesting to monitor the condo market in Kapalua during 2013. The initial market data appears to be positive with 10 sales and 4 pending sales to date. Of note, two of the sales and one of the pending were priced over $1,500,000. We are on pace to exceed the ultra luxury sales totals for 2012.

There are currently 60 condos active in Kapalua. The chart below shows the current number of active listings by complex and compares it to last year’s sales by complex.

This chart compares the current active listings of condos for sale in each of the Kapalua Condominium complexes as compared to the 2012 sales at the same complexes.

Looking at the chart above, you can see there are some complexes with a year or less of inventory and some condos that have an abundance of inventory based on last year’s absorption rates. Last year’s busy complex was Kapalua Golf Villas due to an abundance of motivated sellers. The motivated sellers have for the most part sold their properties, and we aren’t seeing the rock bottom prices that we saw just a year ago. I would surmise that Kapalua Golf Villas will see a little less activity as prices return to normal. At the other end of the market, Kapalua Bay Villas has the biggest inventory compared to recent sales. Typically, that type of inventory could result in a few motivated sellers coming to market. That being said, many of the Bay Villas sellers might have the means and inclination to wait until market conditions improve in their favor. Bay Villas will be a place to watch the rest of the year.

A condominium complex that might have the biggest impact on the Kapalua Market isn’t event listed in the chart above. I am speaking of the Residences at Kapalua Bay, formerly known as the Ritz Carlton Residences at Kapalua Bay. The Residences opened their doors in 2009. The developers spared no expense when they built the Residences. Finishing and materials are all top notch. Unfortunately, they had a tough time recouping their investment in a slumping real estate market. The property was foreclosed upon in June of 2012. A foreclosure auction was held in December with a winning bid of $55,000,000. On January 1, Timbers Resort took over management of the property for Ritz Cartlon. On February 1, 2013, a confirmation hearing was held for the foreclosure auction. Two other parties ended up bidding on the sale driving the price up to $100,000,000. The resulting sale should take up to two months to be completed. That means it is likely that at some point later this year, condos at the Residences at Kapalua Bay will be coming back on to the market.

The Residences at Kapalua Bay will have a significant impact on the ultra luxury market place in Kapalua. They will offer significant competition to sellers at places like Coconut Grove, The Ironwoods and other luxury condominium developments around the island. The full ownership condominiums at the Resort include both three and four bedroom floor plans with roughly 3,000-4,000 square feet of living space. The amenities and the physical plant of the Residences are second to none on island. It will be interesting to see how they are received by the market now that their financial future is well defined and market conditions have improved. Contact The Maui Real Estate Team if you are interested in being kept up to date on the latest developments regarding The Residences at Kapalua Bay.

What does this all mean for Kapalua Buyers and Sellers for the rest of 2013? Buyers should find that the Kapalua market has plenty of inventory to choose from throughout this year. The only place with a scarcity of inventory is at the entry level of the Kapalua Condo market. Kapalua condo buyers will find a lot fewer rock bottom price opportunities with fewer bank owned properties coming to market, and the situation at Kapalua Golf Villas stabilized. Sellers will find that there is a fair amount of competition in the marketplace. If they want to sell quickly, they will need to price well compared to the rest of the market. Contact The Maui Real Estate Team today with questions or for assistance buying Kapalua Properties. You can search the current active inventory of Kapalua Homes for Sale and Kapalua Condos for Sale on MauiRealEstate.com.

Pete Jalbert

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.

A Comparison of Real Estate Sales Volumes at the Kapalu Resort Between the First Half of 2011 and the First Half of 2012

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.

A Comparison of Condo Sales Volume at the Kapalua Resort during the First Half of 2011 and 2012

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.

Pete Jalbert

Maui Real Estate Blog

Kapalua 2011 Midyear Real Estate Statistics

This is the last of a series of posts on midyear statistics for selected Maui communities. I have previously posted on the North Shore, Upcountry, Wailea/Makena and Ka’anapali markets. Last but not least, we are going to take a look at how the Kapalua market performed for the first half of 2011. Included below is information on overall sales volumes, medians, individual condo developments, high sales prices, low sales prices and a few other tidbits of data I dug up along the way. I followed the stats with a few thoughts on the numbers.

A comparison of 2010 and 2011 midyear sales volumes for Kapalua Resort

There were a total of 7 home sales in Kapalua during the first half of 2011 at a median price of $2,200,000. That compares to 4 sales during the first half of 2010. The median price for sales during that period was $3,450,000. That’s a 75% increase in activity and a 36% decrease in median.

  • The highest sale in the first half of 2011 was $14,000,000 for an 11,399 square foot home on 2.48 acres in Plantation Estates. This was a new sales record for Kapalua.
  • The low sale for the year was $1,562,000 for a home in Pineapple Hill. That is the lowest sales price for a home in Kapalua since the year 2000. The one caveat being that the home sold this year was significantly smaller than the 2000 sale.
  • All of the homes being purchased show as cash transactions on the MLS.
  • The breakdown of home sales by subdivision was five closes in Pineapple Hill and two in Plantation Estates

A comparison of 2010 and 2011 midyear sales volumes for the different condo complexes of the Kapalua Resort

There were 11 condo sales in Kapalua during the first 6 months of 2011 at a median price of $830,000. There were 14 condos sold in 2010 at a median of $895,000. That represents a 21 % drop in volume and a 7 % drop in median when comparing 2010 to 2011.

  • The high sale or more accurately sales for the first six months of 2011 were $3,300,000. There were two units sold at that price at the Ritz-Carlton Residences on Kapalua Bay. Both were based on long term pre-construction contracts.
  • The low sale was $425,000 for a unit at Kapalua Golf Villas
  • There was one short sale and one bank owned sale among the eleven closes
  • Eight of the sales were cash, two used conventional financing and one was purchased with owner financing.

During the first half of 2011, there were four lots sold in Kapalua at a median price of $975,000. Needless to say, we outperformed the 2010 market when there were no land transactions recorded by midyear.

  • The high sales price was $1,050,000 for a lot in Plantation Estates.
  • The low sales price was $630,000 for a lot in Pineapple Hill.
  • All of the land purchases were cash transactions.

Looking at the numbers above, the first half of 2011 was positive overall, but there were some mixed signals in the market. Looking at the home market, there are some signs of improvement over last year. There is a clear increase in sales volume. We also saw a new record high sale. In addition to the record sale, there was another substantial sale at $9,600,000. Conversely, one sale at Pineapple Hill was the lowest priced single family home to close in Kapalua since the year 2000. It appears as if the Kapalua market is in line with the Wailea and Makena market in that we are seeing continued price decreases on a majority of properties. That being said, as with the Wailea and Makena market, there are some premier properties where the buyers are willing to pay an absolute premium.

The land market for Kapalua saw limited sales with four transactions, but that is a clear improvement over the complete absence of sales during the first half of 2010. The other thing to note on Kapalua’s land market is that the inventory is lower than the other Maui resort communities. Land sales for Maui in general have been very slow for almost four years. In that time frame, the island has compiled a surplus inventory that could take as long as 6 years to absorb based on recent sales volumes. The Kapalua market on the other hand has less than two years of inventory to be absorbed. Barring a drop in demand or a big influx of supply, this market may stabilize faster than other land markets.

The condo market was the one segment of Kapalua that clearly did not perform as well during the first half of 2011. Sales volume was down vs. the first half of 2010. Median prices were also down. While I think some of the drop in median can be attributed to decreases in values, there were also a few more million dollar plus sales last year which pushed the medium up. That being said, It looks likely that we are going to need to see some additional price adjustments in the Kapalua Condo Market to entice buyers. While other communities have been thinning condo inventory, Kapalua still has a substantial stock of condos for sale in light of the area’s average monthly sales volumes.

Contact the Maui Real Estate Team if you have any questions on these statistics or if you have interest in buying or selling property in Kapalua. You can search the entire inventory of Kapalua Homes for Sale and Kapalua Condos for Sale on MauiRealEstate.com.

Pete Jalbert