Tag: Maui Real Estate Price Reductions
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
| 5/31/22 | 6/30/22 | 7/31/22 | ||||
| Active | Pending | Active | Pending | Active | Pending | |
| <$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) |
| $10,000,000-$19,999,999 | 9 | 2 | 13 | 0 | 12 (-1) | 0 |
| $20,000,000+ | 3 | 1 | 4 | 1 | 5 (+1) | 1 |
| Totals | 193 | 176 | 241 | 169 | 239 (-2) | 156 (-13) |
| 5/31/22 | 6/30/22 | 7/31/22 | ||||
| Active | Pending | Active | Pending | Active | Pending | |
| Haiku | 15 | 12 | 20 | 13 | 22 (+2) | 11 (-2) |
| Hana | 5 | 3 | 4 | 2 | 4 | 1 (-1) |
| Ka’anapali | 13 | 6 | 11 | 7 | 10 (-1) | 7 |
| Kahului | 11 | 24 | 8 | 27 | 13 (+5) | 21 (-6) |
| Kapalua | 4 | 2 | 5 | 3 | 5 | 1 (-2) |
| 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) |
| Spreckelsville/Paia | 12 | 4 | 11 | 2 | 10 (-1) | 2 |
| Wailea/Makena | 8 | 5 | 13 | 4 | 15 (+2) | 5 (+1) |
| Wailuku | 28 | 32 | 39 | 33 | 39 | 35 (+2) |
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
| 5/31/22 | 6/30/22 | 7/31/22 | ||||
| Active | Pending | Active | Pending | Active | Pending | |
| <$250,000 | 5 | 9 | 2 | 8 | 1 (-1) | 8 |
| $250,000-$499,999 | 12 | 23 | 19 | 25 | 11 (-8) | 23 (-2) |
| $500,000-$749,999 | 18 | 55 | 31 | 40 | 43 (+8) | 39 (-1) |
| $750,000-$999,999 | 29 | 54 | 44 | 46 | 44 | 43 (-3) |
| $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) |
| $2,000,000-$2,999,999 | 19 | 40 | 20 | 36 | 20 | 36 |
| $3,000,000-$4,999,999 | 12 | 22 | 11 | 25 | 12 (+1) | 18 (-7) |
| $5,000,000-$9,999,999 | 7 | 7 | 11 | 3 | 10 (-1) | 3 |
| $10,000,000+ | 3 | 0 | 4 | 0 | 4 | 0 |
| Totals | 149 | 293 | 199 | 247 | 205 (+6) | 234 (-13) |
| 5/31/22 | 6/30/22 | 7/31/22 | ||||
| Active | Pending | Active | Pending | Active | Pending | |
| 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) |
| Lahaina | 14 | 8 | 16 | 5 | 16 | 8 (+3) |
| Ma’alaea | 3 | 5 | 5 | 5 | 5 | 6 (+1) |
| Napili/Kahana/Hono… | 34 | 39 | 48 | 34 | 40 (-8) | 34 |
| 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.
Price Reductions
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.
We made it to Volume 10! Our efforts to keep you abreast of the Maui Real Estate Market in these dynamic times continue. As usual, this is something of a grab bag hitting on a variety of topics. We look at some of the recent data points and outlooks for the National Real Estate market. This post also looks at some of the latest numbers regarding inventory, price reductions and the speed at which properties go pending on Maui. Finally, we provide some thoughts for sellers as the subtle shift in market dynamics continues.
A Smattering of National Real Estate Perspectives
We tend to be data geeks at the Maui Real Estate Team. That means we consume a steady diet of information on the local and national real estate market. With change in the air in the real estate market, the tweets, articles and opinions are coming fast and furious. This is a curation of some of the recent articles and tweets we read we thought were worth sharing.
- Redfin came out with their latest look at the second home market a little over ten days ago. It’s worth reading past the headline. Demand for second homes in April is down substantially from its peak during the second half of 2020 and 2021. That said, it is still 9.8% above pre-Covid levels. When looking at articles talking about changes in the market, it is particularly helpful when Pre-Covid numbers are provided for context.
- This is an interesting tweet on a paper highlighting the role of remote work in the role of price increases. This clearly impacted the local market as higher income buyers working remotely entered the Maui market.
- New construction home sales are feeling the impact of rising interest rates across the country. Although John Burns points out in his tweet below that they are still above pre-pandemic levels. Locally, Maui has relatively limited new development occurring at this time. Hoku’ula in Hali’imaile is doing site work and taking reservations on market based housing. Anuhea at Kehalani is partially completed. Some phases are actively in construction with the next phase likely to come to market in late summer or fall. La’i Loa in Wailea is fully reserved with construction ongoing.
- Inventory is increasing nationally. The 8% increase this week is substantial, but not unprecedented. Mike Simonsen’s whole thread is worth a read if you are on Twitter.
- As dynamics in the market shift, the tendency is to look at past markets to find analogues to the current market. Bill McBride from the Calculated Risk Blog argues that we shouldn’t be looking at the last real estate bust for comparisons. He makes a pretty compelling case that the late 70s and early 80s is a more relevant comparison to the current market. Baby Boomer demand then is similar to Millennial demand now. The Federal Reserve found itself in a similar position due to inflationary pressure. While mortgage rates now are still well below rates from that point in time, the year over year change in rates is similar. Will we see similar pricing dynamics?
- I wanted to include this last tweet from one of my favorite real estate follows on twitter to wrap this section up. It points to one of the values of keeping an eye on statistics. I’ve noted quite a few headlines that create a different impression of the market than what they underlying statistics show. Keeping a closer eye on and understanding the stats helps to strip out some of the hyperbole.
Recent Data Points From the Maui Market
The Maui market is influenced by trends in the national market, but it doesn’t necessarily follow in lockstep with national dynamics. The high volume of second home sales and being a literal island can create different market dynamics. Here are some of the latest numbers on local inventory, price reductions and pending sales.
Overall Inventory
As of May 24th, there are 198 active home listings on the Maui MLS. At the end of April, there were 176. That is a modest 12.5% increase in active home listings for the month to date. For a little perspective, it is worth taking a look at pre-Covid numbers. In the end of May in 2019, there were 445 active listings. We are still less than half of pre-Covid inventory.
Condo inventory remains particularly limited. As of the 24th, there are 160 active condo listings in Maui County. There were 158 at the end of April. Inventory gains for the month to date remain negligible. For further context, there were 487 active listings at the end of April 2019. We are at less than a 1/3 of 2019 inventory.
Clearly, we aren’t seeing the same type of inventory increase that the mainland market is seeing. That said, Maui traditionally doesn’t see the big inventory bump that the National market sees in the late spring. Inventory decreased from the end of April to the end of May in 2017, 2018 and 2019. This modest bump in inventory for homes and condos for the month to date goes against pre-Covid trends. The Maui market’s seasonality may be masking a shift on inventory.
Pending Sales on New Listings
We’ve looked at the percentage of homes going under contract within the first ten days of going to market in Musings II, Musings XIII and Musings IX. In mid February, 56% of new listings went under contract in 10 days or less. In early April, that number decreased to 46%. By mid-late April, the number was down to 43%. Of the 76 listings that came to market between May 7th and May 14th, 27 went under contract within 10 days. That calculates to 35.5%. To give a pre-covid reference point, 21.7% of new listings went under contract in 10 days or less for properties listed between May 7th-May 14th 2019.
Price Reductions
In our last edition of the musings, I started tracking price reductions on Maui. I looked at the percentage of active home and condo listings that reduced the price below their original asking price. On May 24th, 33% of active home listings reduced their price one or more times. That is actually down from May 5th when 37% of active home listings reduced their price one or more time. On May 24th, 18.2% of all active condo listings reduced their price one or more times. That is up from May 5th when 15% reduced their price one or more times.
Thoughts for Sellers
The good news is that by all metrics this is still a seller’s market. Inventory remains well below normal and there is still demand. That said, the dynamics now are not the same that they were six months ago or even three months ago. The “list the property, set a weekend open house schedule and offers due by Monday routine” is not quite the norm that it used to be. Here are some thoughts for prospective sellers entering the market.
Pricing
It’s been a forgiving market when it came to pricing a property over the last 14 plus months. In some cases, buyers set the pricing. Seemingly well priced properties would be inundated with offers and prices would soar well over asking. In other cases, sellers priced their property at levels that seemed really high based on recent comparable sales. They would still get their number. Sometimes, that would happen quickly and others it would just be a matter of the market catching up. That said, the margin for error on pricing appears to be shrinking. As market conditions become more variable, some of the more aggressive sellers are not getting the market feedback that they hoped for.
Sellers should work closely with their Realtor to look at both recent comparable sales and the level of activity in their segment of the market. There is a lot of heterogeneity in the market so pricing a home can be a challenge. If the market is not responding to your price, you may need to adjust pricing a little more quickly.
Negotiation
Price wasn’t the only area where sellers had a lot of leverage in this more recent market cycle. Sellers rebuffed requests for repairs, tightened timelines and sometimes negotiated post-closing occupancy without buyers batting an eye lash. A high number of back up offers only strengthened sellers hands. Buyers with FOMO (fear of missing out) conceded to seller demands far more often than not.
Anecdotally, I have heard stories of sellers overplaying their hand during negotiations in the current market. While sellers still have some leverage, more buyers are willing to walk away. Concessions, repairs and other negotiations are likely to become more commonplace if the market continues to adjust.
Days on Market
As the numbers above indicate, the number of homes going under contract right after listing is steadily decreasing. We are also seeing more price adjustments compared to earlier in the spring. That of course means that days on market is increasing. It may take a little longer to sell in this market. If your circumstances dictate that you need to sell sooner than later, adjusting to market feedback is important.
A Little Maui Beauty
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Contact The Maui Real Estate Team with questions, feedback or if you need assistance buying or selling property on Maui. We look forward to hearing from you.