Maui Real Estate Blog

Maui Market Musings Volume XX

Well, we made it to our twentieth Market Musings. This post took me a while to put together. I want to say it’s because it is chock full of tremendous insight. The truth is my last 9-10 days consisted primarily of battling Covid. My symptoms made writing this post a protracted slog. Give me some grace if there are typos and/or a few not so coherent thoughts interspersed throughout the text.

In our last post, I talked about the relative resilience of the Maui market under higher rates. Since that time, rates rose even more. The additional bump in rates or perhaps just a longer duration of time with higher rates is weighing on the Maui market. The single family home market in particular is feeling the burden of higher rates and decreased affordability. Musings 20 takes a look at some of the current market indicators including active and pending inventory, price reductions and how quickly new listings are going under contract.

End of October Maui Single Family Home Inventory

8/31/229/31/2210/31/22
ActivePendingActivePendingActivePending
<$750,00011117149 (+1)15 (+1)
$750,000-$999,9993144214629 (+8)29 (-15)
$1,000,000-$1,499,9995828453364 (+19)28 (-5)
$1,500,000-$1,999,9994613441741 (-3)13 (-4)
$2,000,000-$2,999,9993612331235 (+2)10 (-2)
$3,000,000-$4,999,9993211351132 (-3)7 (-4)
$5,000,000-$9,999,99926527626 (-1)5 (-1)
$10,000,000-$19,999,9991101109 (-2)0
$20,000,000+50213 (+1)1
Totals256124225140248 (+23)108 (-32)
Maui active and pending home listings by price point on the last day of the month from August, September and October 2022
8/31/229/30/2210/31/22
Haiku20724728(+4)9 (+2)
Hana829110 (+1)0 (-1)
Ka’anapali1041037 (-3)2 (-1)
Kahului112572616 (+9)16 (-10)
Kapalua41406 (+2)0
Kihei4416351640 (+5)11 (-5)
Kula2410221120 (-2)11
Lahaina237211022 (+1)13 (+3)
Makawao15111311139(-2)
Napili/Kahana/Hono…1449711 (+2)6 (-1)
Pukalani85678 (+2)3 (-4)
Spreckelsville/Paia1531048 (-2)2 (-2)
Wailea/Makena16410811 (+1)4 (-4)
Wailuku4122362640 (+4)21 (-5)
A comparison of active and pending home listings by community for the last days of the month from August-October 2022. It does not include all communities on Maui.

End of October Home Inventory Review

The information above is provided with the usual framework. The home inventory data by price point includes all of the island of Maui, but excludes the islands of Molokai and Lanai. The district information is limited to the districts and community with the most activity.

  • After a pretty healthy drop in Inventory in September, active home listings increased by 10.22% by the end of October.
  • The bulk of the inventory increased occurred between $750,00 and $1,500,000 with an increase of 27 listings in that range.
  • It appears that this increase in inventory stems more from slower activity than an influx of new listings. That is reflected in the pending sales data with 20 fewer pending home sales between $750,000 and $1,500,000.
  • This make sense as this is an area of the market where a higher percentage of buyers are using financing. Looking at all of the sales between August 1 and October 30th, 18.93% of the buyers in this price range paid cash. In all other price ranges, 41.77% of buyers used cash. Plain and simple, the increase in mortgage rates is hitting this segment of the market harder.
  • Overall, the number of pending home sales decreased 22.86% between the end of September and the end of October. That is a substantial decrease, but worth noting that pending sales typically decline in the fall.
  • Looking at the market on a community level, all but three districts increased inventory. The exceptions being Kula, Spreckelsville/Paia and Ka’anapali. Ka’anapali’s decrease stemmed in part due to cancelled listings rather than increased sales.
  • Kahului experienced the biggest increase in active listings and the biggest decrease in pending sales. With the vast majority of the inventory in this community priced between $750,000 and $1,300,000, this is a market where the increased rates appear to causing a bigger shift in conditions.

End of October Condo Inventory

8/31/229/30/2210/31/22
ActivePendingActivePendingActivePending
<$250,00016132 (+1)4 (+1)
$250,000-$499,9991417111619 (+8)12 (-4)
$500,000-$749,9993443284032 (+4)35 (-5)
$750,000-$999,9993343333327 (-6)27 (-6)
$1,000,000-$1,499,9992931193621 (+2)30 (-6)
$1,500,000-$1,999,9992435183414 (-4)33 (-1)
$2,000,000-$2,999,9992238144315 (+1)40 (-3)
$3,000,000-$4,999,999121910171017
$5,000,000-$9,999,999817011 (+4)1 (+1)
$10,000,000+40403 (-1)1 (+1)
Total181233145222154 (+9)200 (-22)
A comparison of end of the month active and pending condo sales by price point from August through October of 2022.
8/31/229/30/2210/31/22
ActivePendingActivePendingActivePending
Ka’anapali2516171418 (+1)9 (-5)
Kahului37345 (+2)5 (+1)
Kapalua11610412 (+2)4
Kihei5063486143 (-5)60 (-1)
Lahaina910578 (+3)4 (-3)
Ma’alaea36443 (-1)6 (+2)
Napili/Kahana/Hono…4525293033 (+4)17 (-13)
Wailea248619861985 (-1)
Wailuku91481211 (+3)10 (-2)
Active and Pending Condo inventory by district in Maui during July-September of 2022. This does not include all districts.

End of October Condo Inventory Review

Again, the tables above come with the usual framework for our end of month inventory. The table by price point includes all condos on Maui, but it does not include condos on the islands of Molokai or Lanai. The table with districts is limited to the communities with the most activity.

Pending sales at La’i Loa at Wailea Hills skew the data in Wailea and the $1,500,000-$5,000,000 price ranges. There are 75 pending sales in that development based on contracts penned in 2020 and the first quarter of 2021. Pending sales in La’i Loa won’t start to close until sometime in 2023. Paradise Ridge Estates in Kihei also skews the data albeit to a lesser extent. There are 18 pending sales with that development based on contracts penned between 2018 and the first quarter of 2022. Overall, 46.5% of the pending Condo inventory is in La’i Loa or Paradise Ridge Estates.

  • After three straight months of decreased inventory, condo inventory increased by a modest 6.2%
  • The largest increase in inventory occurred in the $250,000 to $499,999 price range. While this price range has a lower percentage of cash buyers than the overall condo market, the difference isn’t all that substantial.
  • Active inventory increased in 6 out of 10 price ranges, decreased in three and stayed the same in one.
  • Pending sales decreased 9.91% this month. As with home sales, it isn’t too uncommon to see pending sales decrease this time of year.
  • The decrease in pending condo sales by price point was fairly consistent through most ranges, with the exceptions being the very lowest price range and the very highest price points in the market.
  • At the community level, modest increases in inventory were common across the board. The two districts that actually saw a decrease in inventory at the community level were Ma’alaea and Kihei. Both are markets with a lot of vacation rentals. This is a market segment that is still seeing decent demand.
  • Napili, Kahana and Honokowai experienced the biggest drop in pending sales. This is another big vacation rental condo market. Is the difference in activity levels a case of no clear narrative or just variability? This is something to watch with next month’s numbers.

How Quickly Are Properties Going Under Contract

One other metric we use on the blog to track market demand is how quickly properties are going under contract. Specifically, what percentage of new listings are going under contract in ten days or less. The very first time we started documenting this metric was back in February. At that point, 56% of all new listings went under contract within 10 days or less. Between September 12th and 19th, that number shrank to 34%. Between October 11th-18th, the number of properties that went under contract within 10 days or less fell further to 25.58%.

When you break it down by homes and condos, you can see that condos continue to show some measure of resilience. For condos listed between October 11th and 18th, 40% went under contract with buyers in ten days or less. That’s actually up from mid September when the number was 36.66%. For additional context, 66.67% of condos went under contract in 10 days or less between October 11th and 18th, 2021. Going back to 2019, 26% of all condos listed between October 11th and 18th went under contract in 10 days or less.

The numbers for the home market point to a more pronounced cooling. Only 13.04% of all homes listed between October 11th and 18th went under contract in 10 days or less. In mid-September, that number was 32.14%. For additional context, 54.17% of homes listed between October 11th and October 18th, 2021 went under contract in tend days or less. Going back to 2019, 9.09% of all homes listed between October 11th and October 18th, went under contract in ten days or less.

Price Reductions

One market indicator that surprised this month is the number of active listings with price reductions. Nationally, price reductions continue to rise as the real estate market slows under the weight of higher interest rates. Based on the numbers above, one might expect to see more price reductions, particularly with the home market. With fewer properties going under contract quickly and fewer properties going under contract in general, shouldn’t sellers be adjusting to the market?

As of the the 31st, 90 of 248 active home listings or 39.92% reduced their price one or more times. On September 29th, 42.41% of homes went under contract in 10 days or less. On September 2nd, 42.97% of all active listings had one or more price reduction.

On the condo front, 45 of 153 or 29.41% of active condo listings on October 31, 2022 reduced their price one or more times. That’s up from 25% on September 29th. On September 2nd, 27.84% of all active condo listings had price reductions.

Some General Thoughts on the Numbers Above and The State of The Market

It’s been an interesting last six months in the Maui Real Estate market. The first quarter of the year was largely a continuation of 2021. Strong demand combined with limited inventory to fuel strong price growth. Demand slowly started to taper in the second quarter. That said, inventory remained low. While the frenzy of the first quarter subsided, there was a balance between limited supply and just enough demand to make for a competitive market for buyers. While we were well below the frenzy of earlier in the year, homes and condos in particular sold faster and at a higher percentage of asking price than they would in a normal market.

This trend of a balanced ratio between buyers and sellers continued through the summer. Inventory actually contracted through most of the summer, but we lost FOMO (fear of missing out) buyers from the market. The lack of FOMO buyers had an impact. We started to see some downward pressure on values in limited parts of the market. With a discerning buyer pool, flawed properties that would have sold easily in the first quarter weren’t getting any love from buyers.

In my last musings, I showed stats that pointed to the relative resilience of this market despite rates well over 6%. The stats above point to a further shift downward in the market . Or at least two out of three did. The third is a reflection of Maui as a real estate market as a whole.

The increase in inventory and the decrease in pendings show a market where the balance in supply and demand is starting to shift. This is less due to an influx of new inventory as much as it is to decreased demand. When you look at the number of homes going under contract within 10 days or less, you can see where the push above 7% rates is starting to decrease the number of buyers. I am sure the more negative national real estate news is also having an impact on the buying decisions of some. Fomo has been replaced by wait and see.

The decrease in price reductions is the one anomaly in this market. As the market cools, you would expect sellers to adjust. Prior to Covid, Maui’s market dynamics were different than the typical mainland market. Sellers took time to adjust prices and days on market could really pile up before a listing was considered stale. It’s also worth remembering that this shift is pretty recent. We may need to see these conditions persist for a longer before more sellers begin to adjust prices.

The one other thing to note is that while we saw a shift in market conditions in these most recent stats, conditions remain variable. That’s pretty clear when we look at the difference between homes and condos. As of mid-October, new condo listings still went under contract much faster than they did pre-Covid. Condo inventory remains tight compared to demand and the volume of cash buyers blunts the impact of higher rates.There is variability in the home market too. The luxury market, which again includes a higher percentage of cash buyers, appears to be moving relatively well.

Looking forward, it will be interesting to see where the market goes from here. Since it’s taken me longer to write this blog post, I have the advantage of watching market conditions over the first ten days of November. While I haven’t crunched the numbers in any detail, pending sales stabilized to start the month. Yesterday’s inflation print out caused a shift in the bond market and mortgage rates to drop a half a point.Will that persist or will higher rates return? Needless to say, it’s too early tell. If anything, this points to continued weird market dynamics with a lot of variability in conditions.

A Little Maui Beauty to Brighten Your Day

It may not be Monday but…

Contact The Maui Real Estate Team

Variable market conditions and general market weirdness demand quality representation. Contact the Maui Real Estate Team to talk to one of our experienced agents if you are thinking of buying or selling Maui Real Estate. One of our healthy agents will be happy to learn more about your real estate needs. We look forward to being of assistance.

Pete Jalbert

Maui Real Estate Blog

Maui Market Musings Volume XI

Once again it’s time for another edition of Maui Market Musings. Your almost weekly source for the latest and greatest Maui Real Estate Statistics and market observations. The musings are also rumored to cure insomnia for those that have no interest in real estate. Although, we need to go through clinical trials before we can make that claim officially. This edition of the musings looks at notable numbers from the May stats and a few statistics that point towards current market conditions.

Notable Numbers from the May Maui Statistics

I looked through the latest statistics from the Realtor’s Association of Maui (RAM) and did a little number crunching of my own. The numbers below represent some of the more interesting items from the May Sales activity on Maui. They are just for the island of Maui. RAM’s stats include sales on Lanai and Molokai.

May Home Sales

  • Maui Realtors reported 93 home sales on Maui. That is down 20% from last year’s 116 sales.
  • While increased mortgage rates in March and April likely impacted sales, low inventory remains a factor too. The end of the month inventory of active home listings between February and April averaged about 15% below the same period of 2021.
  • While we may be seeing lower sales numbers, competition for the available inventory remained robust. Of the homes that sold, 35.48% sold for over asking price and 61.29% sold for asking price or above.
  • That is quite a bit stronger than last May when 25.86% sold for above asking price and 50.86% sold for asking price or higher. It is also higher than April when 32.35% sold for over asking price and 55.88% sold for asking price or above.
  • The median price of homes sold in May is $1,225,000. That is 20% higher than the May 2021 median home sale price.
  • The increase in median is a reflection of both price appreciation and a lack of inventory at lower price points. There were only 8 homes sold on island for less than $800,000 last month. The May prior, 37 homes sold for less than $800,000.
  • The average price of homes sold in May 2022 came out to $2,309,049. That is a 34% increase over last May’s median of $1,724,917.
  • Strong activity in the luxury home market drove the high average price. Two homes sold for over $20,000,000. Six total homes sold for more than $5,000,000. Twenty-seven homes sold for over $2,000,000.
  • The high sale for the month closed for $26,490,700. For that sum, the new owners acquired a home with 10,500 sf of living space, 8 beds, 8 baths, 3 kitchens, along with a separate pool house with room for guests, a six car garage and a caretaker’s quarters. The property is situated on an acre across the street from the ocean in Makena. This was the highest priced home to sell for the year to date.

May Condo Sales

  • Maui Realtors reported 144 condo sales in May. That is 39% lower than the 237 sold in May of 2021.
  • As with homes, increased mortgage rates may be tempering demand, but inventory is also impacting sales volume. The average number of active condo listings at the end of the month from February through April averaged about 56% less than the same period of 2021.
  • While demand may be lower, the limited supply continues to make for a competitive market. Of the condos sold, 31.94% sold for over asking price in May. An impressive 66.67% sold for asking or above.
  • That is a lot higher than the numbers from May 2021 when 15.28% sold for over asking price and 42.68% sold for asking price or above. The number of properties selling for above asking price in May 22 is down a little from April 22. That said, the percentage selling for asking price or above is higher.
  • The median price of condos sold in April is $747,000. That is 21.46% higher than last April’s median.
  • The average sales price for the condos sold in April came out to $1,136,318. This is 13.68% higher than the average price in April 2021.
  • Luxury condo transactions remain strong with one sale over $10,000,000, 3 over $5,000,000 and 22 sold for $1,500,000 or higher.
  • The highest price condo sale for the month closed for $11,900,000. That buyer now owns a 3 bedroom, 4 bathroom condo with 2,814 square feet of living space at the Andaz Residences Wailea.

Current Market Indicators

If you are long term reader of our stats post, you will know the familiar refrain that sales are a lagging indicator. We wanted to look at just a few stats that might give a better sense of current market conditions.

As noted repeatedly in the May sales stats, inventory, or lack thereof, remains a big driver in our market. On the last day of May, there were 213 active home listings in Maui County. That is a 7.5% increase from 198 listings at the end of April. On the last day of May, there were 175 active condo listings. That is just 1.7% above the 172 on the last day of April.

Nationally, the inventory of homes for sale rose 25% from April to May. Maui is clearly lagging behind the mainland when it comes to changes in inventory. That said, as noted in Market Musings X, any increase in inventory on Maui at this time of the year goes against pre-Covid trends. Inventory dropped on Maui between the last day of April and the last day of May in 2017, 2018 and 2019.

We also continue to track the number of properties going under contract within the first ten days of coming to market. Of the 55 homes and condos listed between May 18th-25th, 17 or 34.54% of the new listings went under contract within the first ten days of going on the market. That is a slight decline from the 35.55% between May 7th and 14th. It is down substantially from the 56% we reported in mid-February. For comparison to Pre-Covid days, 23.8% of listings that went to market between May 18th-May 25th, 2019 went under contract in the first ten days.

The one last metric we are trying to track is price reductions. The number of active home listings with price reductions is sitting at 29.5%. This is down from May 24th when 33% of active home listings reduced their price at least once. Of the active condo listings, 20.9% reduced their price one or more times. That is up from the 18.2% of active condo listings that reduced their price on May 24th.

A Couple of Thoughts on The Numbers

One number that stood out is the decrease in the number of price reductions among the active home listings . Prior to calculating the numbers, I expected to see an increase in price reductions for active home listings. Anecdotally, it seems like there are more price decreases. So why the lower number? Without doing a deep dig into the recent pending sales, I suspect that price reductions are proving to be effective. People overshooting the market initially are able to find the market via price adjustments.

Overall, the numbers above point to a market that while cooler than this winter, still remains resilient. The shifts in the market are gradual and not drastic. Inventory numbers well below normal combine with existing levels of demand to create conditions that are still more competitive than a “normal” Maui market.

While the numbers show some of the variability in the market between homes and condos, they don’t show the variability by geography and price point. On May 31st, I went through the end of the month inventory for homes and condos and broke it down by geography and price point. The purpose of the exercise wasn’t so much for this post but to create a baseline for future analysis trying to track potential shifts in inventory and demand at a district and price point level. That said, there is pretty clearly some variability evident. This post is getting a little long already so I will save my findings for the next edition of the Musings. The one immediate takeaway is that sellers will likely want to talk to their Realtor about conditions specific to their segment of the market when determining pricing and negotiation strategies.

The Obligatory Maui Photo Tweet to Brighten This Blog Post

Contact The Maui Real Estate Team

Contact the Maui Real Estate Team if you have any questions about this post or if you need assistance buying or selling Maui Real Estate. We look forward to hearing from you and discussing your real estate needs.

Pete Jalbert

Maui Real Estate Blog

Maui Market Musings Volume VI

The sixth edition of Maui Market Musings is here. The latest edition includes a review of the first quarter statistics that point to scarcity and competition in the market. It also delves into the taboo question of whether we are in a housing bubble. For that and a little more, keep on reading.

All Done with Quarter One

March 31st marked the end of the first quarter. The end of the quarter presents an opportunity to look back at the sales activity during that time. Specifically, I wanted to show the numbers that point to the scarcity of listings and the resulting competition for properties on the market.

The signs of scarcity are pretty clear in the numbers. New listings of single family homes decreased 9.5% compared to the first quarter of 2021. New listings of condos fell 8.9% compared to the first three months of 2021. We entered the year with low inventory and the lower number of new listings meant less relief for buyers. There was an average of 188 homes for sale during the first quarter. That is down 29% from the average of 264 during quarter one of 2021. The average number of condos for sale during the first quarter of 2022 was 71% lower than early 2021! The lack of inventory showed when it came to sales volume. Home sales for the quarter are 13.7% lower and condos sales are 3.7% lower.

The signs of heightened competition are also readily apparent in the first quarters statistics. Days on market for homes dropped 13.7% compared to the first three months of 2021. The average days on market for condos in the first quarter was 76 compared to 143 in the first quarter of 2021. That is a 46.9% drop! Competition impacts bidding strategy and drives offer prices higher. Of the homes that sold in the first quarter, 64.58% of the homes sold for list price or above. That compares to 42.21% during the first three months of 2021. For the condos that sold in Q1, 71.02% sold for asking price or above compared to 34.52% in the same period of 2021.

Of course, changes in the median prices also reflect increased competition. Median home and median condo prices increased 20.4% and 25.2% respectively compared to the first quarter of 2021. The March monthly median prices were both all time highs at $820,000 for Maui condos and $1,177,500 for Maui homes. For the data geeks looking for more numbers, here is a link to the Realtor’s Association of Maui March Statistics.

Are We in a Bubble?

The question now is where does the market go from here? After two straight years of extraordinary growth, the conventional wisdom among real estate economists seems to be that the national real estate market should slow gradually as the year progresses. Rising interest rates would help to cool demand despite continued low inventory. Over the last week, some economists are taking a more bearish outlook. Most prominently, the Dallas Branch of the Federal Reserve released a paper that highlights what they see as signs of a housing bubble.

The Dallas Branch’s paper highlighted the metrics that indicate a growing break between the market and what fundamentals support. Specifically, they site price to rent and price to income ratios as being out of balance. They show that the current ratios are starting to look similar to what we experienced during 2006/2007 when the last real estate bubble was about to burst. If comparisons to 2006 and 2007 give you a case of the cold sweats, take some solace from the fact that the Dallas Fed is not predicting a similar fallout if there is a housing correction.

Another thing that is worth noting from the Fed’s article is their explanation for what causes bubbles and markets to diverge from fundamentals. It often happens when there is a widespread belief that price increases will continue. Buyer’s fear missing out before prices go up and so they bid more aggressively. This of course helps to spur price increases. In light of this, I thought this tweet from Economist Ali Wolf from Zonda was interesting.

Will the Dallas Fed’s article put a dent in some of the exuberance that caused market fundamentals to fall out? In other words, will the widespread belief in additional price increases start to fade? Or will discussion of housing bubbles fade as we move away from the publication date of the article? It is worth noting that the discussion of bubbles is happening at a time when interest rates for 30 year loans spiked near 5%. Is there a threshold with mortgage rates that saps that exuberance?

While there may be a few more people raising concern about a housing bubble, it’s safe to say that this is not an emerging consensus. There are still a significant number of economists advocating for the gradual shift. This is a volatile time in our world making prognostication that much harder.

What does this mean for buyers and sellers? For buyers wondering whether now is an ok time to buy, we ask two questions. Can you afford it and how long do you plan to own the property? With the first question, how much of a stretch is it for you to buy right now? Are you going to be leaving yourself house poor? If the answer to the last two questions is yes, it may not be the best time to buy. Are you planning to hold the property for 5-10 years or just looking for an interim home for a couple of years? If it is a more short term purchase, again now may not be the best time to buy. It depends on your individual circumstances.

For sellers, market conditions remain in your favor. That said, it is a time to be more vigilant about economic and market conditions. We are continuing to see sellers really push the envelope on pricing with mixed levels of success. If and when market conditions start to cool, those sellers may end up way out of line with the market.

Notable on Recent New Inventory

Over the last week or so, it seemed like a few more properties came to market that only sold within the last couple of years. I looked at new listings between March 21st and April 4th to see if the data backed up anecdotal observations. Of the 150 new listings, 15 sold previously between 2020 and 2022. That’s a nice even 10%. Looking at those 15 listings, it is clear that there are some that are fix and flips, some are flips with limited or no improvements made by the seller, some appear to be sales due to life changes and some are just head scratchers. The head scratchers were the properties that closed and were back on the market within the month with more limited price increases.

A little Maui Beauty to Brighten the Post

A drier than normal winter meant fewer rainbows on Maui. The return of trade showers last week brought not only some much needed moisture, but also some color to the sky.

Contact The Maui Real Estate Team

Dynamic market conditions, limited inventory and strong competition demand quality representation. Contact The Maui Real Estate Team if you need assistance buying or selling property on Maui. We would love to take the time to discuss your real estate needs.

Pete Jalbert

Maui Real Estate Blog

Maui Market Musings Vol. IV

This week’s market musings takes a look at some of the notable numbers from the February sales statistics and the latest on interest rates. Without further ado…

Notable Numbers from The February Stats

The Realtors Association of Maui recently released their February 2022 statistics. These are some of the numbers that I found particularly noteworthy.

  • New inventory decreased for homes and condos 6.7% and 17.3% respectively compared to February 2021. This speaks to Maui’s continued inventory crunch.
  • Pending sales for homes and condos dipped by 27% and 31% compared to last February. This is in part due to a lack of inventory and in part because the period between February and April of 2021 were the busiest in Maui’s history for closed transactions. For these same reasons, I surmise you will see similar year to year decreases in pending sales throughout the rest of the Spring.
  • The days on market for homes increased just than 1% compared to last February. On the other hand, condo days on market dipped 46.8% compared to last February. While some of this is due to a particularly strong condo market, this can also be traced to a divergent home and condo market during 2020. Home inventory decreased throughout 2020. Condo inventory, and vacation rental condo inventory in particular, increased throughout most of 2020. It only started to trend down towards the end of the year after the reopening of our tourism economy in October. There was a pretty healthy inventory of condos with higher days on market to start 2021. As a result, many of the early 2021 sales had pretty high days on market. In 2022, there are a lot fewer condo listings sitting around for long before going under contract.
  • The median sales price of single family homes and condos increased 18.3% and 31.2% respectively. To be clear, these numbers do not directly reflect changes in property values. Changing values do influence median sales price. However, the median price is also influenced by the composition of the properties sold. We touched on estimated price increases since the start of Covid in Musings Volume II. Across a variety of properties, we saw values increases between 28 and 46% over the last two years.
  • Single family home inventory decreased 25.6% compared to last February. Condo inventory is down 71.3%. Again, this goes back to the differences of inventory to start 2021. The condo market had a pretty healthy supply of condos for sale, while the home market entered the year with far fewer condos. Relevant to the here and now, inventory levels remain really low for both homes and condos.
  • Two markets stood out for an increase in activity. Both the Kihei and the Napili, Kahana, Honokowai districts saw big increases in condo sales. Vacation rental condo sales drove the increased activity. Sales of Kihei condos that allow vacation rentals are up 32% this February compared to last February. Sales of Napili, Kahana and Honokowai vacation rental condos were up a whopping 93.75%.

Interest Rate Watch

After flat to declining interest rates, the 30 year fixed rate jumped above 4% for the first time since 2019.

This is a resumption of the upward trend over the last six months. Rates dipped with the start of the war in Ukraine as investors shifted from equities to more secure bonds. Mortgage rates tend to generally follow the ten year treasury bond. A subsequent sell off in bonds due to news on inflation and future fed increases allowed rates to increase again. While the gradual increase in rates is forecast to continue, some economists predict that global uncertainty may dampen the rate of increase in mortgage rates this year.

And For Something Non-Real Estate Related…

My posts can’t be all numbers all the time. Chances are if you are reading this, your interest in the island extends beyond real estate. You appreciate Maui’s people, natural beauty, flora and fauna. With that in mind, I thought it was worth sharing this short video from earlier in the week. Here is one of Maui’s most famous winter visitors being saved from an entanglement of fishing gear.

Contact The Maui Real Estate Team

That’s it from this week’s Market Musings. Contact us if you have any questions about the market, requests for content on future posts or of course need assistance buying or selling property on Maui.

Pete Jalbert

Maui Real Estate Blog

Maui Vacation Rental Condos September 2021 Market Update

I challenge you to find a segment of the Maui Real Estate market that experienced a more drastic reversal of fortune over the last 12 months than vacation rental condos. With tourism shut down starting in April of 2020, demand for vacation rental condos shrank rapidly over the spring and summer. With no rental revenue to offset costs and economic forecasts calling for a slow rebound in tourism, many owners opted to sell. Inventory rose steadily through spring, summer and early fall. On October 15, 2020, the state rescinded the mandatory quarantine rules for incoming travelers. Residents and vacationers who tested negative could avoid the Covid vaccine. This marked the first step in a gradual shift in the market.

For the first couple of months after tourism reopened, visitor numbers were a fraction of what the island experienced pre-Covid. That said, buyer demand ticked upwards and supply slowly ticked downwards as soon as visitors returned. With the start of the new year, a significant shift occurred. Visitor numbers recovered far faster than anticipated. Apparently, many of the visitors were vacation rental condo buyers.

Soaring Sales and Shrinking Inventory

Pending condo sales on Maui since January 2020. The collapse in demand right after the start of the pandemic is clear as is the slow recovery. In January 2021, the market hits another gear entirely. This chart includes both vacation rental and non-vacation rental condos.
Condo inventory on Maui since January 2020. This chart includes both vacation rental and non-vacation rental condos.

They say a picture is worth a thousand words. These two pictures tell the tale of the Maui Vacation Rental condo market pretty succinctly. Buyers returned to the market in big numbers in early 2021. With a pretty healthy inventory of condos to choose from, the volume of transactions grew quickly. Buyer activity reached its peak in March with 290 condos under contract. Volume started to dip in April. While there was a minor uptick in May, the number of properties under contract continues to fall.

The healthy inventory of condos in January and February quickly gave way to scarcity. A ravenous buyer pool quickly chewed through much of the inventory. Anecdotally, I started to get a lot of e-mails from other Realtors beating the bushes searching for unlisted properties in late March and April. The inventory continued to fall through late Spring and the summer. The contrast between this summer and last summer is pretty stark. While many popular condo complexes had double digit inventory in the summer of 2020, most currently have a handful of active listings at most. The overall condo inventory is less than 25% of last summer.

Shrinking inventory is in turn impacting the volume of properties under contract. There are far less active condos for sale now than there were that went under contract in March back in the peak of the market. It is difficult to compare demand now compared to demand back in the late winter and early spring. Anecdotally, it feels like demand is down some. That said, with such limited supply market dynamics feel similar to the spring when demand and supply were both higher. Plain and simple, it is a strong sellers market.

Strong Demand Plus Declining Inventory Equals Rising Prices

With strong demand and dwindling supply, it’s not surprising to see the trajectory of prices. While median prices on island tend to fluctuate based in part on the composition of condos sold within a given month, there are clear signs of price increases. The median price of the vacation rental condos sold in August of 2020 was $600,000. The median price of vacation rental condos sold in August of 2021 is $747,500.

Other Notable Numbers From the 2021 Maui Vacation Rental Condo Market

  • There were 880 vacation rental condos sold on Maui between January 1, 2021 and August 25th, 2021. That is a 221% increase in activity compared to the same period of 2020.
  • The average price of condos sold between January 1, 2021 and August 25th is $1,079,000 and the median price is $715,000.
  • The lowest priced vacation rental condo to close sold for $110,000. That was a leasehold, oceanfront, one bedroom at Maui Sands.
  • The highest priced transaction for the year to date closed for $14,250,000. This was for a 3 bedroom, 3.5 bathroom, direct beachfront unit at Wailea Beach Villas.
  • There was a lot of activity in the higher price ranges of the vacation rental condo market. The Wailea Beach Villas sale was one of two transactions that closed over $10,000,000. It was one of nineteen sales over $5,000,000 and one of ninety-two sales over $2,000,000.
  • Kihei was the busiest market with 278 closes.
  • Kapalua saw the biggest increase in activity of any area of the island compared to the same period of 2020. The 80 closes as of August 25th are a 615% increase in activity over the same period of 2020.
  • Kamaole Sands was the busiest individual condo development for sales. There were 33 condos sold for the year as of August 25th. Honua Kai was the next busiest with 31 condos sold.

Market Outlook for Buyers

As mentioned above, scarcity is a challenge for buyers in this market. The summer did not bring any inventory relief. July and August had the fewest new condo listings since April of 2020. It will be interesting to see if we see more inventory in the fall. Mainland markets are seeing a slow increase in inventory. Is our lack of inventory a reflection of different dynamics in play on Maui, or are we just seeing some lag before we catch up to trends on the mainland?

Might we also see a decrease in demand? A report from Redfin in June indicated demand for second and vacation homes started to shrink in the spring. They cited a variety of factors including decreased affordability and tighter underwriting standards. They also indicated that many that intended to buy a second home already made their purchase.

I can see where affordability could start to impact demand on Maui. Price increases over the year are significant. Those looking for strong cap rates are likely to be discouraged. While rents are up some this year thanks to strong demand, they aren’t quite keeping pace with appreciation. Buyers more focused on cap rate rather than personal use of the condos will be less likely to buy in the current market.

Last but not least, the adverse impact of Covid is not over. Cases are up sharply in Hawaii and hospitals are strained. Some tourists are heeding the governor’s calls to delay visits due to the recent surge. Hotels are reporting cancellations over the next two months. Will that dampen demand at all?

Market Outlook for Sellers

The market outlook for sellers is pretty clear. There is still good to strong demand and inventory is limited. Prices are up. If you aren’t using your condo or you are just looking to cash out, this is a good time to sell. It is worth noting that while the market is supporting strong appreciation, it is still quite possible to overprice your property. Approximately 53% of the current active listings are on the market for over 30 days. If you want to sell quickly, it still makes sense to look at recent comparable sales when formulating a pricing strategy.

Contact The Maui Real Estate Team

Contact The Maui Real Estate Team if you are interested in buying or selling a vacation rental condo on Maui. For buyers, we would be happy to review current inventory options in your price range and keep our ears open for unlisted properties. For sellers, we would welcome the opportunity to give you a free broker’s price opinion on your condo. We look forward to being of assistance.

Pete Jalbert

Maui Real Estate Blog

August 2021 Haiku Real Estate Market Update

This is the third installment of our summer community real estate market updates. Today’s post focuses on the North Shore community of Haiku. It follows recent posts on Spreckelsville and Paia and Kuau. Haiku spans a large geographic area along the north side of Haleakala. It ranges in elevation from sea level to about 1,500 feet in elevation. Located on the windward side of the island, Haiku’s landscape is more lush due to more frequent trade showers.

The area was a focal point of agriculture pre-western contact. In the more recent historical period, it was an area of plantation agriculture with both pineapple and sugar cane serving as the primary crops. The agricultural legacy is evident in the zoning. The bulk of the properties in the area are zoned agricultural. Most agricultural lots include 2 or more acres. Acreage is one of the biggest appeals to this area of Maui. There is still smaller scale farming in the area. Many homeowners have orchards and/or gardens. Other draws to Haiku include the area’s natural beauty, access to nearby water sports and proximity to a variety of schools.

Notable Numbers from This Year’s Haiku Home Sales

  • Maui Realtors reported 66 sales in Haiku for the year to date as of August 17th. That is a 27% increase over the same period of 2020.
  • The median sales price of the homes sold is $1,177,500. The average sales price is $1,440,507. This is also up significantly over the same period of last year when the median and average were $870,000 and $1,104,884 respectively.
  • The lowest priced property sale for the year to date closed for $600,000. This 977 square foot house and cottage on a 12,284 square foot lot sold prior to going on the MLS. I venture that it likely would have sold above this price if it went to market.
  • The highest priced sale closed for $6,650,000. That property includes a 4,500 square foot home with a pool and a large barn on 38.91 acres.
  • That sale is one of nine properties to close over $2,000,000 and one of four that closed over $3,000,000.
  • There are currently 16 homes under contract in Haiku with 4 of those listed for more than $2,000,000.
Horses in pasture in front of the barn
A 39 acre property in Haiku represented by the Maui Real Estate Team, Inc. It closed in late July for $3,450,000. The property includes a large barn, extensive pasture area for horses and a beautiful cottage.

Thoughts on the Haiku Market for the Year to Date

Like the rest of the island, the Haiku area is seeing strong demand and limited supply. This is reflected in both the higher than average sales activity, and the increase in prices. Sales volume for this period is higher than not just the same period of 2020, but also the same period of any of the last five years. Both median and average price increased significantly over 2020. The increase in average price reflects not just rising prices, but also additional activity in the higher price points of the Haiku market. This is part of a two year trend for higher priced sales in Haiku. There are 21 homes that closed for $2,000,000 or more in Haiku since January 1, 2020. That is 27% of the sales for $2,000,000 or more in the last 20 years!

The Outlook for Haiku Homes for the Rest of 2021

While buyer demand remains strong, inventory is incredibly limited in Haiku. As of this moment, there are only 17 active home listings. That’s a fraction of what we typically see in Haiku. Inventory is particularly scarce below $1,000,000 with only 4 active listings. By comparison, there are 7 listings over $2,000,000. While some markets on the continent are seeing inventory rebound, we aren’t seeing it in Haiku. Sales volume for the rest of the year will be hard pressed to keep pace with the first seven plus months of 2021 unless more listings come to market. It will also likely mean continued upward pricing pressure.

The Haiku Land Market

Haiku sees more land sales than most parts of the island. It typically has more land inventory available. Haiku Town Acres and Kauhikoa Farms are two newer subdivisions created in the last five years that drove recent activity. The rest of the inventory consists of resales from older subdivisions or lots created from smaller scale subdivisions. CPR lots are increasingly common.

Notable numbers from the Haiku Land Sales in 2021

  • Maui Realtors reported 29 lots sold for the year as of August 17th. The median price of the lots sold is $585,000. The average price of the lots sold is $813,190.
  • The highest price lot closed for $2,499,000. It is a 20.5 acre oceanfront lot located to the East of the Peahi surf break.
  • The 20.5 acre oceanfront parcel was the only sale over $2,000,000, but it was one of eight sales for $1,000,000 or more.
  • The eight sales equals the total for all of 2020. The last two years are now tied for the busiest year ever for $1,000,000 or more land sales in Haiku.

Haiku Land Sale Overview and Outlook

Strong demand helped push pricing up in the Haiku land market in 2021. As the overall real estate market on Maui hit another gear in the first quarter of 2021, buyers quickly snatched up much of the remaining land inventory in Haiku. I remember clearly in January and February when a number of the properties that sat on the market in the fall went under contract in close succession. Replacement inventory has yet to come to market. As it stands, there are only 9 active land listings in Haiku. The lowest priced listing is currently $1,300,00! When lower priced lots come on the market, it feels more like an auction than a conventional real estate listing.

Barring a substantive increase in inventory, I would surmise that we will see really limited sales volume and continued price appreciation. That said, land pricing does not operate in a vacuum. Construction costs are high due to increased material and labor costs. If the cost to build plus the cost of land far exceeds the price of existing homes, buyers won’t support the higher land prices. Land buyers should evaluate potential construction costs and create an overall budget prior to hopping into a frothy land market.

Contact The Maui Real Estate Team

The Maui Real Estate Team keeps close tabs on the Haiku market. A number of our office’s agent call the community home. Contact The Maui Real Estate Team if you are looking for property in Haiku. We would welcome the chance to learn more about your real estate interests and needs. You can view active Haiku home listings and Haiku land listings on MauiRealEstate.com.

Pete Jalbert