Year End Wrap Up 2010

Is Maui Real Estate Back to Normal?

The answer is “no” and we’ve a ways to go

Some of the signs are good.  The number of sales increased in all categories.  So, despite the gloom and doom about how difficult it is to get a loan today and how hard it is to close short sales, Maui real estate is selling.

2010 marked a continued return toward getting back to normal.  2008 was abysmal.  2009 was greatly improved in terms of the number of homes and condos sold and 2010 was even better.  Heck, a 17% gain in home sales and 39% gain in condos sales should be cause for celebration.  I wish my stock portfolio or my bank account was growing at that rate. 

But the fact is, aside from 2008 and 2009, you have to go all the way back to 1998 to see sales volume as low and the market as slow as it was in 2010.

We are seeing an increase in the number of homes and condos sold, compared to the number on the market.  But, at current rates, it would take about a year to sell all of the homes on the market and more than a year to sell all of the condos on the market.  Six months of inventory is considered “normal”.

And then there is that “shadow inventory”.  You’ve heard the term, and you hear a lot of definitions.  In fact, when I “Google” shadow inventory definition I get about 1,620,000 results.

Here is my definition.  Shadow inventory is all of the properties that have been foreclosed on and are owned by banking institutions but are not listed for sale plus all of the properties that have notices of default and are not listed for sale.  OK, maybe some homeowners who are in default will cure the default, but that number is very, very small.

To put that into Maui real estate perspective, according to Realty Trac, there are currently 2,019 properties in default, headed for auction or already owned by the bank.  Only 261, 13%, of them are listed for sale in the MLS.

Where are the other 1,758 Maui properties?  That’s the shadow inventory.  We can’t sell them and you can’t buy them because they are not for sale yet.

Where is it all going?

Sales were up in 2010 because prices were down.  In fact, prices were back to 2003 levels.  As a buyer if you thought you missed the market way back when, think again.  You can get a “do-over” and Maui is on sale.  That’s what we’re hearing from clients. 

As the number of sales increase on Maui for homes, condos and land, the prices have to start correcting.  So, for you buyers in the market don’t dawdle waiting for the bottom.  By the time we know we hit the bottom you will have missed it.

For sellers there may be some solace in hearing that prices will start correcting.  But it will be a couple of years before we start to see any real movement on prices based on the number of homes and condos currently for sale compared to the rate at which they are selling.  

It’s a great time to buy real estate in Maui.

Condo sales finish a rollercoaster year

Sales up, prices down, bargains abound

Condo sales on Maui in 2010 was a see-saw affair.  The year started with 4 straight months of increasing sales. We started with 75 condo sales in January and rose in consecutive months to 162 in April.  Then, like a rollercoaster ride, the sales number plummeted to only 69 in July.  Then it bucked up and down for the rest of the year.

Condo sale prices also went on a ride.  The Maui condo median sales price started the year at $404,000.  The median rose rapidly to $499,000 in March.  Then, hang on to your hat, dropped to $310,000 in August and finished the year at $355,747.

In the end there were a lot of happy buyers as 2010 sales topped 2009 sales by a whopping 39%.  And, there were a lot of sellers who bit the bullet as we saw the median price decline by 18% overall.

Area Trends

For condo sales the areas to watch are Kihei and that Lower Road strip on the west side from Honokowai to Napili.  Both areas were big gainers and big losers in 2010. 

Sales of condos along the Lower Road increased by 80% in 2010 over 2009.  It also lost 16% in the median price, one of the biggest losers.

In Kihei there were 42% more condos sold than the year before. However, the median price there lost 15%.

But maybe the biggest winner/loser for the year was Wailea/Makena. The exclusive area posted an impressive 46% gain in condo sales. Buyers got bargains as the median price dropped 35%.

Where are the deals

Last year we said to watch Wailea and Kapalua for good deals in those upper crust neighborhoods.  You know what happened in Wailea.  Kapalua also had a big gain with condo sales up 45%.  The average selling price in Kapalua was down 8% but the median price was actually up by a slim 2%.  Does that signal a return to normal or are there still bargains in Kapalua?

On the west side look for deals on 2 bedroom condos in Lahaina at aina nalu. This boutique condo-tel in downtown Lahaina fell on hard times in 2008 and 2009.  But 2010 saw sales rebound as prices slumped to the low $200,000 range from earlier highs in excess of $600,000.  Now, sellers with well priced units are seeing multiple offers.

Look for deals on selected oceanfront complexes on the west side’s Lower Honoapiilani Road.  And you’ll still find some bargains on the golf courses in Wailea.   

For more specific information on any condo complex on Maui send an email with your request to lee@alohapotts.com or, visit our website at www.alohapotts.com.

High end homes heat up

Generally, sales are up and prices are down. Déjà vu.

Sales of single family homes on Maui increased by 17%.  However, their median price dropped by 8%. 

The number of sales actually followed the same upward spike as the condos from January to April. Sales numbers increased from 48 in January to 91 in April.  Then the numbers declined slowly and settled in to the mid 60’s in July and stayed there throughout the end of the year.

Prices fluctuated up and down through the course of the year, but we didn’t see the huge swings we saw in condos. As mentioned previously the median dropped by 8% for the year, but the average selling price was actually up by 5%.

Some of the biggest gainers were at the top of the market.  Sales of homes in Kapalua more than doubled.  The average price there was up by 51% and the median rose 25%.

Wailea homes sales increased by 61% and prices followed.  The average selling price in Wailea was up 49% and the median was up 11%.

Other major noteworthy areas include Maui’s central district of Wailuku and Kahului.  Sales there were up 7% and the median price was down 9%.

There were over 100 sales upcountry, Kula, Makawao, Pukalani up over 20%.  The average price up there increased about 16% while the median dropped 9% -10%. 

Lahaina and Kaanapali both had increases in homes sales from 32% - 50%.  Like other island areas, median prices were down over 20%.

The overall trend was the same in almost every district on Maui; the number of sales in 2010 was up significantly and the selling prices - down. 

What’s going to happen in 2011?  It appears that the number of sales will continue to increase as the economy improves, especially on Maui with tourism numbers getting back to “normal” and fueling employment here.  In the middle and upper end of the market we are seeing more “boomers” looking for their retirement home. 

Prices should flatten out.  After an 8% decline in 2010 we might expect demand to keep prices near current levels in 2011.

For more information on homes anywhere on Maui send an email with your request to lee@alohapotts.com, or see all of the listings on Maui at www.alohapotts.com.

Foreclosures, short sales and REO’s on Maui

Maui’s market is driven by the distressed with a long road ahead

The foreclosure mess in Maui is a conundrum and it’s complicated.  As mentioned in the opening section, Maui has a huge shadow inventory created by homes and condos that have been or are headed toward foreclosure.

How bad is it?  Many people thought that Hawaii and Maui in particular were somewhat immune from the housing bubble.  After all, it’s Maui, they not making any more of it.  So, because of scarcity prices will stay up and stable, right?

Wrong!

The combination of easy credit, skyrocketing prices from ’03 to ’06 and the economic disaster of 2008 were a poison pill that has created one of the worst foreclosure situations in the country. 

That’s right, in the country.  According to Realty Trac 1 in every 339 homes (including condos) in Maui is considered a “foreclosure property”.  In Florida, a well publicized foreclosure hotspot, 1 in every 343 homes is a foreclosure property.

And it appears that we will be working through that inventory very slowly. 

Of the 2,019 properties shown as foreclosure or pre-foreclosure only 261 are listed for sale. In 2010, 644 of the condos and homes sold, 32% of all sales, were short sales or REO sales. 

That reveals two things: buyers are looking for deals in the form of short sales or REO’s and they are going to keep looking for them.  But if we continue to sell 644 foreclosure properties a year it will take us 3 years to work through the current batch of foreclosures.

With that many price challenged properties in the pipeline they tend to drag down the prices for the normal properties to the point that the distressed price level is the new normal. 

Is the Maui market back to normal?  No, and we’ve a ways to go.

If you are interested in learning more about distressed properties on Maui, send me an email lee@alohapotts.com and I’ll send you a list and some details.

If you are coming to Maui this year, let us know, we would love to say hello.

A hui ho!

Get more information and details

To get more information on property and trends, you can search all properties listed for sale at www.AlohaRealtyGroup.com.  If you can’t find what you’re looking for there, send us an email to lee@alohapotts.com, and we’ll do our best to get an answer for you.  As we get more requests for information, we’ll add new sections to the website, newsletter or both.

About The Aloha Potts Team

Aloha Potts is a team comprised of L. Lee Potts, MBA, REALTOR® R(B) and Barbara S. Potts, MBA, REALTOR® R(B) and former California CPA.  We are business people, and we treat our clients with the same care and service attitude that we would like to receive when we do business.  We are in business for pleasure and profit.  We expect that most of our clients will enjoy the property they own in Maui (pleasure), and it would be nice for everyone if your property performs well for you (profit).  Real estate can be highly speculative, and profits are never guaranteed.  So if you are buying property

in Maui, it’s a good idea to surround yourself with a professional team.

Lee Potts is the former President of an international software company and former Marketing VP of a publicly traded franchise organization.  Lee and Barbara are both licensed under Aloha Realty Group. 

Barbara Potts was a CPA with Ernst and Young before joining Apple Computer back when both Steve’s were there (Jobs and Woz).  She was also Director of Strategic Marketing for Grass Valley Group, a division of Tektronix, and a business broker in California.