Market Overview June

Hawaii’s top economist says real estate has hit the bottom

Kind of

Last month we told you that ringing sound was the market hitting bottom.  Well Paul Brubaker, Chief Economist for the Bank of Hawaii (America’s #1 Bank), professor and all around smart guy, says the same thing… almost.

Paul spoke at the Realtors Association of Maui quarterly meeting.  His market forecasts over the last several years have been extraordinarily accurate.  It’s like he’s got a crystal ball or something.  You can see his entire presentation at http://yourwebcast.com/ram/brewbaker09.htm .  If you can’t open it, send me an email and we’ll figure it out.

The short version is that the single family home market has hit bottom in Maui.  Paul believes that condo prices are still headed south.  In either case, he is urging buyers, “if you have the money, now is the time to buy.

Just a few details before you get the rest of the report.  Inventories seem to have stopped rising.  The “days on market” are comparatively short.  The properties that are selling are moving pretty quickly. 

We are seeing bidding competition at the low end of the market.  Some REO’s (bank owned properties) are selling for more than asking price.  On the other hand, we are seeing some HUGE price reductions on properties at the top of the market. 

Want details?  We have details.

Maui condo prices rebound?

High end in gear

The Maui median condo price bounced back in July, buoyed by closings at the luxury end of the price spectrum. These included 2 units at Hoolei in Wailea and 3 at the Palms of Manele on Lanai.  The Palms units each sold for exactly the same price, $1,875,000.  The asking prices on those were all over $2.3 million.

The sales median was also helped by several closings at Ke Alii Ocean Villas, a new upscale development in south Kihei.

All told, there were 11 sales above $1 million and 11 sales below $250,000.

With only 45 total sales, June was the second slowest month of the year.  In June of 2005 there were 194 sales.  So buyers are still being very cautious. 

It will be interesting to watch the activity in the coming months.  While some economists are telling us that we’re at the bottom of the market, Maui condos are going to be affected by two other factors, one unique to areas like Maui, the other not.

About half the condos sold in Maui allow vacation rentals.  Lenders are continuing to tighten their requirements for so-called ‘condo-tels’.  Many lenders won’t even make loans on condo-tels.  Those who do are now requiring 30 -40% down and charging more than 1.5% higher interest rate.  That will limit the pool of buyers who are willing and able to pull the trigger. 

Many of our residential condos on Maui were purchased by folks who couldn’t afford to buy a house.  And many of them bit off more than they could chew and are part of the subprime mess.  We will see many more of them going into distressed property status as short sales or foreclosures. 

Distressed properties tend to be priced below the “normal” market price.  When there are so many, as we have on the market today, they pull down the prices of the normal market.

So we will watch the market and see if June’s uptick will stick or if it is just an anomaly driven by some high end sales.

Area Highlights

Once again Kihei accounted for more sales than any other area, with 19.  Wailea had the second most sales with 8.  So South Maui dominated the condo market totaling more than half the sales on the island.

In West Maui, once the king of the condo world, there were only 11 sales for the month.  West Maui prices are coming down, approaching some of the perceived bargains in Kihei. 

Highs and Lows

The lowest price for a condo in Maui was paid at Harbor Lights.  The asking price was $90,000 and the 2 bedroom 1 ½ bath unit sold for $50,000.  It was a short sale.

The second lowest selling unit was in Southpointe.  It is interesting because it was bank owned, an REO.  It was listed for $149,000 and it sold for more, $157,195.

At the other end of the spectrum was a Wailea Beach Villa.  The 3 bedroom 3 bath garden view unit went for $3,295,000 all cash.  Over three million bucks for a GARDEN VIEW in Maui?  I don’t get it.

Distressed Property

Of the 45 condos sold in June, 4 were short sales and 4 were bank owned.  So, just under 20% were distressed. 

Of the 1,522 condos listed for sale, 175 are short sales and 27 are bank owned. 

So, only 13% of the listings are distressed properties but they account for over 18% of the sales.  What does that tell us?

If you would like to get a list of current distressed properties or if you would like to know a bit more about how short sales work, send us an email.

Potts’ Picks

The deal this month is at Kaanapali Shores unit 407.  It’s a nicely remodeled unit on the inner courtyard with beautiful ocean views.  Our analysis says these types of units should sell for the low to mid - $500’s, but this one is offered for only $475,000. Get details from our website by searching for MLS 338669.

I’m not seeing a lot of great buys at the top of the market.  Our pick for the best is on Lahaina’s Baby Beach.  This is a 2 bedroom, 2 bath unit of 1,740 square feet.  It is priced $1,000,000 less than the next lowest priced unit and more than a million lower than the last sale at $2,750,000. You can see it on the website.  Search for 338148.

For more information send an email with your request to lee@alohapotts.com or, visit our website at www.alohapotts.com.

The 62 homes sold in June are the most sold in any month this year.  Is that good news indicating that sales activity is picking up.?   It’s actually a bit depressing.  You see, there were only 2 months in 2008 that posted fewer than 62 sales.  And we all know how bad ’08 was.

The median price remained just below $500,000.  So most of the homes selling on Maui cost less than most of the condos that sold last month.

With that being the reality, of the 1,015 single family homes for sale on Maui, only 260 are priced at $500,000 or less.  43% of those are distressed.  While there are homes in that price range in about every community on Maui, most are in Kihei and the Central District – Kahului/Wailuku.  

Area Trends

Roughly one third of June’s sales were in the Central District.  Kihei had 14 sales and Upcountry had 13.  Maui’s west side had only 5 sales.

In a bit of a reversal, the median price for homes in the Central District was above the Maui median.  Upcountry homes and Kihei homes were both below median. 

In Kihei the median selling price was down by 23% so far this year.  That looks pretty good compared to Upcountry losses.  So far, the median price in Kula is off by 56%.

Distressed Properties

Of the homes sold, 12 were bank owned and 3 were listed as short sales.  Distressed properties accounted for 24% of total home sales in June.  They were surprisingly evenly distributed: 4 in the Central District, 4 in Kihei and 3 Upcountry. 

We are also seeing some limited short sale activity in some of the upper end neighborhoods like Kapalua and Kaanapali.  There are even a couple of distressed oceanfront homes on the market.

Highs and Lows

The lowest priced home to sell on Maui in June was a 3 bedroom, 1 bath home in Kihei.  It was a bank owned property REO, originally listed for $265,000, but it sold for more at $272,000.

And there is still money out there to buy nice things as someone in Wailea discovered.  And sometimes you can even get bargains at the high end.  The 5 bedroom, 5 baths, 5,685 square foot ocean front home was listed for $18,500,000, but it sold for a paltry $11,250,000.  I have access to another home like this if you have the money and the interest ;>)   

Potts Picks

This month we’ve picked 2 homes that offer great value. 

If you are still thinking about $11 million 5 bedroom homes, how about a deal on the Kaanapali Hillside.  30 Kui Place features 5 bedrooms, 3.5 baths and 3,526 square feet of living space.  It has ocean views and has been partially renovated.  It was originally listed for $1,787,000.  It has been reduced to $1,000,000.  MLS 332444. 

But if you need to be beachfront, there are bargains to be had.  This house is on Lahaina’s famous Baby Beach.  It is a 4 bedroom, 4.5 bath, 2,380 square foot like-new home.  It was originally listed for just under $10 million.  The price has been reduced to $6,450,000.  If you can’t quite afford this one, send it to friends with money or hui up with some pals and buy it yourself.  It is MLS number 324103.

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