Maui Real Estate Mid-Year Report 2011

Maui Real Estate hits bottom

What is that boinging sound?

Some people think that Maui real estate is at the bottom of the market, some people don’t.  But what does the evidence show, what does the trend look like and what does history tell us? 

After the first six months of 2011, the stats indicate that the home segment of Maui’s market is in better condition than the condo segment.  Home sales on Maui are up by 4% compared to the same period last year, but the median price is still down by 5%.  A little up, a little down.  But for specific neighborhoods and districts the results are much more dramatic. See the Maui homes section to see where the big gains are and where the losses are.

Condos are a different story; both the number of condo sales on Maui and the median price are down.  Sales compared to last year are down 3%, but the median price was down a seemingly huge 24%.  I say “seemingly” because closings in one new development throw off the Maui condo sales stats in both directions.  Read the condo section of the report to get the specifics.  

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

Sometimes the facts are fuzzy and just cloud the picture

Honua Kai strikes again

The mid-year Maui real estate report published in the Maui News was very misleading.  Completely accurate on the surface, but very misleading nonetheless.

It was reported that both sales and selling prices were down for Maui condos.  Sales were down just 3% but the median selling price fell 24%.

The problem with the report is that it failed to account for the significant impact that the developer closings at Honua Kai, the new luxury resort on Maui’s west side, had on the market.  Since those sales were reported last winter and into early spring, they show up in the statistics.  However, the sales contracts were written on most of those condos preconstruction.  In some cases they were written over 3 years ago when the Maui real estate market was still booming. 

The paper reported that there were 668 condos sold in the first 6 months of 2010 at a median selling price of $427,750.  That included Honua Kai.  If we account for the impact of Honua Kai by removing those sales from the “normal” mix we see there were 516 condos sold at a median price of $335,936

The result is that the picture for the number of sales is even worse.  Instead of being down just 3% as reported, they were down 23%.  However, prices were almost flat.  The median price of condos on Maui was off by just 3%.

That is reflected in the area breakdown from the Realtors Association of Maui as well.  The board statistics show that only 2 areas showed a decline in the number of sales, Molokai and Kaanapali.  Honua Kai is located on the north end of Kaanapali Beach.  Sales of condos in Kaanapali were off by 59%. 

That said, prices were still down in every major market area.  The 2 largest areas, Kihei and Napili/Kahana/Honokowai, had a median price decline of 13% and 12% respectively.

Kapalua’s median selling price was down by 23%, but Wailea was up by 7%.

Distressed properties will still have an impact on Maui’s condo market.  And Hawaii’s new Act 48, designed to help homeowners stay in their homes, will impact and likely slow the recovery in condos and single family homes.

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.

The trend for single family home sale on Maui seems to be flattening out

But each neighborhood varies wildly

At the end of the first 6 months of 2011, single family home sales were probably the bright spot on Maui.  Sales of single family homes were up by 4% compared to last year. Through the first 6 months, however, we saw the median selling price for a single family home decline by 5%. 

But, as you can see by looking at the chart, Sales Volume By Month, Maui’s sales activity is not linear, nor is it even a nice smooth curve.  It more closely resembles a saw tooth.  And the market is not homogenous.

Hardly any of our areas were reflective of the overall island trend and most were wildly varied.

The luxury markets of Kapalua and Wailea are interesting examples.  Sales in Kapalua were up by 75%, although the actual sales numbers are small, 7 sales this year vs. 4 last year. But the median price was off by an amazing 36%.

In Wailea sales were down by 44%.  The median selling price was down by 17%.

Kaanapali, another area known for high end homes on Maui, had sales increase by a significant 67%.  But selling prices were down by 20%.

Upcountry/Makawao sales were up by 35%.  Their median selling price was off by 16%.  Makawao’s neighbor, Kula, showed a sales increase of 26% and the median price increased by 9%.

Other major areas showing downward trends for the number of sales were Kihei, down 11% and Lahaina, down by 19%.  Prices were down by 5% in Kihei, but up by 37% in Lahaina.

So, the blended numbers for Maui as a whole don’t really tell the story of any individual idential area very well.  The numbers vary wildly.  Real estate is still very local, even in small markets like Maui’s.

The fluctuations by area are huge, and before things settle down and we really know that the market is coming back, we still have to deal with the distressed property situation.  Take a look at the distressed property section and my comments on Act 48 to get a better picture of the impact on Maui’s real estate market.

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.

Distressed property picture in Maui not any clearer

How will the shadow inventory and Hawaii’s Act 48 affect Maui’s real estate recovery?

In May, Governor Ambercrombie signed Act 48 into law in Hawaii. This is a well intentioned attempt to help homeowners with true hardships and good intentions communicate with their banks. Some banks are famous for virtually refusing to communicate with homeowners and continually losing the paperwork they had requested/demanded from the homeowner.

The law is far reaching and touches on many areas.  In a nutshell it says that any homeowner going through a non-judicial foreclosure can require a face-to-face mediation meeting with a representative of his/her bank.  Those meetings are not scheduled to begin until October 1 of this year.

In the meantime the law puts a moratorium on any new non-judicial foreclosures until July 1, 2012.  It also adds a number of new rules designed to “clean-up” the non-judicial foreclosure process in Hawaii.

The problem is that the lending institutions and secondary markets like Fannie Mae can’t be clear on the new non-judicial foreclosure rules.  Nobody can.  So, almost all of the institutions are turning to judicial foreclosures that are currently reported to take 12 – 14 months to complete.  That time frame will likely increase to perhaps more than 3 years as the already back logged courts get slammed even harder.

In the meantime, the number of bank owned (REO) and pre-foreclosure properties isn’t getting any smaller.  On July 1^st Realty Trac showed that there were 705 properties that were in some stage of pre-foreclosure.  Only 134 of them were listed as short sales.

The real log jam, and the reason it will take so long to truly get real estate turned around in Hawaii, are the bank owned properties.  According to Realty Trac there are 841 properties owned by the banks.  The Maui MLS shows only 87 listed for sale.  That’s barely 10% of the bank owned properties. 

Why aren’t the rest on the market?  There are lots of reasons, and with Act 48 the process of clearing out that shadow inventory will take even longer.

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!

View past MREA Issues:

2010 Wrap Up, August 2010, July 2010, 2009 Wrap Up, September 2009, June 2009, May 2009, Q1 2009, 2008 Wrap Up, November 2008, September 2008, August 2008

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.