Condo Sales Plummet, But Price Stay Steady
Sales are the number of properties that actually closed escrow. These properties likely went under contract anywhere from 2 to 8 weeks before closing.
The hot new phrase in real estate is, "we're taking a pause." And we are seeing both buyers and sellers taking a pause.
While singe family home sales were down in April compared to March, the number of sales were in line with the average number of sales for the last 6 months.
Condos were a different story. For the 6 months prior to April, October of 2019 through March of 2020, there was an average of 133 condos sold per month on Maui. In April, which is usually a big month as the winter buying season winds down, the number of sales was a mere 85. That is down 46% compared to March.
It's even worse when we dig into the data and see that 15 of the 85 closed sales were from the new Honua Kai development, Luana Gardens and another 4 were the new Kahoma Village units. It we pull those out the drop in condo sales is just shy of 60%.
It may be worth keeping an eye on the number of sales for condos that allow short term rentals. This month 55 of the units that sold allow short term rental, the remaining 30 do not. With a moratorium on allowing short term rentals and no rental income for those properties, we expect some impact to be seen on listings and sales for those properties that rely on short term rental income to cover expenses.
Pending sales represent properties that are under contract but have not yet closed. Pendings are the pipeline that tells us how many sales are likely to happen in the next couple of months. OVerall, pending sales dropped by 30%
Single family home pending sales peaked and then dropped 31% to 131 compared to 190 in March and 228 in February. However, home sales were already trending down due to limited inventory and affordability. Those last two factors, inventory, and affordability will likely continue to be the most critical factors in the health of the single family home market.
Condo Pending sales peaked in February with 306 total pendings. The number of pendings has dropped by more than 50% since then. As we look back in the future months and perhaps even future years, we may see that as the top of the market for the number of sales.
Inventory tells us how many units are available for sale in each category.
The number of Single Family homes for sale has been on the decline since February 2019 when it us up to 502 homes. with only 420 homes for sale at the end of April, there are 16% fewer homes for sales than at the peak. It is also notable that the number of new listings in April of 2020 compared to April 2019 are down 42%. So, not only is the number of homes for sale down, the rate of new homes coming to market is also off significantly. With lower interest rates in place and no sign of that changing, and prices holding steady, I expect supply and demand will continue to be the key factors affecting home sales.
Condo inventory rose by 6% month over month. However, after dipping to 444 condos for sale in February, inventory has jumped by 22%. Two months ago, we had just 4 months of inventory, indicating a seller's market. With the rise in inventory and the drop in sales, April's numbers represent a fairly balanced market with just over 6 months of inventory.
If condo buyers continue to "take a pause", we will see the condo market flip to a buyers market in short order. But don't expect to see any deals, at least not right away.
We look at Average and Median prices in all categories. A lot of people like to know the average price; however, we tend to use median for most of our analysis, because median is less likely to be skewed by outliers of a few very high priced or very low priced sales.
The Average selling price for homes dropped 17% in April compared to March, which sounds huge. However, it did manage to stay above the magic million dollar mark. It was also higher that the average selling price in either January or February of this year. The high point in the last year and half was $1,455,064, back in October of 2019.
The Median selling price for homes slid to $754,522 in April. However, aside for an apparent spike in March, April's number was still higher than 5 of the previous 6 months. So, I don't see any evidence of home prices softening.
The Average selling price for condos had a huge 26% increase. However, 15 of those sales were at the new Luana Gardens, phase 3 of Honua Kai, and all of those sales were $1.9 million and up. Some of those units had been under contract, or pending, for over 600 days.
If we pull the Luana Gardens sales out, the average selling price drops to $757,506, which is still much higher that most of the previous 6 months.
Those sales also had an impact on the Median Selling price, which rose to $602,722. Without Luana Gardens, sales fall back to $538,000, which is down a bit since the beginning of the year, which started out hot. But, that is almost $100,000 higher than the median selling price in April of 2019.
Days on Market:
The days on market is the number of days a property has been on the market until the close of escrow. Was the increase in DOM for condos due to the Luana Gardens closings?
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About Aloha Group Maui
Aloha Group Maui was founded by L. Lee Potts, MBA, REALTOR R(B), and Barbara S. Potts, MBA, REALTOR R(B) and former California CPA. Our team consists of talented professionals: Angie Liu R(S), Beau Dyer R(B), Cheri Miller R(S), Keri Nicholson R(S), Paul Goodman R(B), Suni Novotny R(S), and Tony Brow R(B). 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 on 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 fi you are buying property on Maui, it is 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 Keller Williams Realty Maui.
Barbara Potts was a CPA with Ernst and Young before joining Apple Computer back with both Steve's were there (Job and Woz). She was also Director of Strategic Marketing for Grass Valley Group, a division of Tektronix, and a business broker in California.
Lee, Barbara and the team are licensed under Keller Williams Realty Maui.