Real Estate in the Time of Corona

A client called me less than 3 weeks ago with a question. He asked, "Do you expect to see some good buys because of this virus?" The bars and restaurants were still open, the resorts were open, we even had an outing planned with Marty Dread's cruise. So, my response to that fellow was, "It depends on whether this lasts 6 weeks or 2 months."

Then reality set in. Now only essential businesses are open. We are sheltering in place and the streets are as empty as we've ever seen.

So, what's happening in real estate? The national pundits are opining that the single family home residential market will emerge virtually unchanged. The reason they most often state is supply and demand, the most basic of economic laws.

However, experts are also predicting that areas that are dependent on hospitality industries such as tourism, hotels, restaurants and so on, will be harder hit. Does that sound like any place you know?

With inventory having been in such short supply for so long and with interest rates at historic lows, how much will any kind of a slowdown have on Maui's real estate market in the scheme of things? This month's numbers won't tell us much of anything in terms of real estate trends on Maui. The sales that are being reported were already in escrow and close to closing. The same will be largely true of the April numbers. 

Should you be buying now? If you are already in escrow and buying for the long term, the answer is yes, especially if you are financing the purchase. It's likely that rates will start to climb again as the economy starts to recover and any savings you might achieve from a slightly lower purchase price later could be more than offset by an increase in rates. See the 1% equals 10% rule. *

If you are/were on the verge of buying on Maui, the law of supply and demand is still in effect. If you find the property you're looking for then negotiate your best terms, take advantage of interest rates, and enjoy your home or condo for virus free years or decades to come.

Sales:

Both single family home sales and condo sales rose for the month. The number of condo sales in March, at 156, tied the highest number of sales in any month this year. We already know, based on the number of pendings, that record sales numbers won't continue. However, the decline in sales was already set to happen based on the lack of inventory.

Pending Sales: along with other key statistics, are detailed below.

Pending sales represent properties that are under contract but have not yet closed. Overall, pending sales spiked in February, rising to 608 total units. We hadn't see 600 pending in a very long time. In March, the number came back to an earth dropping 469. Total pendings were in the 400's in 4 of the last 7 months. So, despite the dramatic monthly change, the number isn't particularly remarkable. 

The big decline came in condo pendings dropping from 306, a spike, in February, to just 202 in March. However, there were only 208 condos pending in August, and pendings remained low in September and October until the run up in November. It's also important to remember that many of the sales that accounted for a record setting March were pendings in February. 

Inventory:

Inventory tells us how many units are available for sale in each category. Home inventory declined for the 4th straight month in March. And, based on sales levels, it is still a seller's market. With just 424 homes for sale, that is only enough to last 4 3/4 months. Despite a significant rise in condominium inventory there is still just over 3 months of inventory on the market.

Supply and demand still comes into play.

Selling prices: average and median sold prices.

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. This will be really interesting to watch over the next few months. The average selling price for a home on Maui jumped to over $1 million in March, shooting up to $1,214,939. The median price jump was even more impressive soaring to $844,000, the highest number this year. 

Condo selling prices were similarly impressive, with the average selling price reaching almost $800,000. The median selling price slipped slightly, but very slightly, less than 1%, to $552,500.

Days on Market: (avg-sold listings)

The days on market is the number of days a property has been on the market until close of escrow. That number seems stable. Normal financed sales take 45-60+ days, so on average homes and condos are on the market up to 100 days before they go into escrow. I believe we are still seeing a downward trend in days on market. The reason for this is the competition for well-priced listings with strong demand.

* The 1% equals 10% rule states that for every 1% increase in interest rates you lose 10% in buying power. 

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Get more information and details

To get more information on property and trends, you can search all properties listed for sale at www.alohagroupmaui.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 our website, newsletter or both.

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.