News Flash: Maui has a housing crisis
Aloha, all, we have been raising the lack of real estate inventory and especially the lack of "affordable" inventory here on Maui for years. The situation became much more pronounced when over 7,000 Lahaina residents were "displaced", and more than 2,000 properties were lost.
In those first few days after the fire and before any government help arrived on the scene, the way the community responded with food, clothing and aloha was extraordinary. It makes me emotional, and grateful, just to think about it.
Individuals scrambled both to provide and find any kind of housing they could. The government stepped in, and hotels and condo owners stepped up to house people who lost their homes.
Now, over 4 months later, we are still trying to figure out how to house all the displaced residents. What some say is the obvious answer - condo-tels and other short term rental properties - are in the spotlight.
According to Mayor Bissen in a piece from MauiNow, there are 13,800 short term rental properties and 16,000 second homes on Maui. It would take less than 10% of those owners to step up and rent long term to solve the housing issue on a short term basis.
The mayor's bill to exempt owners of short term rentals from property tax was passed by the county council on December 15. The bill provides an 18-month exemption to STR owners who agree to lease their units long term by February 1, 2024.
That is the carrot, and where there is a carrot, there is usually a stick. The stick proposed by Mayor Bissen is that property taxes for STR owners who do not participate in long-term rental is that their taxes will be raised high enough to cover any short fall in taxes as a result of the exemptions.
The governor, on the other hand, is threatening a ban on short term rentals on Maui in order to force openings for fire victims that need housing.
At the same time FEMA is sending out letters and holding meetings to explain their program and their offer to short term rental owners. The FEMA approach through their Direct Lease Program:
- here's what we need
- here's how it will work and
- here's what's in it for you.
Seems like a pretty good idea. It's almost like they have experience in this kind of thing and the state and county don't have experience. What if FEMA, the mayor and the governor all got together and came up with one comprehensive plan?
So many questions, right? And where does this leave property owners, and how's the real estate market? Let's do the numbers.
Sales are the number of properties that actually closed escrow. These properties likely went under contract anywhere from 2 to 8 weeks before closing.
There was a significant drop in condo sales for the month. November's 53 sales were the lowest for 2023 so far, but that was only one less than January. Still, for the sake of comparison, there was 119 sales in March and 100 in August. With November's low sales and more condos coming to market, it may be a good time for buyers to be shopping.
Home sales were flat for the month with 47 sales in November compared to 48 the previous month. Late fall on Maui is typically a slower time of year for home sales, but 47 sales this year compared to 63 in November of 2022 is a 25% drop. You might expect that lower sales would be followed by prices declining. That is not happening.
Inventory tells us how many units are available for sale in each category.
The number of homes for sale just isn't growing. For years Maui County has made it between difficult and impossible to build homes in any quantity. Now, when there is a crisis, the county is coming to the owners of legal short term rental properties for help.
Ok, enough soap box rhetoric.
The number of homes for sale is down from 233 last month to 224 at the beginning of this month. It's also down from the 252 that were on the market in the same month in 2022. On top of that, the average selling price is up over 20%.
Condo inventory, on the other hand, is up to almost 300 condos for sale. We haven't seen that many condos for sale since March of 2021. Add that to the threats being made against short term rental condo owners, and we may see prices softening. We may also see more inventory as some would-be sellers who have been sitting on the fence thinking about selling now or selling later may decide that now is the time to sell.
SELLING PRICES: average and median sold price
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 the median is less likely to be skewed by outliers of a few very high priced or very low-priced sales.
I've already noted that the average selling price for homes in up 20% over the same month in 2022. But at $1,599,751 it is still lower than the peak average prices when we topped $2M.
The median selling price for homes for November came in at $1,100,000 even. That is the lowest median selling price in 5 months. Still, $1M plus is still $1,000,000+.
The average selling price for a condo topped $1.8 million! What the heck? That is the highest average selling price on Maui ever. It turns out that properties at the New Makena Beach Club and Residences, which were never listed in the Maui MLS, stated closing. The 4 that closed started at just over $7.7 million and topped out at over $10 million. Those numbers may have skewed the average selling price a bit.
You may remember this New Makena Beach Club as the old Makena Beach Club, and before that the Prince, as it was remembered by the locals and long term residents. We used to do long weekends there and got the rooms for $99 per night. Seems like yesterday.
The median selling price for condos was $890,000. That is more than the median price a year ago, but not as high as the $900K + we hit a couple of times this year.
We may be seeing the shift in the condo market. Based on the few sales coupled with increased inventory we now have 5.6 months' worth of condos for sale. That is technically a balanced market, and we've moved from a seller's market to a balanced market in a hot hurry. Sellers who want to sell should price their property based on the rental market and be patient. The seller's market for condos appears to be over.
The times, they are a changin' Keep an eye out for updates on Maui and Lahaina.
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The team at AGM continues to help Maui's keiki with their basic day-to-day needs and hope to bring some joy to this holiday season.
You can help by making a tax-deductible contribution at GoFundMe - Keiki Fire Relief Fund or click on the QR code below.
Mele Kalikimaka & Hau'oli Makahiki Hou!
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 firstname.lastname@example.org, 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 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; Cheri Miller R(S), Suni Novotny R(S), Keri Nicholson R(S), Myra Plant R(S), Anthony Freda R(S), Courtney Stice, R(S), Kathy Becklin, R(B), Heather Zidell, R(S), Magdalena Odonnell R(S), Sarah Twitchell R(S), and Tony Brown R(B). We are businesspeople, 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 Keller Williams Realty Maui.
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.
Copyright 2023 L. Lee Potts
Statistical information in this newsletter is based on actual sales information reported to the Realtors Association of Maui, Inc. While this information is deemed reliable, it is not guaranteed. This newsletter is for informational purposes only and not intended as advice for investment or any other purposes. Real estate is considered to be highly volatile, and purchasers and sellers of real estate should always seek expert outside advice before investing.