2018 Mid-Year Report
Sales are up and prices are up a bit. Inventory is down.
Where does Maui real estate go from here?
Maui real estate has been recovering since 2010. In the last 2 years there has been significant growth in both the number of sales and prices. Both home and condo buyers continue to be hungry for properties.
But inventory, the housing supply, is not keeping up. The number of homes for sale is down compared to the same time last year by 13%, and the condo supply is off a whopping 21%. Even vacant land inventory is off in double digits, down 15%.
Basic economics tells us that with high demand and low supply, prices should be increasing. Prices are increasing, but not that much. In fact, the average home price is up just 3%, and the average condo price is up 6%, on a year to date basis, from 2017 to 2018. Historically, real estate appreciation has been in the 4% - 6% range over the years.
So, are we at the top of the market, will there be another bubble, or is this just the new normal?
Some national pundits are saying, “real estate prices have no place to go but up.” That is based on the current low inventory and the lack of new construction. That is exactly the case in Maui. Inventory is extremely low and getting new construction approved on Maui is so difficult, most developers don’t want to take it on. So, inventory will likely stay low.
Prices likely still have some room to rise. Interest rates are still at historically low levels and there is only about 2 month’s inventory for homes priced under $800,000. So, we probably aren’t at the top of the market just yet, and there won’t be a bubble. Sales and price increases will just slow down.
Condo sales have been smokin’ hot
The lack of new construction and inventory will slow things down
In the first half of 2017 condo sales were up 10% compared to 2016. This year sales are up an amazing 19% from the first half of 2017. Those are some impressive year over year increases.
Demand is still quite strong, but at the current rate of sales, there is not enough inventory to last even 4 months. For condos priced at or below median there is less than 3 months of supply.
While there were increases in the number of condos sold in every area of Maui, not all areas were equally blessed. And there are certainly some surprises.
The biggest surprise is the Wailea/Makena district. In the first 6 months of 2017 there were 82 sales. This year there have been 127. That is a 55% increase in sales and the inventory is down to just 3.5 months.
It is worth pointing out that 40 of those Wailea sales were from a new development, Keala O Wailea. There are currently 3 for sale and all are resales.
As usual, the district with the most sales was Kihei. For the first 6 months, year over year, Kihei increased from 281 to 321 sales. That is a 14% increase. Of the 4 areas that I am highlighting in this report, Kihei surprisingly had the lowest percentage increase, and was also below the 19% average increase on Maui.
That said, Kihei only has 131 condos currently for sale. That is only enough to last 2.4 months at the current rate of sales in Kihei.
Maui’s West Side is also up compared to 2017. Year over year sales jumped from 235 to 276, a 17% gain. Like its neighbor, Kihei to the south, the west side also lagged behind the island’s average growth rate.
Maui’s Central area condo sales increased by 36% from 77 in 2017 to 105 for the same period in 2018.
While that is an impressive increase, over 30% of that growth came from Kamani at Kehalani. Given that Kamani is sold out and at the current rate of sales there is not enough inventory in the Central area to last even 2 months, growth can only slow down.
Single family home sales and prices are flat
But, those numbers don’t paint the real picture
When I wrote the mid-year report in 2017 inventory was a big issue with overall inventory of less than 6 months signaling a seller’s market. This year not much has changed in terms of inventory. At the current rate of sales we have 5.6 months of inventory.
It is worth pointing out that in the first 6 months of 2017 sales were up over the previous year just 2%. Guess what? 2018’s first 6 months are up just 2% over 2017. Additionally, the median selling price is essentially the same as a year ago.
So, what’s happening? We have at least 2 markets: the allegedly affordable market and the upper end market.
For buyers looking for a home in the under $702,000 range, the median price for a home over the first 6 months of the year, there is just over 2 months of inventory. For homes priced over $702,000, there is 9 months of inventory. And when you get to the $2,000,000 price tag you have over 2 years of inventory. That might be a buyer’s market.
Maui’s West Side home market paints a dramatic picture of the contrast between the overall market depicted by the raw numbers and the 2 markets that exist.
West Maui has 135 homes for sale, and at the current rate of 13 homes sold per month, the west has enough homes to last over 10 months. It’s a buyer’s market, right? That is what the numbers say. However, only 13 homes are priced at $1,000,000 or less.
Upcountry home sales are down by 25% compared to last year. The median price for the year is $760,000. They have about 6 months of inventory and almost half of the 77 homes for sale are priced under a million.
In South Maui, predominantly Kihei, sales are almost the same as a year ago. In 2017 there were 126 homes sold in the first 6 months vs. 120 this year. At the current rate of sales they have just 4.6 months of inventory. But of the 84 homes for sale, only 21 are priced under the $1,000,000 mark.
For homes sales, Central Maui is the hot spot on the island. The median selling price is $649,500 and there has been some new inventory in that price range.
However, there are only 83 homes for sale in Central Maui. At the current rate of 34 homes sold each month, there are almost enough homes to last 2 ½ months.
So, if you are looking for a home at a price of less than $1,000,000, get out there and get shopping.
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