In September, home sales took a tumble with only 57 sales. That was one of the slowest months for home sales on Maui ever. Was that the beginning of a steep downward turn?
October came back with 77 sales. That's up 35% over the previous month. So, while we don't see a steep downward trend in home sales, we have to recognize that there has been a steady, slow decline in the number of sales since hitting this year's high number at 106 sale in April.
For some context, it might also be worth mentioning that in November of 2019, there were 71 home sales. So, 77 sales in any one month is not abnormal.
Moving on to condo sales, there were 7 fewer condos sold in October than in September. After the sharp drop in the number of condo sales in July, the number of sales has fluctuated slightly up and down. However, my sense from talking to Maui property owners and would-be buyers is that the demand for Maui condos is strong. The low sales number in this case is more about supply than demand.
Despite everything else that is going on in this economy, inventory, i.e. supply, is still calling the shots on real estate on Maui. In the table above you can see that inventory has increased from May by just over 25%. What you can't see is that we started the year with only 177 homes for sale. That's an inventory gain of 45% for the year. That's a huge increase in inventory. Even with that, we have only 3.3 months' worth of homes for sale. By definition, it's still a sellers' market.
The number of condos for sale inched up from January through May and then spiked up in June and July. Which was, maybe not coincidentally, when the number of condo sales sank significantly.
One might think the simultaneous spike in supply and dip in demand would bring some balance to the market. One would be wrong. Despite a 17% increase in the number of condos for sale, there is still less than 2 months of inventory for sale on Maui. It is clearly still a sellers' market.
SELLING PRICES: average and median sold prices
The selling prices of home in October seemed to support the idea of it still being a sellers' market. The average selling price for a home peaked at $2,255,363 back in May, signaling a shift in Maui's high end luxury market. The result was a dip of over $700,000 with both August and September going below $1,500,000. However, in October we saw the average selling price top $1,800,000 which might indicated the luxury market still has some steam left in it.
The median selling price also got a small lift, up just 4% over the previous month. But any asset you own that rises 4% in a month is not too bad.
Condo prices didn't fare as well as home prices. The average selling price for a condo dropped below $900,000 for the first time since March of 2021. However, Maui's high end condos, the sales of which would increase the average selling price, are also in short supply, so we should take the decline with a grain of salt.
The median selling price of a condo increased $2,500, which is less than .5%. That's nothing, but the trend over the last 12 months has been on the rise. The median selling price in October of 2021 was $672,500, and in October of 2020, when we were just starting to get a bounce back from the COVID shutdown, the median condo price was $581, 160.
Despite solid sales results, we are bound to see a decline, perhaps a significant decline in overall sales over the next 2 - 3 months. This has nothing to do with demand, the culprit is inventory, and you don't need a crystal ball to see writing on the wall. It's written in the number of pending sales.
The number of homes and condos under contract scheduled to close between now and the next couple of months or so, has dropped below 400 for the first time since June of 2020. Which, in case you don't remember, was a pretty tough time economically and otherwise for a lot of folks here on quarantined Maui.
Later that same year sales began to return to "normal" levels. By early 2021, the market was catching fire and, in March, pending topped to 900 homes and condos for just a few days.
Historically, pending sales of homes and condos together have been in the high 400's and even up into the 600's. With low inventory and pending dropping into the 300's, while there may be debate as to whether or not the national economy is in a recession, for those working in real estate, directly or indirectly, the recession is on.
In context, give the state of the economy with what has happened to interest rates, the stock market, our national politics, and the world situation, Maui real estate is solid. By comparison to most other measures - rock solid.
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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; 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) 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 2022 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.