Aloha, we're a little late with the 2023 Year-end Report. So, we want to shout out a big ALOHA and welcome to 2024. Here is our update for what's happening on Maui, and a look into our somewhat hazy crystal ball.
First, we are grateful for what we have and what we can do to help others. Many of our friends have found new places to live. Unfortunately, some of them no longer live on Maui. Some others only have a place to live temporarily.
The messages we're getting from government sources are usually well meaning, but confusing. While the governor and mayor were threatening short term rental (STR) property owners, FEMA was attempting to make a sweet offer. As most of us understood it, the aim was to secure 3,000 long term rental properties to house those displaced by the fire and living in temporary housing.
After a relatively short time, the FEMA Direct Rental Program stopped taking new applications. I spoke directly to one of the property managers who told me that they had signed up 1,500 property owners. He went on to say that FEMA would be getting the rest of the properties they needed from "other sources."
The next week, the governor once again threatened to "ban" STR's on Maui if we were unable to meet the needs of the fire victims. Almost simultaneously, the Maui mayor sent a letter to STR owners offering a property tax exemption for those willing to convert their their STR to a long-term lease. The letter identified 3 options for long term rental, including the FEMA direct lease program. Our politicians should try talking to each other.
One of the options is from an organization called Kako'o, a native Hawaiian centered organization. According to the CEO of Kako'o, there are currently 1,944 people still in hotels. FEMA is supporting only about 35% of them directly through housing. Kako'o has rental options for non-FEMA eligible survivors. They are also building 54 units and offering forgivable loans for ADU's. That sounds like something worth supporting.
For their part, the county is offering several long-term property tax incentives for people willing to be or already are renting for a wildfire family long term. The county's tax programs can be found at www.MauiPropertyTax.com.
As far as Maui real estate goes, let's do the numbers.
________________________________________
SALES:
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 real estate market was already struggling coming into 2023. In fact, the inventory for both homes and condos bottomed out all the way back in the fall of 2021. It took a few months for sales to follow, but follow they did. By the second half of 2022 sales were in steep decline and bottomed out in January/February of 2023.
In addition to the lack of inventory, sales of properties in the "Maui low" to mid-priced market were suffering due to rising interest rates. Many consumers who wanted to buy on Maui but couldn't find the property or even a property found themselves priced-out of the market due to higher interest rates.
While many of us in the real estate community were braced for the tough combo-punch of low inventory and high interest rates, no one was prepared for what would follow in the 2nd half of 2023.
As would be expected, the sales of both homes and condos were low at the beginning of 2023 due to the inventory story and dropped off after the August wildfires.
The Realtors Association of Maui (RAM) reports 729 home sales in 2023 compared to 1,023 in 2022. That's a 28.7% drop. It may be notable that there was also a 24% drop in new listings.
The same report shows an even more dramatic reduction in condo sales. We finished the year with 969 condos sold compared to 1,520 in 2022 for a 36.3% decline.
Some good news is that since topping out in the 8% range in October of 2023, mortgage rates have been heading in the right direction for home buyers. Will lower rates bring more buyers to the market and thus entice sellers to bring more properties to the market? Let's look at the trend in inventory.
________________________________________
IVENTORY:
Inventory tells us how many units are available for sale in each category.
As previously noted, the inventory of homes for sale bottomed out in December of 2021 at just 163 for sale on Maui. We began to see some modest increases until mid-2022, and inventory peaked in January of 2023.
Home inventory has been stuck at fewer than 250 homes for sale since March. We have been selling about 60 homes per month. With last month's inventory ending at 225 homes for sale, we have only 4 months' worth of homes, and low supply means that even higher prices are likely to follow. That said, the number of new listings in 2023 was 24% fewer than in 2022.
Condo inventory is a different story. Looking all the way back to September of 2022, not really all that long ago, we had only 155 condos for sale. By December of 2022, inventory had increased to 206, topping the 200 mark for the first time in 5 months. But last month we finished with 374 condos for sale.
More supply should mean that lower prices are on the horizon, right? Not so fast. While that sounds like a nice increase in condos for sale, the number of new listings for condos was 32% lower in the year 2023 than in 2022. We have a way to go.
Additionally, the types of condos that make up the overall supply and the mix of those that are selling are influencing pricing trends. The types I'm referring to in this case are those that allow short term rental (STR), those that do not allow short-term rental, fee simple and leasehold.
________________________________________
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.
For everyone waiting for home prices on Maui to drop, get comfortable, you are going to be waiting for a good long while. The median selling price for a Maui home in 2023 was up 8.6% over 2022. With the continuing housing shortage and easing interest rates, I don't see prices coming down.
The average selling price of a Maui home also increased, but only by 2%. Still, an increase is an increase. We might see the average selling price continue to slump closer to the median price in coming months as the Maui luxury market is seeing more inventory. Stay tuned for more news on that apparent trend.
The pricing news was much more the same for condos. The median selling price was up 7.4% over 2022. The average price was up almost 14% year over year.
For 2024, interpreting pricing trends for condos is going to be trickier. We are currently seeing a shift in the historically normal mix of the sales of condos allowing STR compared to those that do not. Condos that allow STR have historically outsold those that don't. That changed at the end of 2023.
In the final 6 months of 2023, according the Maui MLS, only 415 of the condos sold were short term rental as noted in the MLS. There were 45% that were not STR. In the previous year the mix was 52% STR allowed and only 35% not allowed. That is a huge shift and, if you are noticing that neither of those percentages add up to 100 and wondering what happened to the remainder??? Well, not all Maui Realtors put in ALL the data they should for their listings. I am forbidden by the Code of Ethics to make any further disparaging remarks about my fellow realtors.
There is a lot happening on Maui right now, and somehow, there is a lot that is not happening. We are hearing from the short-term rental property managers that occupancy is strong, and generally they are booked at about 80% occupancy, at least in West Maui, through June. That is going to make some people happy and some people unhappy. Overall, it is good for the whole economy.
Most of us are pleased to see the New Year and expect things to improve. We aim to keep you more updated on progress for West Maui and Maui real estate in general.
Aloha, Y'all.
- - - - - - - - - - - - - - - - - - -
The team at AGM continues to help Maui's keiki with their basic day-to-day needs and hope to give out some partial scholarships for summer programs.
You can help by making a tax-deductible contribution at GoFundMe - Keiki Fire Relief Fund or click on the QR code below.
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 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), Keri Nicholson R(B), Anthony Freda R(S), Courtney Stice, R(S), Kathy Becklin, R(B), Heather Zidell, R(S), Magdalena Odonnell R(S), Sarah Twitchell R(B), 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.
