Got Inventory?

Hot off the presses:

Own a vacation rental property on Maui? You want to read this!

Late last week the Maui County Council unanimously passed a bill creating a new 3% transient accommodation tax (TAT). It goes into effect on November 1. Mayor Victorino said, "We didn't want this bill, but the state legislature left us no choice."

In the past, Maui received a portion of the TAT that was generated here back from the state. However, the state, think Honolulu, decided they need the money more than Maui does, so they're keeping all of it. That takes about $15 million a year out of Maui's coffers. So, what happens when you don't have enough money? T.T.T., Tax The Tourists.

Safe Travels. Governor Ige has extended the state's emergency proclamation for another 2 months. What does that mean to you? Well, if you are traveling, whether your are a resident or a visitor, Hawaii's Safe Travels program is still in effect. The statewide mask mandate also remains in effect, and, if you were wondering, yea, it's being enforced. Restaurants and other activities, like cruises, will remain at 50% occupancy, down from 75% occupancy.

However, some good news is that the Guv announced an easing of restrictions on Oahu. They can have up to 1,000 people for outdoor events such as weddings. Outdoor seated events can have up to 500. Proof of vaccinations and masks will be required, as well as some other unnamed precautions. The Mayor of Maui has asked the governor to allow an easing of restrictions on Maui. However, at a press conference earlier this week he did not state specifically what he has requested.

Since the delta variant hit we spikes in COVID cases that exceeded our highest daily infection rates ever. It's tough on the economy, but most of the population here is taking it seriously.

And in sports news... The Maui Jim Invitational, Maui's big annual basketball tournament, which is a big deal here on the island, won't be on Maui this year. Due to our pandemic protocols the tourney is being moved to the ninth island. It is better known to non-islanders as Las Vegas.

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.

September home sales on Maui declined slightly compared to August. However, last month's sales were still the second highest number in the last 4 months. I expect, based on the number of homes in the pending category, that closed sales will remain above 100 homes for the next few months at least.

Sales of condos are continuing their slow decline, but don't read too much into that yet. September sales at 178 are still well ahead of September 2019's 119 sales. If there were more inventory, there would definitely be more sales.

Pending Sales:

Pending sales represent properties that are under contract but have not yet closed. Pendings are the pipeline that tell us how many sales are likely to happen in the next couple of months.

At first glance pending sales seem to be dropping quickly. However, that is mostly due to condo category. Pending home sales peaked in March at 285 and have held steadily in the mid to low 200 range ever since.

Pending condo sales also peaked in March at 456. Now pendings are down to just 295. I say "just" but 295 is higher than all but one month even in the "before times." You know, COVID.

Inventory:

Inventory tells us how many units are available for sale in each category.

This month, the story is the same as last month. We have less than 2 months of inventory for single family homes and less than 1 month of condos for sale.

So, where is this going? I can't see us getting back to pre-pandemic levels for homes or condos anytime soon. In February of 2020, we had 453 homes for sale on Maui. Today we have less than half that number. Single family home inventory could start to rise in the next couple of months, perhaps due to sling sales resulting form the latest COVID restrictions. But with the more recent loosening of restrictions, and the winter buying season just around the corner, I expect home inventory won't increase significantly through the first quarter of 2022. The next few months prior to January rush may be the best opportunity for prospective home buyers on Maui.

Condo inventory has had a steep decline; however, September inventory held, if only at a measly 127 units, the same as August, but it held. And some wise people believe that condo inventory might start to climb soon. Why? As prices continue to rise, the gains might just look too attractive to pass by, especially as many condo-tel owners are still stinging from the steep losses in rental income in 2020.

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 the median is less likely to be skewed by outliers of a few very high priced or very low priced sales.

The median selling price for a home on Maui dipped below the $1 million dollar mark last month after 3 consecutive months over $1 million. Will it continue to drop? That's not likely. One reason is that new conforming lending amounts for the state of Hawaii were just announced. The new rate is $937,500. This should make it easier for buyers in the million dollar price range to get loans.

The average selling price for a home dropped below $1.5 million. We haven't seen that since November of last year. That doesn't necessarily mean that home prices are coming down. It appears that there were simply fewer of the very high end homes sold during the month.

The median selling price for condos moved back into the low $700,000's, continuing that up and down trend between the mid $600,000's and the low $700,000's. With such high demand and low inventory, couple with the fact that we are still receiving multiple offers, including cash offers over asking price, I expect prices to remain at these levels.

Days on Market: (avi-sold listings)

The days on market (DOM) is the number of days a property has been on the market until close of escrow.

The days on market remained at very low levels, especially for homes. The low numbers is likely a combination of cash sales and the fact that there are more lenders that can process loans, and process them quickly for homes, than there are for condos, especially our condo-tels.

The DOM for condos drifted up a bit, but this is still a very low number. I've also heard through the coconut wireless (think grapevine on the mainland) that there is a new lender entering the condo-tel market in Hawaii that could shake things up a bit.

Stay tuned.

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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 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), Beau Dyer R(B), Angie Liu R(S), Suni Novotny R(S), Keri Nicholson R(S), Myra Plant R(S), Paul Goodman R(B), Jamie Martin R(S), Anthony Freda R(S), Courtney Stice, R(S), Kathy Becklin, 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 2021 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.  

Aloha from your resident experts!

The island has settled down somewhat since the "summer of freedom", but whether that is due to the Mayor asking visitors to rebook their travel until the Delta variant has calmed down or just normal October slowdown, we're not really sure. Probably a combination of both.

What about Aina Nalu you ask? Vacation rentals are up, not as much as we would like to see, but units are slowly starting to make some income. Real Estate activity actually doesn't seem too drastically different than the past two years. What is noticeably different is that units are not staying on the market very long and we continue to end each quarter with no active listings.

As you can see, prices are trending up and units are starting to sell at or above asking prices; by all indications it looks like it will continue to go that way. The average days on market for pending units now is only 24, with the last few new listings going into escrow within a day or two.

As noted in the last issue, Maui condo sales and pending sales are still very high; but inventory continues to be very low. At the end of the quarter there were only 127 condos for sale and 234 condos in escrow, and there were 187 condo sales in September. We will continue to keep our eye on things and keep you updated.

From July 1 to Sept 30 there were 6 listings and 3 closed sales. There were 0 cancelled listings, and 0 expired listings at the end of the quarter. There were 0 active listings and 3 pending sales at the end of the quarter. As of 10/7, there are 5 units in escrow (2 new listings that went into escrow after 9/30).

For more Maui real estate information, check out our Maui Real Estate Advisor.

Quick Update:

Aloha, for those of you paying attention, you'll notice that this report is very late this month. That's because we went on a quick two week vacation to the parts of Northern California that were not on fire.

That included a few days in Grass Valley at my daughter's house to visit with the family and the grand dogs.

After that we attended my high school reunion. I'm not saying which one, but it did have a zero in it and I got to see a bunch of my OLD friends. Geez, where did the time go?

Then we were off to Aptos where the temps were in the 60's to visit Barb's mom. I was glad I packed my long pants and socks. We wrapped up the trip in San Francisco. We parked the car for $36 a day and walked everywhere up and down those famous hills. We had to do something to work off the clam chowder, great Chinese food, and martinis.

On Maui it's been...well, weird. The Guv and Mayor asked our guests to kindly stop coming to the islands. And people actually listened! That little request caused a major jump in departures back to the mainland and the planes coming in were far from full.

It's driving the businesses here lolo (crazy). Restaurants and tour boats like Scotch Mist and Pac Whale are back to 50% capacity. Inside dining requires proof of vaccination. However, if you have no proof of vaccination you can sit outside. Which, by the way, are the best seats anyway. But lower capacity means the businesses can't support as many employees, so we'll see the unemployment numbers jump again.

And real estate - wow, 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 t0 8 weeks before closing.

News from the mainland is that sales are slowing and they are seeing more inventory. That is most definitely not the case here, at least through August and into early September.

Sales of homes came close to a record with 121 sales closed. With inventory fluctuating just above and below 200 homes it is difficult to imagine that we can continue this record pace of sales. Our Maui brokerage, Keller Williams Realty Maui, has already topped a billion dollars in sales for the year to date.

Condo sales dropped to 186 after 5 straight months of 200+ units selling. That is also amazing considering we haven't even had 200 condos for sale at the end of any month since May.

All that said, we have entered the "shoulder-season". That combined with the government warnings could lead to a bit of a slow down here.

Pending Sales:

Pending sales represent properties that are under contract but have not yet closed. Pendings are the pipeline that tell us how many sales are likely to happen in the next couple of months.

You can see a bit of a slowdown in the pending sales. In March, we actually topped 900 properties under contract for a few days. The current 688 number is about a 24% drop form the top at the end of August. 24% is a big number, but compared to 2019, which I reflect on fondly as the last normal year on earth, 688 is still much higher than any month that year, when 590 units was the highest.

With 246 homes under contract we expect to see the closed sales stay in the 200+ range for at least a few more months. After that, the lack of inventory could kick in.

The 333 condos pending is way off, 27% to be more precise, than the 456 of March. However, compared to the "before times" in 2019, when the highest for any month was 271, we are still way ahead. However, condo inventory is in even worse shape than home inventory - but I'm getting ahead of myself.

Inventory:

Inventory tells us how many units are available for sale in each category.

In real estate we deem the market to be "balanced" when there is about 6 months' worth of properties for sale. That means if no new properties come to market, it would take 6 months to sell off all of those properties. If we have less than 6 months of homes or condos on the market, it is a seller's market. If there are more than 6 months, it's a buyers market.

We have less than 2 months of single family home inventory. For condos we don't even have enough inventory for 1 month. So, we should expect to see both closed sales and pendings, especially in the condo category, decrease. That doesn't mean it won't be a seller's market any longer, it just means that lack of inventory is really starting to takes its toll.

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 the median is less likely to be skewed by outliers of a few very high priced or very low priced sales.

The median selling price for a home stayed above $1 million for the 3rd month in a row. The median asking price for homes on the market is $1,850,000. There are currently 46 homes for sale priced at less than $1 million.

It's worth noting that the average selling prices is over $1.7 million for the 4th month in a row, but the average asking price... Are you sitting down? It's currently $3,464,415.

The median condo price dropped back to $650,000. That is not terribly inconsistent with the last several months. It's the same for the average selling price. Although, $941,708 is the lowest monthly average in the last 6 months.

Days on Market: (avg-sold listing)

The days on market (DOM) is the number of days a property has been on the market until close of escrow.

The low number of days on market for homes is still surprising to me. You would think that the quick close is due to a lot of cash sales. And there are, over 30% of the August sales were cash. But the majority are still conventional financing. This combined with the high number of sales given the inventory indicates that the new homes coming to the market get snatched up very quickly, but you already knew that, right?

However, only 114 days on market for condos has to be an all-time record. Just a tad under 40% of those sales were cash.

Stay tuned. I promise to get out next month's report in a much more timely fashion. And tune into our YouTube channel, LahainaLeePotts - YouTube, for regular updates including Friday Night on Front Street. 

 _________________________________________________

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), Beau Dyer R(B), Angie Liu R(S), Suni Novotny R(S), Keri Nicholson R(S), Myra Plant R(S), Paul Goodman R(B), Jamie Martin R(S), Anthony Freda R(S), Courtney Stice, 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 2021 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.