Maui’s real estate market, which has recently been buffeted by a number of national and local economic difficulties, began to exhibit encouraging signs during the last portion of 2010. December, which is traditionally one of the weaker months of the calendar year for the housing market performed comparatively well both on the local and national levels
Of course, any growth in Maui’s real estate sector is heavily dependent on national macroeconomic conditions, and specifically on whether job growth and higher rent will spur an interest in home ownership.
Now that the 2010 fiscal year has concluded, statistics indicate that the volume of real estate transactions increased considerably for the Valley Island from 2009 to 2010. This trend holds true across all three major portions of residential real estate: vacant land, condominiums, and single-family homes. There were fourteen percent more sales of vacant land in 2010 compared to 2009, as well as about eighteen percent more single-family home sales. Most significantly, the quantity of condominium sales over the last calendar year increased by approximately thirty-nine percent year-over-year.
Unlike the Oahu real estate market, however, the Maui housing market saw a dip in median price along with an increase in sales volume. Compared to last year, vacant land on Maui sold for about nineteen percent less, while single-family homes were purchased for eight percent less and condominiums were sold for around sixteen percent less on average than they were in 2009.
Much of the positive momentum in the Maui real estate market was propelled by the West Maui sector in particular, which saw especially sharp gains in sales volume for condominiums (43%) and single-family homes (37%). Generally speaking, a decrease in sales price and an uptick in units sold indicate a buyer’s market. However, the trend of declining prices may well reverse in the near future, especially if the current preponderance of short sales and foreclosures begins to be cleared off the market.
If distressed properties in particular are no longer a substantial influence on the Maui housing market, then the median price could potentially rise in the near future. Additionally, year- over-year housing figures can possibly be skewed by the influence of the federal housing tax credit on 2009 numbers.
The Maui real estate market is heavily dependent on external factors, specifically investors seeking a second home or rental property. Some towns, in particular Makena and Wailea, have exhibited especially resilient sales figures despite the different undulations of the market. A number of communities near Kihei have consistently shown extremely high median sales prices over the last year. In that section of the southern coast, the median price is a staggering $1.7 million – well above the average figure for the rest of the Valley Island.
Perhaps even more impressive is the current price range of properties in the market, which vary as high as $22 million. The primary buyers for this type of property are generally investors from the continental US, as opposed to local residents.
Maui is also facing the nationwide foreclosure crisis, which tends to depress median prices in affected areas. Across the entire state of Hawaii, approximately eleven percent of properties were at some stage of foreclosure. Maui in particular had a considerably higher foreclosure rate than the rest of the state, specifically relative to the more heavily populated island of Oahu. There were actually fewer foreclosures throughout the state in the most recent tracking period, although the slowdown was most likely the result of a foreclosure backlog than any substantive improvement in the overall market.
In fact, it is entirely possible that the process of resolving these foreclosures will significantly depress the median price of properties on Maui. While this may temporarily boost sales volume, it will also make it more difficult for median prices to recover in the long term.
Additionally, Maui’s real estate recovery depends heavily on the health of the overall economy. The largest component of Maui’s economy is tourism, which relies largely on recreational and discretionary spending. Essentially, if the national economy fails to recover strongly, Maui’s economy and real estate market will be among the first to experience negative consequences.
However, if the economy continues on its tentatively positive trajectory, the Maui housing market stands to continue recovering.