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Maui real estate markets

December 23, 2010

Tags: Maui, Real Estate
Posted in: Maui

Image by Randy Son Of Robert via Flickr

Experts generally agree that the national and Maui real estate markets are finally showing a period of recovery and growth, although there is also a consensus that those recoveries are both precarious and uncertain. A report from the Lahaina News seems to indicate that a housing recovery is currently underway, but that the duration and strength of that recovery is both variable and far from predetermined. The National Association of Realtors’ chief economist, Lawrence Yum, believes that home sales will steadily rise over the next few months, due to low mortgage rates and relatively low prices on homes and apartments. This cautiously positive outlook seems to also apply to the island of Maui in particular. Year-over-year, the first three quarters of 2010 have outperformed the first three quarters of 2009 by wide margins. Maui condominium sales have risen by nearly fifty percent, while single family home sales increased by about thirty-three percent, the number of vacant lots purchased increased by about thirty-two percent. This increase in sales volume has been accompanied by a decrease in the median sales price, with condominiums dropping in price by twenty-one percent, residential properties by eight percent, and vacant land by just under twenty percent. West Maui saw perhaps the most drastic increase compared to 2009, with condominiums, residential properties, and vacant land showing jumps of eighty-two, fifty-five, and forty-eight percent, respectively. These same three categories of West Maui real estate did a drop in average price as well, though, with each segment dropping by fourteen (condominiums), sixteen (homes), and thirty-one (land) percent. The overall trend appears to support a continuing buyers’ market, although the steady decline in median price seems to be slowly leveling off. Hopefully, this nascent strength will continue and lead to real stability in Maui’s real estate market.

This same generally positive news for Maui homes and condos for sale was noted in a November 11, 2010 article from the Maui Weekly, which stated that “This is concurrent with the recent rise of real estate purchases on Maui. When comparing the first, second and third quarters of 2010 with the same time periods in 2009, condominium sales volume displayed an increase of 49 percent, with residential property sales improving by 33 percent and vacant land sales growing by 32 percent. Median sales prices for condominiums declined by 21 percent, residential by 8 percent and vacant land dropped by 19 percent.” This is an unsurprising correlation, since generally speaking the number of sales is inversely related to the quantity of units sold. In times of particularly robust economic strength and growth, some markets exhibit both higher prices and higher rates of sale.

There are, unfortunately, signs of weakness both for the local and national economies. The real estate market tends to follow the overall momentum of the economy, meaning that if Hawaii or Maui’s overall economy starts to falter, there is a larger chance that real estate will also falter. 2009 was the first time since the Great Depression that the global economy as a whole contracted. According to the University of Hawaii Economic Research Organization (UHERO), the current tentative recovery that supplanted that recession is starting to falter. The Maui Visitor’s Bureau is concerned that an additional shock to the already fragile economy could push the nascent rally back into recession. In particular, a major concern is that a double-dip recession could damage the largest sector of Maui’s economy, the tourism industry. The UHERO update warned that the global recovery is proceeding “in an uneven fashion.” Less developed nations, especially those in East Asia, started to rally most quickly, but more industrialized countries lagged well behind the expected curve of recovery. Unemployment remains relatively high, and the American recovery in particular seems ready to fail as the last of the federal stimulus money is spent. Economists are projecting that it could take years for the global economy to return to pre-recession levels. While the United States has seen encouraging increases in consumer spending, the commercial sector has not shown comparable strength, and banks remain hesitant to loan out money. In Japan, which has been in financial trouble for years, the relative strength of the yen has started to be a concern, counteracting the positive effects of higher exports. The bottom line is that the Hawaiian economy may suffer as the global economy’s recovery begins to stumble.

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