Through midyear, Maui residential real estate sales activity has zoomed upward, although prices have not.
In the first six months of 2009, there were 296 single-family closings. This year, 422, an increase of 42.6 percent. In the first six months of 2009, there were 407 condominium closings. This year, 666, a jump of 63.6 percent. Single-family prices edged ahead by 2 percent to an average of $768,866, but condo prices have fallen 11 percent to $756,119.
“I don’t know what’s really driving it, but people might believe we’re at the bottom,” said Bruce Faulkner of Maui HI Realty and president of the Realtors Association of Maui.
Faulkner said he’s not an economist, but he is sure that until the backlog of short sales and bank-owned repossessions is worked off, prices will not really go back up.
The distress sales are dragging down appraisals, and, “we’ve seen some sales killed when the buyers have seen appraisals come in lower than the offer. It’s even happened on Lanai.”
On the other hand, the $8,000 tax credit offered to first-time buyers boosted sales in the first half of the year.
So while the Maui real estate market is nowhere near what it used to be, it’s also nowhere near as bad as it has been.
Total turnover in Multiple Listing Service properties this year so far has reached $828 million. There have been years when that figure was well over a billion, but for the first half of 2009, it was only $569 million.
Prices are still way off their peaks – there was a time when the average price of a single-family house on Maui was a million dollars – which discourages people from trying to sell if they don’t have to, Faulkner said.
“People are not going to go into the market unless they’ve got no choice,” he said.
That makes for a market where clean offerings are scarce. There are still many short offerings, where owners who have not had foreclosure proceedings go to completion are trying to get out from under mortgages that are more than the house is now worth.
These are often complicated by second mortgages, usually held by a different lender than the primary mortgage. Short sales are notoriously hard to do, because the holder of the second mortgage, who ordinarily stands to get nothing, can stop it by refusing to cooperate.
Faulkner said the Realtors association has offered a course on how to manage short sales, hoping to get the local real estate business community all operating on the same page, so deals can get done. More than 100 real estate professionals have already taken the course, which will soon be offered again.
Mortgage rates are so low that Faulkner said he thinks they can hardly get any lower, which has caused him to rethink refinancing.
“In the old days, we used to tell people interest rates had to go down two points to make sense,” he said. With rates so low, now he recommends doing a calculation to see if it makes sense to get a 1 percentage point gain.
Sometimes it will, and he said, adding that “I like to see people get 15-year mortgages.”
That doesn’t reduce the monthly payment so much, but it means that very soon “they’ll be mortgage-free.”
Faulkner said the increase in turnover has been across-the-board for single-family sales in the first half of the year, although especially marked in Wailea and Upcountry.
Looking at percentages, Maui Meadows is the hottest spot, with closings up to 11 from two the year before, although prices have fallen 17 percent to an average of $828,000.
In Wailea-Makena, home sales have doubled to 18, and prices have jumped 22 percent to $4.2 million. That figure is skewed by one high sale, because the median sale – at which half the prices are higher, half lower – has hardly budged at $1.8 million.
In the similar resort residential section of Kaanapali, home sales also have doubled, to 12, and prices have fallen 6 percent to nearly $1.5 million. At Kapalua, sales rose from three to four, and the average price doubled to $4.2 million.
In Makawao, Olinda and Haliimaile, home sales rose to 23 from 13, and prices are up 10 percent to $504,000. In Kula, Ulupalakua and Kanaio, sales are up from 19 to 27, and average prices are up 14 percent to $649,000. In Pukalani, closings rose from 28 to 34 and prices fell 7 percent to $514,000.
The jumpingest place for home sales in East Maui, though, is Haiku, where closings more than doubled to 23 and prices rose 10 percent to $607,000.
The west side remains a much more expensive place to live than the rest of the county. In Lahaina, transactions in single-family houses rose to 24 from 15 and prices gained 8 percent to $947,000.
In Central Maui, there were 132 transactions (up from 113 for the previous year’s first six months), by far the most of any area, and prices fell 17 percent to $426,000. In Kihei, there were 81 closings, up from 53, and prices were down 19 percent to $524,000.
The median price of a single-family house, including Lanai and Molokai, may give a clearer picture of housing costs for ordinary folks, because it eliminates the influence of very high prices for a few mansions. This year, the median price for a single-family house has been $469,000, down almost $35,000 from last year.
The building of so many luxury condominium projects has changed the relationship in average housing prices. A generation ago, condos were Maui’s entry-level housing and sales were concentrated in Kihei.
Today, some of the most expensive housing in the county are the condos on Lanai (although the single transaction there this year was for only $480,000), and there was almost as much activity in Kaanapali (184 closings, up from 157) as in Kihei (203, up from 100). In Kihei, average prices fell 15 percent to $341,000.
The condo in Kihei is still Maui’s version of affordable housing, less than half the average price of a single-family home.
But the average condo is anything but affordable and at $756,000 is within $12,000 of the single-family average.
Top-end condos are moving like hot cakes, although prices are not so hot. At Kapalua, condo closings jumped from three to 14, at average prices of $1.6 million, up from only $1 million a year ago.
At Kaanapali, closings increased by 27 from 157 to 184. although prices were unchanged at $1.3 million. In Wailea-Makena, closings more than doubled to 64 and prices advanced 4 percent to $1.7 million.
The median price of a condo tumbled 32 percent to $428,000, with much of that attributable to an unusually skewed mixture of sales in Wailea-Makena.
* Harry Eagar can be reached at firstname.lastname@example.org.