While our priorities continue to focus on keeping ourselves, our family, and others safe from the coronavirus (i.e., wearing masks and social distancing), the economy cannot afford to stagnate too much longer. The “experts” continue to search for definitive answers about the virus and when or if things should begin to reopen. A “try it and see what happens” mentality seems to be the flavor of the day.
Since real estate sales and related activities carry tremendous weight in the big picture of our economy, pundits and opinions are plentiful. Now that April statistics are in for Maui (see below) it’s relatively easy to see the early effects on the housing market. The snapshot view shows us that listings for new homes are down 42% compared to last April; sales are down 58%. Listings for condos are down 24%, and sales are down 72%. These radical numbers should come as no surprise when considering how much our market is driven by out-of-state buyers (visitors) who are simply non-existent right now—and likely for some time to come.
Surprisingly, though, prices are not only holding but the medians have inched up a bit. The most recent 3 sales in south Maui closed for full price, $2,000 over asking, and $5,000 under asking respectively. Our sales usually hover in the 96-97% range of asking price, which suggests even a $500,000 condo would sell for $15-$20,000 less than asking.
But is this just a temporary “mirage”, perhaps based only on the small sampling size? Frankly, in my opinion, it’s difficult to imagine anything but the longer this goes the more downward pressure there will be on pricing. Will the “bubble” burst like it did in 2007/8? And has the last few years been a bubble driven by inflated values and no-doc loans? I think not, but take a listen to Matthew Gardner, Windemere Real Estate’s Chief Economist, and his thoughts on whether or not we are headed towards another housing bubble.
In a quick summary he says:
I do anticipate that total home sales will be down from 2019 due to COVID-19, estimating 10-15%. This is dependent upon when ‘Shelter in Place’ ends and our country’s economy re-opens again.
I see home prices drop somewhat over the next few quarters, but the drop in value will be SHORT-LIVED.
I expect to see quarter-over-quarter drops in median home prices in the 3 rd & 4 th quarters; however, 2020 YEAR HOME PRICES WILL BE OVER 2019 by 2.5%.
Let’s move from the present to an exciting new project in Wailea that will soon begin to break ground for a 2023 completion— La’i Loa ! This stunning development will feature 75 1, 2, and 3 bedroom Condos with 4 bedroom Penthouses spread over 15 buildings on arguably Wailea’s most spectacular remaining oceanview property.
Prices will start at about $1.5 million with units sized from 1,370 sq. ft. to 2,585 sq. ft. for the Penthouses. Sales have begun and reservations with deposits are being taken. Please contact me if you would like more information on this development.
This month’s Featured Property is a just-remodeled stunning home in a highly coveted well-established south Maui neighborhood across from one of Maui’s most popular stretches of white sandy beach. The cleverly designed floor plan offers an open space living and kitchen area with three well-separated bedrooms for maximum privacy, The nearly 8,000 sq. ft. lot provides plenty of room for outdoor entertaining or just a great place to sit and enjoy a sunny Maui afternoon and your favorite beverage. Grab this one before someone else does! MLS #386971 , $1,149,000!!!
Click Here for complete April statistics
Click Here for Kathy Rosales’ complete financial update
Without belaboring the point, here is your quick update on the COVID-19 status for the state and for Maui County. As one might expect, the tradition of Aloha continues to see most residents wearing face masks and the vast majority observing social distancing.
Supermarkets and Costco are requiring face masks and most businesses encouraging them. The beaches were re-opened last weekend for walking, jogging, and ocean sports which, literally, was a breath of fresh air for me.
Monday May 11 will see some shopping centers and hair salons opening, along with pet grooming. Looks like my cat and I will both be able to get our hair cut again. Rumor has it if we do not see any significant upticks over the next few weeks, the 14-day quarantine for visitors and returning residents to the island may be lifted, so don’t toss that SPF 30 just yet!
Stay safe; be aware, so you’ll still be there for next month’s Newsletter! ?♂️?
I hope you are all staying safe and being patient with yourself and your loved ones during these difficult times.
Maui Realty Associates
(808) 283-9093 cell
(808) 879-5510 fax