South Maui Market Rebounds Through July
Keeping in Pace with the Rest of Hawaii and the Country
By Dave Morrell RS, MBA

If you are thinking about buying or selling a home in Wailea-Makena or Kihei anytime in the near future, I would encourage you to review economist, Paul Brewbaker’s address to the Real Estate Association of Maui (RAM) .

Mr. Brewbaker seems to feel that the economy has turned and as shown by a number of indicators, real estate prices on Maui have already reached the bottom or are very close to doing so!

I will not spend a lot of time reviewing the predictions in that report, but will attempt to focus instead on the South Maui market segment. Reviewing the video link to Mr. Brewbaker’s webcast report should help to put these following charts in perspective.

The South Maui real estate market continued to improve in the first four months of 2010 as sales increased each month. Although sales did drop off a little after the Federal tax stimulus for new escrows expired, home and condominium sales still maintained a very healthy activity level, helping to further reduce market inventory to levels not seen since 2005!

With limited supply and strong buying activity, prices have been firming. There are still very good deals available, (especially with interest rates lower than they have been for years) but I don’t believe we can expect to see prices for quality homes fall much further (If at all)! The following chart seems to indicate that most market segment prices have actually increased, but it is very difficult to extract any kind of meaningful trend with our relatively small, South Maui market.

We are constantly asked:
1. Will the South Maui Real Estate market continue to firm?
2. Are there differences between Wailea condominiums, Kihei single family homes, Beach front homes, South Maui Real Estate in general?
3. Will we see a sudden upward movement in home and condominium prices?
4. Is it time to buy that new home in Makena or should we wait?
5. Will I need cash or is financing available at a decent interest rate available?
6. Is it too late to take advantage of low interest rates and bargain Maui real estate deals?
7. Is it time to sell our Kihei vacation rental condominium or will prices rocket back up to 2006 levels soon?

While no one except you can answer these questions for you in your situation, and no one can predict the future with any kind of certainty, you may want to review some of the following, then call your Realtor (as well as your loan broker and/or CPA) to discuss your own situation.

Market Inventory:
Although market inventory has been declining fairly steadily since the beginning of 2009, prices are just now beginning to reflect the declining supply. Will the inventory continue to decline? If it does, will that push prices up dramatically? How will the so-called “Shadow Inventory” affect the South Maui market inventory? Do we see short sale inventories increasing or decreasing? How about bank sales (REO’s)? The following charts may shed some light on these questions:

New listings of short sale properties (Properties selling for less than the owner owes) began to appear in South Maui in mid 2007. Although the quantity of new short sales listed have fluctuated considerably, we have not seen a significant overall increase of short sale listings in recent months. The number of Kihei single family homes listed as short sales did appear to peak earlier this year. Short sale listings of Wailea single family residences has remained quite low (perhaps explaining the relatively small price decline for these homes?).

Meanwhile, most of the major banks seem to have worked through many of their administrative difficulties in working with short sales so that the process has begun to work a bit more efficiently and short sale listings are working their way off the active inventories.

On the other hand, bank owned (REO) properties have begun making their way to market in the past 12 months so that they are beginning to show some affect on the market, particularly with Kihei Condominiums. Very few Wailea properties have yet been listed as bank owned (foreclosures).

So does this mean that our market is about to be flooded with low priced (and in many cases low value) bank owned properties? Is there a significant “shadow inventory” that is about to hit the market and push the rebound back into recession? What affect would an increase of REO’s have on inventory, sales and prices?

In order to address these concerns, we must look at the short sales and bank owned listings in perspective of the entire South Maui Real Estate market. This chart should help to visualize that perspective.

As the chart indicates, the total number of new South Maui listings has been decreasing over the past few years, in spite of the increase in distressed property listings. The combination of fewer listings and increased number of sales has been instrumental to decrease overall inventory. During 2010 new distressed property listings did account for about 25% of the total new listings.

Although total listings have declined, the increase in distressed properties has tended to dampen prices. Distressed properties are often in a state of disrepair and buyers generally want a discount for the poor property condition, not to mention the hassle of working with numerous lenders and creditors under an entire different set of contract rules, rules which often do not protect the Buyer’s interests nearly as well as in a standard transaction. Standards for appraisers have been tightened considerably so that appraisers are often very hesitant to appraise non distressed properties at a significantly higher value than the distressed homes. As a result, increases in prices may not be allowed by the Buyers’ lenders until cash purchasers set a new trend. If you are a buyer with cash, you have a significant negotiating advantage to purchase premium properties at somewhat discounted prices. Buyers utilizing credit (on the other hand) have some very good incentives to purchase relatively low cost homes now with extremely low interest rates (and low monthly payments) that probably won’t last for long!

So what do you do if you are an owner in need to sell a South Maui Property? Do you sell now (even perhaps taking a loss) to get out from under a high monthly mortgage payment or in order to move on to other goals in your life? Do you wait in hopes that prices will turn around enough to make up for your mortgage payments while you wait? Will the potential increase in prices return enough to pay off your mortgage and have cash left over to do what you want to do next? What do you risk that prices may not increase as much as needed? Does your mortgage exceed the amount that you can expect to sell your property for? Should you consider a short sale? The answers for these questions will be different for different Sellers. They will depend upon your own specific needs. You should definitely discuss these issues with your Realtor and probably your CPA. There can be significant tax consequences as well as pricing and market issues.

Whether you are a potential Buyer or Seller, if you do not already have a relationship with a Realtor, we would love to do our part to help you find the dream property or investment solution that fits just for you.

By Richard Farnham

Kim and Dave's Website now has an interactive "Virtual Tour" Map that allows you to see all of their current listings location on the map and, with the click of the mouse, go to that properties virtual tour or video.  Other area overview videos are also available for many areas.  This map breaks down Maui into the main living areas found.  Just click on the map below to go to the interactive map, or use the column on the left.  Just look for "Maui Virtual Tour Map".

Wailea Resort is thrilled to be the host location for a major film project starting Adam Sandler and his production company. Filming will be taking place on Maui starting April 19th through May 18th. This is an amazing opportunity for Wailea Resort to be showcased when the film releases next year!
Bud, myself and production company officials met with our Wailea Resort Safety and Risk Management team and outlined several key dates on which the filming could have a slight impact on our residents and visitors. We want to keep everyone informed, so that you can share the great news and keep your homeowners/employees/guests in the loop with what is happening with this project. We recommend that you use the information below to notify everyone of the potential inconveniences so that they may make arrangements to avoid the affected areas.
We have listed below several key dates and information:
1) April 19 – May 18
RENAISSANCE Wailea Beach Resort Hotel property is being utilized as a staging area for location trailers and vehicles. It will also be utilized for all film extras and employee parking. Private Shuttles will be running extras/employees from the Renaissance parking lot to their location shoots, so anticipate traffic in and out of their entryway on Wailea Alanui starting today through May 18th at various hours.
2) April 21 – 23
WAILEA BEACH WALK area fronting Grand Wailea Resort will have interim closures for pedestrian traffic between Wailea Beach Park access to the Wailea Beach Villas area daily, starting at 4:00pm on Wednesday, April 21 through and including, Friday April 23rd as they will be filming a luau scene fronting the Grand Wailea. Signage/information will be posted to redirect pedestrian traffic. Filming will take place throughout the night, with luau music being filmed early in the evening and filming with dialog continuing throughout the night as necessary.
3) April 22 – May 1
GANNON’S RESTAURANT WILL BE CLOSED Thursday April 22 through Saturday, May 1st.
WAILEA GOLD & EMERALD Golf Courses, Driving Range, Locker Rooms, and Pro Shop will remain open. Greeters will welcome guests and help direct traffic. Complimentary valet parking will be provided for all golfers.
Gannon’s will be providing a satellite “al fresco” café with umbrella seating in the cart staging area, offering a continental breakfast and various lunch options (menu tbd). Every paid golfer will receive a complimentary breakfast OR lunch from the Café only. The course beverage cart will still be operating on a cash basis during this time. Additional meals can be purchased at the Café for $5.00 each. Beverage service including a limited bar menu of beer, Bloody Mary’s, and cocktails will be available.
4) May 3 – 4
WAILEA BEACH WALK area fronting Grand Wailea Resort and Wailea Beach Villas will be closed to pedestrian traffic at various times on Monday, May 3rd and Tuesday May 4th . Pedestrian traffic will be routed accordingly as filming occurs. Signage/information will be posted to redirect pedestrian traffic..
Starting on April 23rd, construction of a “beach bar” set will begin. All necessary permits and permissions have been approved by the appropriate cultural advisory bodies, County, State, and DLNR. The structure is temporary and will be removed immediately following the shoot, no later than May 8th.
5) May 10 – 11
WAILEA BEACH & BEACH WALK fronting Grand Wailea Resort and Wailea Beach Villas will be closed to pedestrian traffic at various times on Monday, May 10th and Tuesday May 11th . Pedestrian traffic will be routed accordingly as filming occurs. Signage/information will be posted to redirect pedestrian traffic.
Wailea Community Association has been and will continue working with the hotel and the production company to ensure we minimize any disruption to our residents and guests during this film project. We will continue to update all of you on any changes to the above information.
The economic impact to Wailea, Maui and the state is huge from this production, and we recognize the long term rewards our destination will receive from the exposure of this major motion picture will be huge, when the film is released next year.
 

The South Maui real estate market rebounded significantly toward the end of 2009. From the beginning of 2009 to the beginning of 2010, South Maui active inventory levels fell by nearly 1/3 and the number of new sales contracts per month tripled! This rebound has been considerably faster than the market comeback from the 1994 slump when active inventory was even higher than 2009.

Kihei single family homes led the rebound with inventory levels dropping by 44%. Kihei Condos, Wailea single family homes and Wailea condos also had significant inventory reductions of 33%, 19% and 17% respectively.

Selling prices had certainly not yet returned to market highs, but the reduction in inventory and increase in sales have begun to affect prices in all South Maui market segments. Of course we cannot predict future market trends, but if the present trend continues, we will see much less inventory to select from and increasing prices to deal with. The present Buyer’s market may be turning back to a Seller’s market once again.

So when will be the best time to buy or sell property in South Maui? There is, of course, no way to reply to that question with one answer to fit all situations. Only you can answer for your own particular circumstances.

If you decide to buy (or sell) real estate on Maui, we would love to be your guide!

It is commonly said that Maui real estate markets tend to follow California by about 6 months. We all hoped that this wouldn’t hold true as the California market began to falter a couple of years ago, but alas, Maui did begin the slippery slide as well.

Now, we see signs of an improving national real estate market, perhaps due in large part to the tax incentives for first time homebuyers, continued low interest rates, and an improving economy. Can we predict whether Maui will follow, or perhaps even lead us in this positive national trend?

As indicated on the chart above, the number of accepted real estate contracts in South Maui began to pick up significantly in the third quarter of 2009. Toward the middle of the fourth quarter, activity slowed a bit in our historically slow season.

We also saw a significant decline in the number of available properties as the increased activity began to chip away at excessive inventory and as new development projects slowed somewhat.

Although inventory has declined and demand has increased, selling prices of lower end properties have also continued to decline. Even if prices continue to drop, it will become increasingly difficult to find quality properties at extreme bargain rates. Sellers who maintain their properties well, often remove them from the market as prices continue to fall. Consequently, the inventory of quality homes has been somewhat replaced by poorer quality repossessed homes and lengthy short sales.

On the other hand, selling prices of higher end homes and condos in the Wailea/Makena area have begun to rise again and sales activity has been relatively steady.

Regardless of the market’s ups and downs, real estate should always be considered a long-term investment. In South Maui, your real estate purchase is usually more about lifestyle and future enjoyment than it is about pricing and market timing. If you are considering buying or selling, be sure to work closely with your REALTOR® who should be experienced with lifestyle choices as well as market trends. You should feel comfortable discussing your needs and aspirations with that agent who will help you with one of the most important decisions you can make.

“UP, DOWN OR SIDEWAYS – WHAT’S WITH THIS MARKET ANYWAY?” We see the “expert” reports and editorials in the news media and hear how “The market is up”… “The market is down”… “Sell now while you can”… “Buy now while you can”… What advice do you follow? Are the news reports accurate? Or are they biased?

With the entire world economy in such a state of flux, just about any conclusion can be drawn from the figures and just about any reporting of the figures becomes an “editorial” instead of an accurate, unbiased, “news report”. Opinion can be considered fact simply by presenting data in strategic places within the report. Reporting (particularly in mass media) can create a “self-fulfilling prophecy” as the masses buy or sell in an attempt to get on the bandwagon before it is too late.

The real estate market follows many of the same rules as the stock, commodity or currency markets. But there are also some major unique differences.

• The real estate market: •Generally is more difficult to get into and out of, so the “bumps” in the ride tend to get smoothed a bit. Owners usually invest for a longer duration. Both large & small investors caused much of the recent ‘bumpy ride’ by applying the same short-term rules, as they were accustomed to in other markets.
• Can be more easily leveraged (particularly by “non-accredited” investors) than most other markets, because lenders have considered real estate a “safer” investment. Most of the stock market type investment regulations are not in practice in the real estate market.
• Provides a more tangible use of the investor’s resources. Most owners will feel a more substantial and emotional connection to their real property than to their IRA investments in a mutual fund somewhere.

These differences will cause the real estate market to react differently to the laws of “supply and demand” than with other investment positions.

With this knowledge, how do we decide when and where to invest (or divest) in South Maui’s real estate market? Some graphical information might help in your decision making; however, we encourage you to look beyond the mere “facts and figures”. Look at your underlying needs and desires and you may see well beyond the investment. You’re buying a tangible investment and a lifestyle for you and your loved ones. If you love Maui weather, geography and culture, then do all that you can to come, visit, buy and stay!!

Aloha residents and owners at Kihei's Piilani Villages in Sunny South Maui (and everyone else on the Island of Maui) -

Time to clean out and lighten your load?
Or maybe you’re looking for something that your neighbor wants to get rid of?

It's time for a Village wide (Piilani Village in Kihei) yard/garage sale -
Date: Saturday, July 11, 2009
Time: 7 AM to 11 AM (or later if you want)
Place: Residences in Piilani Villages that want to take part

We need your opinions and suggestions!!
Maybe a list of items you will offer for sale (be sure to put your address)?
Or something you've been wanting to buy?

Just click on "Show Comments" below, then add your comments, suggestions or items. You don't even have to give your name or address (but it would be nice for everyone else if you do! ).

(We do reserve the right to not display comments if we don't think they are in good taste or appropriate)

We’ll do some advertising and (hopefully) press releases for it.

So far, the following neighbors have decided to join in (see map & comments below).

The whole island has access to this blog, so lot's of people will be looking!

We're waiting to hear from you! Let's make it a community thing!

Kim & Dave

We’ve all heard it: “Location is key when buying real estate!” But did you know that on Maui, weather is a major key to finding that perfect location for you?

Of course, the majority of people who locate here from the mainland, come for the year ‘round warm weather, gentle, cooling trade winds and the fabulous beaches. Other than that, maybe we know enough to settle on the windward side if we like lush green jungles, striking waterfalls and lots of rain… Or we head to the leeward side if we want warm, sunny weather with fabulous beaches J. But did we know that there are many, many more microclimates that may be even more important than the basic “Windward-Leeward” dilemma that faces us when we are just visiting for a week or two? Surely, if we are going to buy property and settle here (whether for long term residence or just a seasonal getaway) we should invest a little time to understand the weather differences throughout the island, not to mention the abundant cultural, architectural and scenic diversity that Maui has to offer.

Did you know that the predominate trade winds come from the East-Northeast when they approach the island, but they actually approach the Makena-Wailea area from the West-Southwest direction? – Just the Opposite Direction! As a result, the windward areas generally receive considerable moisture, while Kihei and Lahaina are very dry, but even in the summer, Wailea-Makena areas get those ideal, cool afternoon clouds without the blasting heat, winds or rain that other areas can sometimes experience.

We have found as much diversity in the desires of our mainland buyer-clients as we have found in the weather and culture of Maui. That is one reason why you often see people from various locations in the world gravitating toward specific parts of the island. Although the South Maui weather conditions appeal most favorably to us, we know our clients and the island diversity well enough to understand why Wailea might not be ideal for everyone. We try to develop relationships with our clients to help us understand their real desires.

There is obviously not enough room here to give a complete lesson on the wind, rain and temperature variations throughout the island (let alone the other diversity issues or other islands), but be assured that with a little research and guidance, you should be able to find that perfect spot on Maui to call “home”, or your “home away from home”.

About the authors: Kim Insley-Morrell and Dave Morrell originally came from very diverse areas of the mainland (Dry Eastern Washington, Cold Michigan and Sunny Southern California) but between them they have settled and raised their children in Hawaii for 21 and 36 years respectively. They have experienced living on Oahu (both wet and dry sides), Kauai, and, of course, Maui (Both South & West Sides). “Maui No Ka Oi”, or “Maui – The Best”. They have settled for most of the past 20 years on the Sunny Side of (South) Maui and say that it would be nearly impossible to extract them from their Paradise on Earth! As Realtor Salespersons, their greatest joy comes in finding the perfect home on Maui for their diverse clientele. They can be reached at 808-276-7766 or www.MauiAina.com.