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.