Don Austgen
(808) 891-8886
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Welcome to Maui Real Estate News. Here you will find the latests statistics on the Maui Real Estate Market, my thoughts on the current market, links to articles pertinent to our local market as well as the national markets.
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Prices Kept Low by Distressed Properties
A Maui News article explains that our housing market is being held down by the large number of short sale and REO properties on the market. While sales activity has increased significantly over the first months in 2010, prices have remained steady or even declined slightly over the same time frame. According to the article, this is due to the large number of distressed properties and banks offering significant discounting on the inventory to get these properties off of their books. This flush of properties offering significant discounting is a large part of the reason for the increase in sales activity. People are seeing the incredible deals hitting the market, and are acting to take advantage. For people still waiting for bottom, Terry Tolman, chief staff executive for Realtor’s Association of Maui, sums it up by saying “You’ll know when we hit bottom,” but by that point, “that means you’ve missed the bottom.” With increasing sales volume, on can only wonder how long it will be until we see the other markers of an increasing marketplace start to appear. For the full article, please click here.
March Sales Statistics
March saw an increase in home, condo, and land sales, rising to 88, 124, and 11 units respectively. Year to date we continue to see significant increase in sales numbers and volume, with decreased prices. Residential and condo sales have seen an increase of 25% over 2010 year to date stats. The next few months will reveal if this is a significant trend, or just a temporary uptick. Going forward, the significant numbers of distressed properties will need to be absorbed before we can see a return to a truly normalized market. For the full report for Realtor’s Association of Maui, please click here.
Housing Chart Book
Wells Fargo Security released a special report recently discussing the housing and construction markets. A special thanks to Dan Bardenhagen at Wells Fargo Mortgage for making this article available to us. Please click here for the full report.
Wailea and Makena are Baron’s Best Places for Second Homes
Last year Baron’s announced that the time to act on second and luxury homes was here. People were a bit shocked by this declaration, given the depressed state of the market, but that was the point. With prices 20-40% off their 2007 peak, homes in the luxury and vacation home markets were very great deals. The recent article declares that they were right. Wailea and Makena have seen strong increases in sales activity over the past year and increase in median sales prices from $1.5 in 2009 to $1.7 in 2010. We have been feeling the strong increase in buyer interest here over the past year, and it is good to see that the increased interest is manifesting in sales, rising prices, and declining inventory. For the full article, please click here.
February Sales Statistics
We seem to be remaining fairly stable from the beginning of the year with residential and land sales remaining stable at 57 and 7 sales, respectively, and condo sales increasing to 95. Year to date we have seen increases in sales volume, with slightly lower prices. The reports of increased buyer activity are now reflected in the numbers, and inventory has declined slightly. The large number of distressed properties will need to be absorbed by the market before we can see a full return to a normalized marketplace. Until then, the prices have dropped to a level that buyers are now acting and getting some great deals. For the full Realtor's Association of Maui report, please click here.
January Sales Statistics
Sales numbers actually declined slightly in January. This is likely due to a push buy buyers or sellers to close in 2010, which elevated sales numbers in December and then lead to a drop in the first month of 2011. January saw a decline to 54 homes sold, 87 condo sales, and 9 land lots sold island wide. We are seeing strong anecdotal evidence that buyer interest is increasing, and this is starting to be reflected in sales numbers. The decline in sales this month is easily explainable when contrasted with the large numbers of fast closings in December for the benefits (tax or other) of buyers or sellers to close in 2010. Inventory has begun to shrink slightly and now comprises many distressed properties. These distressed properties will need to be absorbed before we are able to return to a normal market place. For now, we should continue to see sales activity increasing and many great deals hitting the market. For the complete January sales report from the Realtors’ Association of Maui, please click here.
2010 Year End Sales Statistics
Maui properties are selling once again! With sales increasing significantly over the previous year (17% for residential, 39% for condominiums) 2010 brings new hope into the real estate market for Maui. After the bubble burst in 2007, sales dropped drastically from year to year. This is the first year since then that we have seen an increase in sales over the previous year. People are finally acting on the many great opportunities now on the market and buyer confidence is on the rise. Sellers, who were waiting, not wanting their property to sit on the market, are now able to get offers and get their property sold. This trend is seen both in the high end and in the low end properties across the island. With distressed properties like REO and short sales stilling hitting the market, it will be some time before we can return to a fully normalized market, but we are on the right track. With sales rising and more and more anecdotal evidence of increased buyer interest, 2011 should be a great year for buying or selling Maui real estate. For the complete statistics from Realtors' Association of Maui, please click here.
Grand Wailea Investors Forfeit Ownership
Early in 2011 the Morgan Stanley Real Estate defaulted on the loan for eight of their premier luxury properties, including the Grand Wailea Resort and Spa. According to a report by Bloomberg, Morgan Stanley was unable to refinance and the lenders restructured the debt, writing off $200 million and taking $400 million in equity, thus taking control of the eight resorts. Morgan Stanley had also defaulted on its loan for the Makena Resort and given up ownership through foreclosure during 2010.
This news does come as a surprise as Morgan Stanley had invested money into renovating the wings of the Grand Wailea Resort & Spa as well as beginning the process of a $250 million, 310 room expansion. The expansion was being contested and ownership changing hands leaves the question of who has control of this expansion and its approval process.
For now, the Grand Wailea will continue operations as normal, with Hilton maintaining its long term management contract for the resort. It will be interesting to see if the lending groups hold on to ownership, or if we will see a new investment group move in, much like Trinity Group did with the Makena Resort. For the complete article, please click here.
Market for Vacation Homes on Rise
According to a recent article in the Wall Street Journal, the market for vacation homes has soared to levels not seen since the last boom. According to the article vacation and luxury home markets around the country are seeing drastic improvements and lots of activity for a number of possible reasons.
While the market for primary residences continues to be sluggish and still finding its bottom it seems that secondary homes are in higher demand than over the past several years. According to the article this is due to the large rise in stock prices in the 2010 fiscal, making wealthier Americans more confident about the economy and its future. The other major factor is that prices in the vacation and luxury markets have dropped significantly and people are now ready to take advantage of these great deals. This unique combination of building buyer confidence and ability and the great deals hitting the markets makes for increased sales in these markets.
Another major factor is that people who want to take advantage of the depressed sales prices are in a financial position to do so. While people may want to take advantage for primary residences, many of these people do not qualify for financing with new, tougher lending requirements. In the second home markets most people are walking in with at least 25% down and are well qualified for loans. What’s more is many buyers are using full cash offers to get even better deals.
This article certainly reflects what we have been seeing here on Maui over the last half of 2010 and into the beginning of 2011. Buyer interest and activity is much higher (28% more sales in Wailea and Makena in 2010 than in 2009) and prices seem to be finding their bottom. Buyers are coming in confident in the economy and in the deals that are presenting themselves in the vacation and luxury markets. The lower end is still sluggish, with lots of distressed properties slowing the recovery, but the high end markets are seeing significant action. If the trend continues, 2011 should be an incredible year in Maui real estate.
For the entire Wall Street Journal article, please click here.
New Mayor to Affect Maui Development?
In November, Maui County elected to unseat then current Mayor Charmaine Tavares and return to Mayor Alan Arakawa who had served from 2003-06. At the beginning of the year Arakawa was sworn in, promising to have learned from his previous mistakes and to work faster and more efficiently in getting things done. One of Arakawa’s primary campaign points was to streamline the permitting process for businesses and developers to get the economy back on track. He also promised to get water to farms and landowners, allowing them to farm and build homes. He acknowledged that we live in different times than when he was last mayor and vows to make Maui County “a better place to do business and to live for our generation and for generations to come.” It will be interesting to see how much of his campaign promises can be kept over the next several years. If he is able to accomplish all that he wants, there will be many exciting changes for Maui County.
The airlines are recognizing the need for more seats available to Maui, now that the economy has begun to stabilize and people are returning to their vacations. A total of eight new direct flights into Maui were added this year.
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Airline
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Origin City
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Frequency
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West Jet
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Edmonton
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1
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West Jet
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Calgary
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1
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Continental
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Orange County
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4
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Continental
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Los Angeles
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7
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Alaska Air
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San Jose
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3
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Alaska Air
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Sacramento
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7
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Hawaiian
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Oakland
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7
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Hawaiian
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San Diego
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7
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