What has sold on Maui in the last 30 days

Aaah yes, the cold, hard facts of Maui Real Estate are best summarized in what has actually sold in the last 30 days.

A little research for the island over the last 30 days shows 75 Single Family Residence (SFR) and 89 Condominium sales. Of the 75 SFR sales, 59 (78%) were below $ 895 000, most of which were below $ 650 000. There are 10 (14%) sales between one and two million, and 6 (8%) were above two million. Two of the top three sales were in Kapalua, and the third in Makena. The list price vs sales price for these three properties is as follows: Kapalua listed for $ 4.5 million, sold for $ 3.6 million, Makena listed for $ 8.3 million, sold for $ 6 million, Kapalua listed for $ 15.9 million, sold for $ 12.5 million.

Considering Maui's 89 Condo sales in the last 30 days, 70 (78%) were below one million, 11(12%) were between one and two million, and 8 (10%) were above two million. The top two sales were both in Wailea. A Wailea Beach Villa's listed for $ 4.5 million, sold for $ 3.75 million, and a Wailea Point unit listed for $ 10 million, sold for $ 8.973 million.

With the Fed cutting rates by a 1/2 point today, I hope investors will re-gain their confidence and resume purchasing jumbo loans. With the jumbo loans being bought, interest rates for these higher loan amounts should return to the 6% range, which could serve as the basis to move the $ one -two million market.

Aloha,
Peter Slate R(S)
Haiku Properties

Fed cuts rates, at last

Wall Street posted a 335 point gain to close at 13 739 on Tuesday after the Federal Reserve slashed key interest rates by a 1/2 point to ease stessed credit and housing market concerns. Investors cheered the Federal Reserve decision to cut the federal funds rate, (where banks charge each other for overnight loans), by a half point to 4.75 %.

The Fed aslo cut the Fed's discount rate (where banks borrow from the Fed) by the 1/2 point, to 5.25 %. Much speculation over how much the Fed would cut rates, with investors expecting a 1/4 point cut, and hoping for a 1/2 point cut, were dismissed with a cheer as rates were cut by 1/2 point. The news sent shares sky rocketing.

A small rate cut usually indicates more rate cuts to come. With the Fed's bold move today, investors are weary that gains may be short lived. Inflation does not seem to be an immeadiate concern. However, crude oil prices hit a fresh record high on Tuesday above 80 dollars a barrel. Financial stocks did well today. Bank of America, the second-largest US bank whose boss warned late Monday that third-quarter results would be hit by the credit crunch, gained 3.43 percent at 51.21 dollars. Citigroup rose 5.08 percent to 48.37 and JP Morgan advanced 5.59 percent to 47.82 dollars.

The yield on the 10 year bond rose to 4.480 percent from 4.462 yesterday. The public is still waiting for banks to refresh their position on Jumbo loans as $ 2 trillion worth of loans are set to adjust in the next year.

The Status of Maui Real Estate

Aloha,

This blog serves a very objective perspective on Maui's real estate market. As most realtors will quickly tell you what you want to hear, we decided to forego the "sugar coating", and tell it "how it is". The newsletter will cover two parts: Maui in general, and our specialty: Upcountry

Sales figures for Maui as a whole from the end of July 07 through the end of August 07 show a 5 % decrease in Single Family Residence (SFR) sales, 8 % increase in Condo sales and a 17 % decrease in land sales. Sales figures for Maui from August 06 compared to August 07 shows a 19 % decrease in SFR, 55 % increase in Condo and 50 % decrease in land sales.

Digging a little deeper, I researched the number of SFR properties and vacant land parcels that are in escrow against those actively listed in the Upcountry area. The Upcountry area includes: Makawao, Olinda , Pukalani, Kula and Keokea. I found there are 162 SFR listings, 21 (13%) of which are in escrow. Similarly there are 62 parcels of vacant land listed, and only 4 (6%) in escrow ! Over the last year 177 SFR and 17 vacant land parcels have sold Upcountry. This would indicate, with no new listings, it would take a little under a year to sell all the SFR listed, and 3.6 years to sell the vacant land currently available on the Upcountry market. Another aspect to consider: the average days on market before a SFR sells is 172 days, and 264 days for vacant land. In our opinion, a red hot market shows 45-50% of listings in escrow, a medium market 30% in escrow, and a cool market 20% in escrow ... 15 % and below ... Down right bleak. You'll want to remember, not all escrows are successful.

With my curiosity piqued, I decided to enter into the most volatile section of Maui 's real estate: the Kihei Condo market. I broke it down into Maalea, Kihei and Wailea. I found:
Of the 45 listed condos in Maalea, there are 0 in escrow. In the last year 20 sold. This indicates that with no new listings, it would take 2.25 years to sell off the inventory. Kihei has 376 active listings, 49 (13%) of which are escrow. There were 457 condo sales in the last year. Wailea has 152 active listing, 16 (11%) of which are escrow. There were 215 Wailea condo sales in the last year. Judging by these percentages, we have no other choice than to rate the Kihei / Wailea condo market as bleak.

Expanding further, there are currently 812 active SFR listings, 1332 active Condo listings and 484 active vacant land listings on Maui.

Why is this so ?
A couple reasons. With so many Banks and financial institutions going bankrupt (149 lenders in one year) over sketchy mortgage debt, the remaining banks and lenders have made it significantly more difficult for borrowers to get financed, especially in the non-conforming, jumbo range, where most Hawaii loans are placed. Another reason, investors looking to the stock market for better returns.

Our Conclusion:
With the explosion of wealth worldwide, and the growing number of people who have a net worth of $ 5 million or more, we know there are very capable buyers, who are in a position to purchase real estate at any time. Given that Maui remains one of the worlds most desirable resort destinations, and that the population is ever increasing ... Maui is not the problem! We conclude investors need only overcome their psychological hurdle before returning in force. With investor confidence restored, we believe Maui real estate will experience a strong rebound. There are currently two Upcountry properties that we feel are exceptional buys.

If you have any questions or comments regarding this newsletter please contact us directly at (808) 276 4017 or at the office (808) 878 6800. If you know of anyone who is thinking of buying or selling real estate on Maui , please refer them directly to the telephone numbers above.

Mahalo for reading our blog.

Regards,


John Papazian R(B) Peter Slate R(S)
Haiku Properties Haiku Properties