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Cash is King in Maui Real Estate Market

I am often asked the question, “Are lenders still loaning money and are people getting loans?” The simply answer is this, yes and yes. With this being said, the current real estate financial lending process and regulations far differ from those in the peak of the market in 2006.

People actually need to qualify for their loans in order to receive them – this means that lenders are being extremely careful, and often times nit-picky in the documentation and lending ratios that they utilize to qualify individuals for loans. What effect has this had on the overall market in terms of the way properties are sold and the price levels?

Here are The Stice Team’s Deals of the Month gallery, including the above pictured oceanfront home on Front Street in Lahaina.

Prices are continuing to drop as Cash is King in the Maui real estate market. So far, this year on Maui, 64% of all condos, 28% of all homes, and 82% of all land transactions have been cash transactions. That means, collectively, over 51% of all sales on Maui have been paid for without the use of a lending institution.

Until the lending environment becomes somewhat “normalized” again, I believe that price growth will be limited. With this being said, I would also share that we have likely hit the proverbial bottom of the market in some segments of the market, including the entry to mid level of the residential market, and the entry level of the resort condominium market.

There is just too much activity in these segments to suggest anything other than this. Often times, buyers are faced with competitive buyer situations and these aggressively priced properties do sell for over the original asking price. I do believe that we will continue to see price corrections in the higher price echelons of the market.

Enjoy views like these from this Kapalua condo foreclosure and check out our gallery of the Best Foreclosure Deals on Maui.

There are strong signs that the Maui market has made some strides in recovering in the sense that transactional volume is way up year to year, mainly due the sale of many REO and short sale properties.

In comparing the year end stats of 2010 versus the year stats for 2009, you will see what I am referring to:

  1. Residential unit sales rose (+17%), average sold price = $747,891 (+5%), median price= $460,000 (-8%), and total dollar volume sold = $608,783,134 (+23%).
  2. Condo unit sales increased (39%), average sold price = $648,043 (-10%), median price = $377,500(-16%), and total condo dollar volume sold = $743,305,403 (+25%).
  3. Land lot sales – NOTE: Land Lot sales are such a small sampling that statistics in this property class are not necessarily reliable indicators. Land lot sales increased (+14%), average sold price = $513,571 (-53%), median price = $405,000 (-19%), and total dollar volume = $56,223,494 (-47%).

There was some thought entering our winter season that we would be seeing an increase in sales volume. There are a couple of factors favoring improved volume, including strong exchange rates for international buyers, higher visitor numbers, and some improvements in the overall economy. I heard on the news the other day that the 1st quarter visitor numbers and spending were the strongest that they have ever been.

We are seeing a very strong influx of Canadian buyers dominate the market place right now and they almost always invest via all cash transactions. Their economy has remained relatively strong, their currency is stronger than the U.S. dollar right now, and they realize that now is the time to take advantage of these tremendous opportunities in the Maui market place.

The first quarter numbers look like this, comparing January-March 2011 to January-March 2010:

  1. Residential unit sales rose (+14%), average sold price = $681,682 (+1%), median price = $450,000 (-4%), and total dollar volume sold = $135,654,619 (+16%).
  2. Condo unit sales increased (+5%), average sold price = $491,522 (-35%), median price = $320,000 (-25%), and total condo dollar volume sold = $151,880,159 (-32%).
  3. Land lot salesNOTE: Land lot sales are such a small sampling that statistics in this property class are not necessarily reliable indicators. Land lot sales decreased (-13%), average sold price = $849,919 (+54%), median price = $310,000 (-38%), and total dollar volume = $22,947,826 (+34%).

This month brought the Stice Team some new challenges:

  • Tracy assisted a local Maui commercial real estate broker with a very complex purchase of an old home in Wailuku that required a FHA rehabilitation loan – this was an arduous process, but Tracy, the buyer, and Kara Beltran (the mortgage broker) demonstrated fantastic collaboration and got the property closed.
  • I assisted a young couple with a successful closing of a Kahana Ridge property – Jeremy’s first successful short sale closing. Read here for the details in a previous blog. We could not be happier for these clients, and all the other people we have been fortunate enough to assist in their dreams and endeavors.

Maui’s general economic forecast for the 1st quarter of 2011 was also quite promising and several economists have stated that we are basically okay, neither booming or busting. Some of the positives have been very strong tourism numbers, and consumer spending in the first quarter as well as strong business and tax revenue.

The challenges that we are facing are rising fuel costs with prices floating around $5.00 per gallon, stagnating real estate prices, and the aftermath of the natural disasters in Japan. More here in a recent article in the Maui news.

Here are the best deals in the market. Your time is now, contact me – pick up the phone, or write me an email, and I will help you make it happen.

Please reach out directly to me at my below contact information, or feel free to create your own HawaiiLife.com account, where you can view all properties on the MLS and save your favorites. Just click here and you will see the tab at the very top right of the page that says Sign Up, which you can then click on and follow the steps—it is easy and rewarding.

Aloha,

Jeremy Stice, R(S)
Hawaii Life Real Estate Brokers
808.281.2178
Stice@HawaiiLife.com

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David Buck

April 27, 2011

Wow Jeremy, those cash numbers are much higher than here on Oahu. Cash really is king there!

David Buck

April 27, 2011

Wow Jeremy, those cash numbers are much higher than here on Oahu. Cash really is king there!

Katie Minkus, R(B)

April 27, 2011

Aloha Jeremy – awesome blog post! I’m sure our numbers would be similar here on the big island… certainly on the higher end of the market it’s cash and cash and more cash only. And in most cases, cash demands a discounted price. Congratulations on your closings, too!

Katie Minkus, R(B)

April 27, 2011

Aloha Jeremy – awesome blog post! I’m sure our numbers would be similar here on the big island… certainly on the higher end of the market it’s cash and cash and more cash only. And in most cases, cash demands a discounted price. Congratulations on your closings, too!

Jeremy Stice, R(S)

April 27, 2011

@ David- you might be surprised to see what the numbers actually look like on Oahu. I would encourage you to check it out.

@ Katie- Mahalo for the support. You are absolutely right that the high end of the market is dominated by all cash transactions and so is a lot of the lower end investment type properties.

9 of the 22 properties that closed today were all cash including a partially completed home in Makena across the street from the beach that sold for $4,500,000. I would say that this home probably needed another $3 mil to be properly finished but that’s Makena for you.

Jeremy Stice, R(S)

April 27, 2011

@ David- you might be surprised to see what the numbers actually look like on Oahu. I would encourage you to check it out.

@ Katie- Mahalo for the support. You are absolutely right that the high end of the market is dominated by all cash transactions and so is a lot of the lower end investment type properties.

9 of the 22 properties that closed today were all cash including a partially completed home in Makena across the street from the beach that sold for $4,500,000. I would say that this home probably needed another $3 mil to be properly finished but that’s Makena for you.

Stice Team Sold – Haiku Maui Vacant Land « Hawaii Real Estate Market

April 29, 2011

[…] and in fact, during 2011 82% of the vacant land transactions have been all cash. Read about how Cash is King in The Maui Market in one of my previous […]

Stice Team Sold – Haiku Maui Vacant Land « Hawaii Real Estate Market

April 29, 2011

[…] and in fact, during 2011 82% of the vacant land transactions have been all cash. Read about how Cash is King in The Maui Market in one of my previous […]

Maui Real Estate Market Continues Its Recovery « Hawaii Real Estate Market

June 3, 2011

[…] For condos overall, the average price declined 10 percent to $648,043, compared to $718,885 in 2009. Reduced prices mean there are deals, but they won’t last forever. Cash buyers increased airlift from the mainland bringing more tourists and potential buyers, and the strength of the Canadian dollar, or Looney as it is affectionately referred to, has made Maui one of the best deals of any world-class destination. Read one of my recent posts on how Cash is King in Maui Real Estate Market. […]

Maui Real Estate Market Continues Its Recovery « Hawaii Real Estate Market

June 3, 2011

[…] For condos overall, the average price declined 10 percent to $648,043, compared to $718,885 in 2009. Reduced prices mean there are deals, but they won’t last forever. Cash buyers increased airlift from the mainland bringing more tourists and potential buyers, and the strength of the Canadian dollar, or Looney as it is affectionately referred to, has made Maui one of the best deals of any world-class destination. Read one of my recent posts on how Cash is King in Maui Real Estate Market. […]

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