Luxury Hawaii Home Buyers – It is Cash Or ???
I just finished 3 days in San Jose, CA at the California Association of REALTORS meetings and had quite a learning experience. It is quite apparent that REO’s are dominating most of the California market and that liquidity in Jumbo Loans (over $729,000) has almost totally wiped out the luxury portion of the market. Since no secondary market really exists to buy Jumbo Loans, these days most lenders (except a few banks and private lenders that hold the loans as portfolio loans) are no longer lending in this segment of the market.
Why this is important to Hawaii (and more specifically Maui) is that in recent years both the median and average sales prices of homes and condos have hovered near $1,000,000. Statistics this year for both segments of the market have shown between 20 and 30% price declines for both medians and average prices. Look for this to continue. With about 80 to 90% of the volume of sales now driven to the areas of saleable loans (under $729,000), this will continue to shift the averages lower.
The net result is that suddenly, sellers (who have to liquidate their high end second and third homes in Hawaii) are now faced with a very tough situation. If you paid over $1,000,000 for a luxury Hawaii home or condo in the past couple of years, buyers for your unit really have very few financing options. It is cash or ???
Interestingly, there have been few high end foreclosures on Maui, yet…the next year will begin to tell a different story as ARM resets start to show up, and some cash strapped owners will choose to loose their 2nd or 3rd home instead of their first home elsewhere.
Look for some bargains on beautiful high end homes on Maui in the next 6 to 12 months.