Small market real estate statistics can pose a challenge. When you have a relatively small sample size, median and average sales prices may swing significantly based on new development sales, bulk purchases, or increased activity in one price range in the market. That leaves median and average prices as a poor indicator of actual changes in value. We have seen this effect with statistics on Maui.
Our condo market has been more resilient than most. There were relatively few condos financed with sub-prime loans and International demand was strong through much of 2007-2008 as Canadians and Europeans took advantage of the strength of their respective currencies. That being said, we saw price adjustments starting in the low end of the market in 2006 with changes coming to a greater portion of the market in 2007. Now all but the most luxurious properties have seen price adjustments. Despite these dynamics, our median prices managed to stay high and in some cases hit new highs.
How did median prices hold steady when comparable condos were selling for less this year than what they were selling for just one year earlier? The answer has to do with the segments of the market that saw more activity. While the low end and the middle of the market saw lower sales volumes, we saw a surge in volume in our ultra luxury condos. Condos over $2,000,000 sold in significant numbers. The surge was due in part to a bevy of new project sales and a pretty healthy volume of high end resales.
The September Maui Real Estate statistics produced some pretty eye catching numbers. The condo numbers in particular were interesting in that the formerly resilient median condo prices tumbled dramatically. The median was $244,000 below last month's median and $210,500 below September of 2007. What caused this drop? Did the bottom fall out on the market? As I mentioned before, we have been seeing price adjustments in our market for sometime, but the drop we saw this month can again be traced to changes in activity in different segments of the market. September saw the fewest high end new development closes than any other month this year. While the low end of the market saw increasing activity as buyers are starting to take advantage of the opportunities presented in this market.
What does this all mean? Well it is in part a cautionary tale. It points to the dangers of small market statistics at face value. It also is a heads up to keep an eye for a shift in the condo market. One month may be an anomaly. If we see a series of months where high end condo sales are down, it may be indicative of a cooling in our luxury market. This would not be too big of a surprise in light of the current global financial picture. We are due for another artificial bump in medians sometime in January of February as we will start seeing sales recording for Honua Kai. That will be another thing that needs to be filtered out when trying to sort out the state of the Maui Real Estate market. I will keep you posted.
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