Condo sales shrivel on Maui
And the market for sellers is worse than the numbers reveal - Buyers, are you sensing an opportunity yet?
While a 33% decline in condo sales seems rough enough, it is actually worse. The logical question is, "if sales are that slow, if demand is that low, why didn't prices come down." The answer is prices did come down?" They did, you just couldn't see it.
That's because a large number of sales in Wailea skewed the statistics. This has the effect of misleading us in 2 ways:
- First, a large number of the Wailea condo closings were the result of contracts executed in a prior year. That made sales activity appear more robust than that dictated by current demand. I'm told a lot of people who were committed to those deals wanted to get out, but couldn't.
- Second the median price of those closings was well in excess of $2 million, which resulted in skewing both the average and median prices up.
To adjust for the Wailea effect we developed the WAM (Wailea Adjusted Median).
This reveals that in 2007 the WAM was $495,000. In 2008 the median didn't remain static as indicated by the overall results, it actually declined to $433,166, down by 14%.
The other thing that is lost in the numbers is the appearance that condo sales are off by just 33%. While the stat is accurate, the trend paints a more woeful picture for Maui.
In the first third of the year there were 370 condo sales. In the second third of the year, after losing the airlines, there were only 254 condo sales. In the final third of the year, after the trifecta, there were just 164 condos sales on Maui. The final third of the year was 56% off the first third.
2009 Predictions and advice
We will continue to see selling prices decline in certain types of condominiums. There are bargains to be found in
- Oceanfront garden view units
- Properties where maintenance fees have gone up and occupancy has gone down
- Properties in which owners are being pressured to implement expensive renovations
- Anywhere that the 4 D's are in play: death, divorce, disease and desperation.
Prices will hold in properties that are:
- Newer
- Renovated already
- On the ocean with great views
- In a unique location (think Napili Bay, Kapalua Bay, parts of Makena)
A word to Buyers
If you have ever been in the market for Maui property, now is one of the best times ever to be a buyer. There are certainly bargains to be had at certain properties. Your Realtor can root them out.
And even where prices are holding, now might be the time. Otherwise in 5 years you will walk into my open house and say, "Lee, I remember back in '09 when I could have picked up this oceanfront 2 bedroom unit for under a million dollars."
There's that rearview mirror again.
A word to Sellers
People are still buying. So if you are selling now you have to be smart about pricing.
If you are in the first group of properties I described, the ones where buyers are likely to find bargains, be strategic. Prices are declining, so pricing at the top or above what condos are selling for means you are going to continue the pride of condominium ownership on Maui. And worse, if you need to sell you will be doing what we call chasing the market down. You will be reducing the price over and over but you will always be just behind the price point at which your condo will sell. Listen to your Realtor and get ahead of the curve.
If you are an owner in the second group of condos I described and you want to sell don't get greedy or you too will continue to experience the pride of Maui condo ownership. Sooner or later people will pay for quality, but in this market they are deathly afraid of overpaying. Price your condo fairly, in line with the market and look for offers. If you are not getting showings or offers in a few weeks, consider a price adjustment.
Complexes to watch in 2009
Kaanapali Shores - If you are an investor, Kaanapali Shores continues to deliver high occupancy rates. And with the mandated Resort Quest renovations some disgruntled owners are wanting out and we are seeing some bargains.
Honua Kai - The first of the 2 towers is finished, and buyers are closing on their units. However, some of the closings are being delayed as buyers scramble to find financing in this post-subprime era. The developer may get some of these pre-sold units back.
Kapalua - Occupancy is down and pressure to renovate is heavier than ever. Some of the old timers are mad as hell and they're not going to take it anymore. Who can blame them? Big changes create big opportunities and Kapalua is a bargain right now.
Hoolei - This complex is new and had several closings last year. A lot of buyers wanted to get out of the deal but couldn't. Look for bargains in here from frustrated owners.
Opukea - This is a new complex still being sold by the developer. Developers need cash flow, so watch for bargains and incentives at this complex.
To read the full market report of the Maui Real Estate Advisor 2008 wrap up go to www.MauiRealEstateAdvisor.tv. For more information send an email with your request to lee@alohapotts.com or, visit our website at www.alohapotts.com .
Comments(0)