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Maui Real Estate Market Report October 2024: Increased Activity and Apartment Zoned STR Price Drops Heading Into the Election
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Over the last month the Maui real estate market has seen a small increase in sales activity from the previous months with an increase in our number of pending sales and a few major closings in the ultra-luxury sector, a sector that had been very quiet for the first half of the year. This is attributable to cooling interest rates as well as renewed optimism about the post-fire future of the island.
Along with an increase in pending sales, notable price drops, upwards of 30%, have been happening in the apartment zoned STR market that continues to suffer from the purgatory created by the Mayor's illegal and disastrous proposal to ban STR's in the apartment districts.
While inventory is sky-high in this category, many investors have shifted focus to only hotel-zoned STR's as the less risk-adverse buyers have been taking advantage of this unique opportunity to get such a huge discount in the apartment districts. The rest of the market has been holding steady on pricing and hasn't been noticeably impacted by the proposal.
I have recently represented two sellers in apartment zoned STR's, in Wailea and Kapalua. Both sellers found buyers within 3 months of being on the market, however they had to lower their prices well below what we would have called market value prior to the May 2nd proposed ban announcement. Given that a recent Maui News poll showed that more than 75% of Maui residents oppose the ban, there is still optimism that the unpopular and unconstitutional proposal will fail.
Buyer Representation Agreements Now in Practice
Another change since my last market report has been the adoption of the buyer representation agreements. As a result of the recent NAR settlement, buyers and buyer agents are now required to have a buyer representation agreement signed before touring a property.
The agreement document itself isn't new, just the requirement to have it signed prior to showing property. It hasn't had a negative impact on the process and actually provides an extra layer of security for both buyers and real estate professionals. To learn more about how I'm using the agreement and working with my clients, read my full article on working with a buyer's agent here.
Is It a Good Time to Buy Property in Maui?
This is the most loaded question I ever get asked. As a real estate agent, the answer people always expect us to say is simply and emphatically, yes. Maui real estate has always outperformed. However, even in hot market or a slower market, there are a lot of nuances to a correct answer. Generally speaking, looking at the market, its a better time to be a buyer than it has been in years from several perspectives.
We are in a buyer's market. This doesn't mean that in certain niche complexes and neighborhoods that buyers can negotiate prices lower, but overall we have a very high level of condo inventory, specifically in the apartment zoned STR category. Maui also has more single family home inventory than we have had in years also. So, from an option perspective, its a great time to be a buyer.
We're now floating in the low 6% range on mortgage rates with a lower average than we have seen in the last two years. With the most recent jobs report, its unlikely we will see that second rate cut in 2024, but most experts agree we are still going to be floating down for the next few years and lenders are offering free refinancing as rates go lower. From a rate perspective, yes its a better time to be a buyer.
For buyers willing to assume some risk, there are amazing opportunities to be had in the STR market. All we can do is use the available information to calculate the risk and make informed decisions. In July, the Planning Commission indicated that it would recommend that the County Council allow apartment zoned STR's in resort districts including Wailea, Kapalua, and Ka'anapali to rezone to hotel.
Assuming the ban passes all of its obstacles to becoming law, it is now less likely to include those areas, and that makes sense as these are the absolute worst options for affordable housing as they have the highest HOA's and carrying costs. We have been seeing more activity in those zones after the Planning Commission meeting.
Browse Condos For Sale Around Maui
Is It a Good Time to Sell on Maui?
This one is a little tricky. It is not a good time to be a seller of an apartment zoned STR unless you have owned for more than 5 years and really need to sell. I have consulted many owners over the last few months and have even encourage many not sell until the dust has settled on the whole ban proposal.
The apartment zoned STR market is flooded and even with reduced prices, they are not moving because of the fear the mayor has stoked. I encourage each and every owner and person who cares about Maui to fight the proposal through all means including writing the County Council and joining the Maui Vacation Rental Alliance for a potential lawsuit if the County passes it.
For single family homes, hotel-zoned condos, and the rest of the market, its a great time to get ready to sell if you're considering. By that, I mean we are coming into the winter months that have historically been our best season for sales. The market is already showing signs of improvement and tourism pre-bookings look much better for this winter which will stimulate more buying.
To fully capture that market, listing around the end of November/beginning of December will give you the best period of time for activity. By planning now, we would be able to address any work the home may need and develop a comprehensive marketing strategy to capture its highest and best price. Learn more about my selling process here.
Browse New Listings on Maui
Maui Real Estate Market By The Numbers
Get In Touch With Evan!
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Evan Harlow is an award-winning Realtor on Maui ranking in the top 1% of Coldwell Banker agents worldwide. Evan has the expertise, experience, and work ethic to help you achieve your real estate buying and selling goals. We promise exceptional service and support from the beginning of the process through closing and beyond. See what our clients are saying on Google.
Previous Maui Market Report - August 2024: Bad Politics and High Interests Rates Make A Cold Summer For the Maui Real Estate Market
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Since the announcement of the proposed short term rental condo ban in the apartment districts on Maui on May 2nd, the Maui real estate market has been reeling from the potential impact the ban would have on values. In the last three months, a veritable tidal wave of condo inventory has hit the market in the apartment zoned short term rentable complexes amid the uncertainty of the possibility of the ban happening.
You can read more about the current status and legal challenges of the proposed ban here, but for the purposes of this market report, I’ll stick to the ramifications its having on the current market that for the first time in a long time favors buyers.
A Buyer's Market in Full Swing
In my last market report back in May, the market was shifting from a neutral market to a buyer's market and now we are definitely in a buyer's market. The condo market isn’t the only market that has slowed down considerably, the single family market is also showing the effects of the current interest rate cycle.
While mortgage rates have dropped in the last week to their lowest level in over a year and appear to be headed lower, single family homes have been taking longer to sell and buyers have been able to negotiate discounts from listing prices more often than not.
The only buyers in the short term rental condo market in the apartment districts are those who are hunting for a deal and many are finding them. Many sellers are concerned about the long term impacts the ban will have on their ability to carry their units over time and are having to drop prices dramatically to secure a contract or face sitting on the market indefinitely.
Other long term rental condo complexes are also facing challenges finding buyers as the HOA costs have increased significantly due to rising insurance costs and being required to carry 100% rebuild cost on their policies. It's important to work with an expert buyer's agent on Maui when buying a home or condo due to the evolving costs and nuances of thee market.
Micro Markets Around Maui
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If you have read my previous market reports or are very familiar with the Maui market you'll know that Maui has many micro markets and even though we are a small island, every area of the island is its own market in many ways.
Looking Upcountry or in Haiku, you wouldn't notice too many changes, its still relatively low in inventory and home sales are pretty normal. Prices are on a gentle upwards trajectory. If you're looking for a single family home in Wailuku or Kahului it can still be challenging and is still more of a seller's market with several homes going over asking in certain circumstances.
Browse Condos For Sale Around Maui
However, a majority of our transactions take place in South Maui and West Maui where the larger supply of second homes and investment condos are. The second home market is still moving fairly consistently, but there is a little more inventory than we have been used and buyers are being much more selective. In the fire affected areas of West Maui there is still some hesitation for many second home buyers until the future of Lahaina becomes more clear.
Hotel zoned short term rental condos around Maui are still in a neutral level of inventory with stable pricing, but the demand has softened somewhat and that has created opportunities for some buyers to find discounts in that market. In contrast, the apartment zoned short term rentals are abundant on the market and only selling for 25-40% below their pre-STR ban proposal prices.
The Good News About The Market
As we come to the 1 year anniversary of the tragic fires, some good news coming from Lahaina is that the Army Corps of Engineers and the hundreds of workers have almost completely cleared all of the residential lots and will soon be able to start rebuilding.
Once all of the residential lots are cleared in the next month, all of the commercial lots are slated to be cleared by the end of the year. It does sound like estimates to seeing the completed reinvention and rebuilding of Lahaina are closer to 4/5 years rather than the 10 years it originally seemed like. It's been a tough year for everyone of Maui and for everyone who loves Lahaina, but its a welcome sight to see the progress that is being made with the recovery and with finding housing for the survivors.
The other good news for the market is that we have seemingly passed the peak of the high interest rate cycle and mortgage rates are falling. This is already having a positive impact on activity in just the last week since they began to go lower. It still seems like we will be in this market cycle likely until the end of the year and for buyers, its an opportune time to make a move.
The Best Things To Do on Maui By Area
I Love Questions About The Market
If you have any questions about the Maui real estate market, I’d be happy to answer them for you. Feel free to give me a call at 808-214-4799 or shoot me a message through the form below.
Get In Touch With Evan!
Evan Harlow is an award-winning Realtor on Maui ranking in the top 1% of Coldwell Banker agents worldwide. Evan has the expertise, experience, and work ethic to help you achieve your real estate buying and selling goals. We promise exceptional service and support from the beginning of the process through closing and beyond. See what our clients are saying on Google.
Previous Maui Real Estate Market Report From May 2024
Since my last Maui real estate market report in Q4 of 2023 a LOT has happened. The last 4-5 months have been packed full of market impacting events. Many changing variables at the local and national level have contributed to the current market conditions that favor buyers more now than they have in a very long time. I’ll get started with what’s been going on locally.
May 4th Update: Maui County Seeks To Repeal Minatoya Rights to Apartment-Zoned Short-Term Rentals
Protesters and Hotels Force The Hand of The Mayor to Try to Repeal Property Rights
I originally wrote the rest of this market report about a week prior to the news that Maui County will seek to ban apartment zoned short term rental condos on Maui on the Minatoya List, a law that secured rights for owners of certain apartment-zoned complexes to rent short-term. Almost every single one of these complexes had been built with the purpose of renting short term in mind. They are not built and maintained for long term living.
This is undoubtedly sending shockwaves through the island and real estate market right now and it is imperative that owners of these units that are being threatened submit testimony to the county to protect their property rights. Most importantly make your concerns known loud and clear to the Maui County Planning Department and send them an email at planning@mauicounty.gov or call them at 808-270-7735. We will need to work very hard to not only ensure property rights are protected on Maui, but to help Maui avoid a broader disaster that will harm local people irreparably.
Repealing the rights of these short-term rental property owners will unfortunately not produce the desired result of immediately producing more affordable housing. There are 108 condos currently for sale on the market that are not short-term rentable with average days on the market of 70 days. We are not experiencing a shortage of inventory in housing, we are experiencing the same affordability issues that exist across the US.
Our short-term rental condo owners have suffered with all of us after the Lahaina fires, many immediately opening their units up for displaced victims, signing up for the FEMA program, and donating millions of dollars in cash and supplies while also donating much of their time to help in the aftermath.
Even if 1,000 of these 7,000 units became available for sale at half their current value as a short-term rental, they would still not be affordable for the average household on Maui that has a median combined income of 95,000/year. Condo ownership has become even more expensive and most of these condos that are being threatened have maintenance fees over 1,000/month due to increasing insurance costs, common area maintenance, and building reserves. This could also have a negative affect on property values for all owners on Maui, taking away hard-earned equity from tens of thousands of other residents living and working on Maui.
Stealing property rights from these owners will also produce approximately 30M less per year just in property tax revenue for the county and countless other millions annually in associated losses to tourism revenue and taxes. Building more affordable and workforce housing with the tax proceeds within our existing property rights is the pragmatic solution.
At the moment, these A1 and A2 zoned units still have the right to rent short term, and not until the county council approves the bill that the mayor has asked the planning commission to prepare will things potentially change. Even if the bill does pass the council, a class action lawsuit will ultimately follow. The mayor, a former judge, says he expects this and knows that the courts will be the final decision-makers.
In the meantime, we will have to navigate the sales of A1 and A2 zoned STR properties in a new way and there will certainly be a negative impact on current value with the possibility of a ban looming. Hotel-zoned properties have not been targeted and are not included in the discussion. Please feel free to reach out with any questions.
The Minatoya List
Local Real Estate Market Factors on Maui
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The impact of the Lahaina fires continue to unravel in the market here on Maui. Fortunately, it sounds like the FEMA program that enlisted thousands of property owners to rent their homes to displaced fire victims through FEMA has been a huge success.
Both the state and Maui County have indicated that they will be able to move all of the remaining fire victims out of the Ka’anapali hotels and into these properties by June. This is welcome relief for these individuals and families who have been living in a lot of uncertainty while having to go back and forth between rooms at the hotels. This will also be a boost for the West Maui economy as tourists resume coming to these hotels and properties.
Early in the FEMA enlistment program the Governor threatened a ‘moratorium’ on short term rentals on Maui if they were unable to secure enough rentals. Almost like an airline threatening to cancel an overbooked flight if 5 passengers don’t take the credit and get on the next flight.
This however proved to be unnecessary, but it did provide some uneasiness amongst STR owners and anyone in the tourism business as that could have a disastrous effect on our local economy. I had many conversations with a lot of my clients about this and from the beginning it seemed like political posturing and it was.
These short term rental condos are mainly 1bd and 2bd floor plans and were built for transient accommodations. They cannot comfortably become permanent housing for families and with the increases in insurance, those families cannot also afford the HOA’s, which include complex management, landscaping, amenities, etc. The solution isn’t to cause damage to our second home owners and investors who pay the majority of the property tax collected by Maui county and who also have shown incredible kindness through charitable donations.
We need to build more multi-family complexes and affordable residential neighborhoods, something the state and county has previously been at fault for intentionally delaying and purposefully making difficult for developers. Now, they will seek to expedite the permitting and approval processes to improve conditions for developers.
Legislation to Give Counties More Latitude With STR's
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A bill is circulating in the senate that will give individual counties more latitude in their approach to short term rental zoning and restrictions. Interestingly, the counties already have latitude and flexibility in this department. Two years ago Maui County decided to put a moratorium on the construction of any new short term rentable condo complexes with Bill 159. This was just Maui County. If you’ve traveled around Hawaii, you’ll see a different climate with STR’s on every island.
The Big Island still allows short term rentals of single family properties, on Maui that was rolled back and only certain properties that went through a lengthy 5 year approval process or were grandfathered in can rent short term. The right also doesn’t transfer at sale on Maui. So, this bill isn’t particularly concerning for us here on Maui. While it is important to acknowledge we have an exacerbated housing crisis on Maui, doing anything with the rights of short term rental condo owners isn’t the silver bullet a small group is hoping it would be. Look, if it were, I would be behind it too, it just doesn't fix anything when you look at the domino effect.
In fact, these short term rental owners and rentals are contributing big time, through the taxes they pay as well as the philanthropic contributions they have been making, as we heal and recover economically. Unfortunately, there is no silver bullet to fix our housing crisis as we are also subject to the same broader economic factors that the rest of the country is facing contributing to the broader housing crisis, we just need to build as efficiently and economically as possible with local families in mind.
National Real Estate Market Factors
Many in the real estate and lending communities were celebrating back in December and January when it appeared as if we may see 3-6 rate cuts this year. After last weeks inflation numbers and consumer spending reports, it looks like we may not see any rate cuts until 2025. With this unexpected economic strength in the face of continued inflation we should settle into the idea that we will be in the 6-7% range for the foreseeable future.
Throughout the higher interest rate period, home prices have still been appreciating reliably. This is good news for both buyers and owners. The higher rates haven't been a big problem for buyers on Maui over the past few months either, it has however decreased the total pool of buyers, but it has also given them some power.
What’s Changed in The Maui Real Estate Market
Over the last few months the market has noticeably become a buyer’s market and despite the interest rates, buyers have been very active. Inventory is up significantly to about 4 months supply, up from 1.4 months supply at height of the pandemic frenzy, right before interest rates went back up in early 2022. In general, this has not negatively affected prices, there were some purchases made in 2022 that exceeded the current market at that time and some sellers are seeing that. The median sales price of single family homes is up 9.5% year over year to 1.3M. The reported median sales price of a condo is up 62.9%, but don’t freak out just yet.
This statistic is an anomaly because the brand new Wailea Hills La’i Loa complex had many of its units finish construction and are priced in the 2-3M range. They should not be included in the reporting, but they are. So, don’t read too much into that statistic. The one we should read into is that there are 100% more condos for sale in March of 2024 compared to March of 2023. This is great news for buyers, you now have options! There are now 6.4 months supply of inventory in the condo market, officially broaching the 6 month number to be a strong buyer’s market.
What I’m Telling My Clients About The Market
Here are the current takeaways from the Maui real estate market data and what I’m seeing in the market. Obviously, the sun is shining on buyers more than sellers right now. Sellers have been needing to be more negotiable on price, they have been accommodating repair requests, and are still cashing in on a great deal of appreciation. It’s really a win-win situation in the market at the moment. Prices haven’t stopped appreciating, on most properties, but buyers don't have to chase them the way they were.
This isn’t true for every property though, the prime properties in prime condition will still command a premium and not all of them will budge, but for our average buyer, you’re in the driver’s seat for the most part. The overall climate is improving on Maui. There is some light at the end of the tunnel for Lahaina with the round the clock debris removal and many lots already being cleared for rebuilding. FEMA, the State of Hawaii, and the County of Maui are working together and progress is being made in many departments. Tourism is rebounding and healing is happening. Thank you for your continued support for our beautiful island and if you ever have any questions about the market or anything Maui, I’m here to help.
Get In Touch With Evan!
Evan Harlow is an award-winning Realtor on Maui ranking in the top 1% of Coldwell Banker agents worldwide. Evan has the expertise, experience, and work ethic to help you achieve your real estate buying and selling goals. We promise exceptional service and support from the beginning of the process through closing and beyond. See what our clients are saying on Google.
Posted by Evan Harlow R(S) 82003 on
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