Last month, I posted on some interesting happenings in the Maui Condo market. The September median of $388,500 was significantly lower than the August median of $625,000. Our October Maui Real Estate Statistics proved September wasn't an anomaly when the median came in at $402,500. So what gives? Has the bottom dropped out? Are we seeing plumeting prices? I will try to answer these questions and provide a few other observations on last month's condo sales below.
It is clear that we are seeing price adjustments throughout the condo market. That being said, the big drop off in median condo prices is not a reflection of the actual changes in value in the Maui condos. Condos did not depreciate 38% between August and September. In my post on September condo stats, I argued that the big drop in medians may be a sign of shifting market activity. The luxury condo market on Maui remained resilient throughout 2007 and the first half of 2008. The volume of activity at the high end was pushing up the median prices while most of the condo market were seeing modest downward price adjustment. This appears to have shifted in the last couple of months with volume of sales dipping sharply in the high end and volume of sales increasing on the low end of the market. This is the cause of the big drop in median prices more so than depreciation.
The numbers provide clear support to a shift in market activity.I took a look at the percentage of the total monthly sales volume that was occuring at the high end of the market and what percent was occuring at the low end of the market. I did this for the months of January, August and October. I designated prices of >$800,000 as the high end and <$300,000 as the low end of the market. Here is how they stacked up.
It is likely that the cooling in the high end market, may have started even earlier than the numbers would indicate. Our August numbers were bolstered by a significant number of new project closes. Just over 27% of the total sales volume for October were high end new project closes. Most of these were based on contracts that were drafted a couple of years back.
In addition to the trend in median prices, we are seeing a clear trend in diminished volume of sales. We have been under 60 sales per month since June with one exception. Fall is traditionally our slowest time of year for sales volume. It will be intereting to see if we have a jump towards the start of 2009. The winter months traditionally represent peak buyer season as we see more off island visitors.
With price adjustments and less competition, there are some opportunities out there for buyers. I have talked to a number of buyers who are waiting to see greater decreases on list prices. That being said, some buyers are being rewarded by making lower offers. List prices aren't always the best indication of seller motivation. Browsing through October's sales, I noted sales prices 14%, 17% and 19% below list price. The highest priced sale for the month was a beautiful luxury condo at Wailea Beach Villas that closed at $7,800,000. It was a wopping 28% below list price. Another savy buyer bought three condos as a bulk sale at the Kai Makani development in Kihei. One of the three units closed for 34% below list price. This supports the old real estate adage that it never hurts to make offers.
Contact me for additional information on the Maui Condo market and Maui Condos for Sale. You can browse through the current Maui MLS listings for Condos or do a custom search or Maui inventory.
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