Lee Potts

Distressed and bank owned properties take center stage in Maui
There are some bargains, but you need to know what you're getting into

Na Hale O Maui is a community land trust here that carefully tracks distressed properties in Maui. Part of their mission is to acquire foreclosures and convert them to affordable housing. As I understand it, their charter allows them to buy properties once they are foreclosed, but not before, as in a short sale.

According to John Anderson, executive director, there were 483 foreclosures pending on September 1. That number has been increasing at a rapid clip since April when there were only 297 pending. According to Anderson, Maui now has one of the highest foreclosure rates in the nation.

Of the 483 headed for foreclosure, only 398 are listed as short sales. Which means the remaining owners who are in default are either trying to work something out with their lender, fighting the foreclosure or hoping it will just go away. For a lot of homeowners the foreclosure process is so stressful, they opt to do nothing rather than to be proactive.

Of the 398 short sales listed, only 60 are noted as pending, meaning under contract. One reason the number may be so low is that many listing agents take the position that the sale isn't pending until the lender gives their approval. Obtaining that approval can take months upon months. So this stat should be taken with a grain of salt.

Bank owned properties are known as REO's (real estate owned). There are 113 such properties in the MLS according to Anderson. 41 of those are listed as pending. The higher percentage of REO's pending compared to short sales is partially explained by fact that buyers and agents are dealing directly with the owner - the bank.

The final stats offered by Anderson are extremely telling and I am asked about this often. The answer is about 40%. The question is, "how much below market are properties selling for?"

According to Anderson, bank owned properties are actually going for 41% less than current assessed value. These properties are having a dramatic affect on the rest of the market here in Maui. That is demonstrated by the fact that the selling price for properties that are not REO's is 37% below their assessed value. For statistical purposes those are pretty much the same number.

Buyers can expect to see more short sales and REO's over the next few months, but do not limit your search for a great value to this group. Why? I just gave one reason; non-distressed properties are going for about the same price as distressed properties.

The most important reason though, is that buying from a private owner will likely get you a better deal than dealing with a bank. A private owner is required to provide you with disclosures about the condition of the property. You can also demand items such as CC&R's, association board minutes and other documents from the owner. And the owner may agree to make certain repairs and even pay for a termite inspection.

Banks won't do any of that. In fact when buying a bank owned property you will likely be required to sign a "bank addendum". This is usually a very one sided, if not outright onerous, document that is designed to protect the bank by rescinding most of your rights.

Maui is on sale right now. If you want a list of short sales and REO's email me and ask for the list. But if you get serious and we show you a property that isn't owned or under a lien by the bank, don't get mad, it's not a trick; it's just a good buy.

Want details? We have details. Also, check the Maui Real Estate Advisor.

www.AlohaPotts.com

Lee@AlohaPotts.com

Homes sales dialed back a bit over the summer
First time buyer credit a bust for single family home sales on Maui

While summer temps heated up on Maui, home sales cooled, dropping back below 60 units per month for both July and August. The 52 units sold in August is about the average for the year so far. If the $8,000 first time buyer credit is helping, we aren't seeing evidence of it in the single family home segment.

That may be because the price of a home on Maui is still out of reach for the majority of first time buyers. At a median price of $500,000, one can argue that in terms of recent history Maui is on sale. However, a mortgage on a half a million dollar home is still going to carry too much of a monthly nut for most young workers like teachers, fireman and hospitality employees.

Area Trends

Over one third of home sales in July and August were in the Central District (Kahului/Wailuku) where the median price for the last 2 months was just under $500,000. Of the 39 sales in the Central District, only one was a short sale and six were bank owned properties. All of the bank owned properties went for near the asking price and one went for more than asking.

As selling prices Upcountry (Pukalani, Kula, Makowao) came down, sales went up. You'd think there was a relationship or something. With a median selling price of $522,000, there are some bargains up there. There were 2 short sales and 3 bank sales Upcountry, which accounted for more than 20% of the homes sold.

Kihei had only 14 sales for the two month span. There were 14 sales in Kihei in June, so that's quite a drop off for the last 2 months.

The median selling price for the 2 months was around $400,000, well below the Maui median and even well below the Central area.

Just like Kihei, the west side, Lahaina/Kaanapali/Kapalua, had 14 sales. Unlike Kihei the median selling price was $700,000 - $200,000 higher than Maui and $300,000 higher than Kihei.

Distressed Properties

Of the homes sold, 12 were bank owned and 9 were listed as short sales. Distressed properties accounted for 19% of total home sales for July and August. That's down from 24% in June.

The bank owned properties are selling near or a little above asking price. There's a reason for that. If the bank prices the property at a bargain price, it goes quickly and at around asking price. If the bank prices the property too high, nothing happens - for a while. Then the bank starts dropping the price. When it gets to the right price point, they get offers and the offers are, once again, near the new asking price.

Nine of the homes sold in the last 2 months were short sales. These also sold at close to asking price, and some higher than asking.

Highs and Lows

The lowest priced home to sell on Maui was in Wailuku. The listing for this house says it has 0 (zero) bedrooms and the agent describes it as "very aged". This charmer sold for $125,000.

The high end homes really took a hit over the last couple of months. The most expensive home in Maui went for $1,155,000. That's not even a luxury home in this neck of the woods.

Potts Picks

This month we looked at dozens of homes before coming up with this house and ohana in Kihei listed for $479,240. It's in a nice central Kihei location. It has 3 bedrooms and 2 baths in its 1,400 square feet. It also has an ohana that could be rented for a little extra income. It is a short sale, MLS 338921.

Our pick for luxury oceanfront living is on the west side. This spectacular 5 bedroom, 6 bath home offers over 5,200 square feet of living area and sits on almost ½ acre on the water. Asking price is $7.9M and it too comes with an ohana. It is MLS number 336534.

For more information send an email with your request to lee@alohapotts.com , or see all of the listings on Maui at www.alohapotts.com .

To see the report for sales of all types of property on Maui visit Maui Real Estate Advisor.

Maui Real Estate Advisor

Market Overview August

Aug Sales Sales Prior Month % Change Sales Prior Year % Change
Homes 52 57 -9% 66 -21%
Condos 62 69 -10% 51 22%
Land 3 12 -75% 6 -50%

Aug Median Price Median Prior Month % Change Median Prior Year % Change
Homes 500,000 532,000 -6% 645,000 -22%
Condos 340,000 350,000 -3% 625,000 -46%
Land 999,990 322,500 210% 422,505 137%

Aug Current Inventory Inventory Last Month % change Months of available inventory
Homes 980 1,012 -3% 17.19
Condos 1,496 1,518 -1% 21.68

Prices fall, sales increase
Do you think there's a connection?

Maui condo prices fell back to earth in late summer. They tumbled back from the over achieving $500,000 + median in June to a mere $350,000 in July and $340,000 August. Unlike June, there wasn't much happening in the high end to help hold up the median this summer.

The lowest median so far this year was in April when it hit $327,000. The median has hit $350,000 twice and $345,000 once. So it seems pretty flat. Is this the bottom? We'll see.

The lower prices may be the reason for the boost in Maui condo sales. After the weak sales numbers in June, the summer offered some better results for sellers. July posted 69 sales with another 62 in August. Those are the second and third highest months this year and well above spring levels.

Seventeen of the 131 condos sold were bank owned with a median price of $150,000. Those served to pull the overall median down. Ten of the sales were short sales.

Short sales and REO's (bank owned) accounted for 21% of sales.

One of those short sales was a Hoolei unit listed for $3,675,000. It sold for $2,100,000.

Area Highlights

There were 55 condos sold in Kihei. That area accounted for 42% of all sales. The area got a boost by closings at the new development, Ke Alii Ocean Villas.

Kihei's wealthier neighbor, Wailea, had 9 sales. However, 6 of them were below $1 million.

The Central District Kahului/Wailuku, which usually has very few sales, had 18.

The west side (Lahaina, Kaanapali, Napili, Kapalua) shows 41 closings. That is bit misleading. The new sales manager at Honua Kai posted a number of sales that had previously closed to our MLS. It's good to have the information finally, but it skews the stats.

Aside from Honua Kai, there were 33 closings with a median price of $425,000. Only one was a short sale and one was bank owned.

Highs and Lows

Harbor Lights accounted for the 6 lowest priced condo sales including the rock bottom winner. The bank owned unit, listed for listed for $39,900, sold for $40,000.

The condo selling with the highest price was at the aforementioned Honua Kai. That went under contract in 2005, so we're not counting it for these purposes.

That takes us down to Wailea Beach Villas, where a nice ocean view 3 bedroom, 3 bath unit went for a cool $2,150,000.

Distressed Property on Maui

21% of the condos sold were either short sales or bank owned properties.
Of the 1,522 condos listed for sale, 175 are short sales and 27 are bank owned.

So, only 13% of the listings are distressed properties but they account for over 18% of the sales. What does that tell us?

If you would like to get a list of current distressed properties or if you would like to know a bit more about how short sales work, send us an email.

Potts' Picks

For the dream view that everyone wants to get in Maui it tough to beat Noelani 215 priced at $499,000. Both the living area and the bedroom face the lanai overlooking a great ocean view, just a few feet from the condo. It is a 1 bedroom, 1 bath unit. Get details from our website by searching for MLS 338499.

For oceanfront luxury it's hard to beat Puamana in Lahaina. In recent years, the oceanfront units there have peaked over $2 million and into the $3 million range. So, finding a 3 bedroom, 2 and a half bath for $1,775,000 can be someone's bargain. You can see it on the website. Search for 331788.

For more information send an email with your request to lee@alohapotts.com or, visit our website at www.alohapotts.com .

Come back for the report on Maui Home Sales Tomorrow

According to D. Leroy Laney of the Hawaii Pacific University we have officially reached the bottom. Thank goodness, I think. Does that mean that buying opportunities have passed, is it a better market for sellers, is employment rebounding NOW. See what professor has to say in the Maui News at http://mauinews.com/page/content.detail/id/523201.html.

Get Maui real estate news at www.AlohaPotts.com.

Still well below normal

The 62 homes sold in June are the most sold in any month this year. Is that good news indicating that sales activity is picking up.? It's actually a bit depressing. You see, there were only 2 months in 2008 that posted fewer than 62 sales. And we all know how bad '08 was.

The median price remained just below $500,000. So most of the homes selling on Maui cost less than most of the condos that sold last month.

With that being the reality, of the 1,015 single family homes for sale on Maui, only 260 are priced at $500,000 or less. 43% of those are distressed. While there are homes in that price range in about every community on Maui, most are in Kihei and the Central District - Kahului/Wailuku.

Area Trends

Roughly one third of June's sales were in the Central District. Kihei had 14 sales and Upcountry had 13. Maui's west side had only 5 sales.

In a bit of a reversal, the median price for homes in the Central District was above the Maui median. Upcountry homes and Kihei homes were both below median.

In Kihei the median selling price was down by 23% so far this year. That looks pretty good compared to Upcountry losses. So far, the median price in Kula is off by 56%.

Distressed Properties

Of the homes sold, 12 were bank owned and 3 were listed as short sales. Distressed properties accounted for 24% of total home sales in June. They were surprisingly evenly distributed: 4 in the Central District, 4 in Kihei and 3 Upcountry.

We are also seeing some limited short sale activity in some of the upper end neighborhoods like Kapalua and Kaanapali. There are even a couple of distressed oceanfront homes on the market.

Highs and Lows

The lowest priced home to sell on Maui in June was a 3 bedroom, 1 bath home in Kihei. It was a bank owned property REO, originally listed for $265,000, but it sold for more at $272,000.

And there is still money out there to buy nice things as someone in Wailea discovered. And sometimes you can even get bargains at the high end. The 5 bedroom, 5 baths, 5,685 square foot ocean front home was listed for $18,500,000, but it sold for a paltry $11,250,000. I have access to another home like this if you have the money and the interest ;>)

Potts Picks

This month we've picked 2 homes that offer great value.

If you are still thinking about $11 million 5 bedroom homes, how about a deal on the Kaanapali Hillside. 30 Kui Place features 5 bedrooms, 3.5 baths and 3,526 square feet of living space. It has ocean views and has been partially renovated. It was originally listed for $1,787,000. It has been reduced to $1,000,000. MLS 332444.

But if you need to be beachfront, there are bargains to be had. This house is on Lahaina's famous Baby Beach. It is a 4 bedroom, 4.5 bath, 2,380 square foot like-new home. It was originally listed for just under $10 million. The price has been reduced to $6,450,000. If you can't quite afford this one, send it to friends with money or hui up with some pals and buy it yourself. It is MLS number 324103.

For more information send an email with your request to lee@alohapotts.com, or see all of the listings on Maui at www.alohapotts.com .