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COVID-19 taking a toll on island real estate market

Condo inventories growing, sales down

This two-bedroom, three-bath home on Kumulani Drive in Maui Meadows is listed for $1.35 million. This photo was taken earlier this month. COVID-19 and its economic impacts are taking its toll on the local real estate market. The Maui News / MATTHEW THAYER photo

Some patterns are emerging in the Maui County real estate market since COVID-19 took hold in March with growing condo and declining home inventories, fewer closed sales and fluctuating median sales prices, Realtors Association of Maui statistics for the January-to-September period show.

The inventory of condos grew by a third from March (569 units) to September (754). Looking at the data year over year, inventory logged double-digit monthly increases from June to September — 21 percent in June, 30 percent in July, 56 percent in August and 51 percent in September.

Realtor Joseph Hogin, RAM president, said Wednesday that the lack of tourism is affecting the condo market on Maui. Most of the “vacation condos” that are hitting the market are not being rented and the lack of income for those owners are causing them to sell, he said.

For homes, the inventory has gone the other way with a 30 percent reduction from March (479 units) to September (337) and double-digit monthly declines year over year from July to September — 11 percent in July, 24 percent in August and 27 percent in September.

Closed sales have fallen for both condos and homes since March for the most part, though more severely for condos. The number of condo sales fell 47 percent from March (161 sales) to September (85). During that same period, most months had double-digit declines year over year — topped by May (63 percent), June (46 percent) and July (44 percent).

In September, the condo market saw a 29 percent decline, compared to the same month in 2019.

The number of closed sales for homes in September (107 sales) was 10 percent lower than September 2019. Still, that number of sales was the highest since last September.

Since March, the number of home sales, year over year, has fluctuated from a 69 percent decline in May (42 sales) to an 8 percent gain (84) in April.

“COVID has caused lots of issues regarding the lack of sales,” said Hogin. “People on the island are not working or working part-time. When a home comes on the market at a decent price, local families cannot make an offer due to employment and then the home gets snatched up by a cash buyer. This is no fault of the seller or the real estate agents, it’s simply bad timing.”

Prices for a home are beyond the means of most working class residents — with the median price of a home at $785,000 in September, up 9 percent from a year ago, and of a condo at $495,000, which was actually down 8.3 percent. (The median is the middle number in a series and better reflects real estate sales that could be skewed by a few large sales.)

The affordability index for homes in September was 49, which meant that the median household income for the county is only 49 percent of what is necessary to qualify for a median priced home at prevailing interest rates.

The index was closer to affordability for condos at 77.

The coronavirus outbreak has just made things worse for local buyers.

“If your job was affected by COVID and you have been laid off of work, no lender is gonna give you a loan,” Hogin said. “I was working with five buyers on the island and then COVID hit and the dream of homeownership went down the drain for them.

“Hopefully, when our government opens the island back and things return back to normal we can focus on homeownership for our families on the island.”

By region, the largest number of home sales in September was in Wailuku, 27, with a median price of $719,000; in Kihei, 14, $940,000; and in Kahului, 13, $675,000. There was one sale in Kapalua for $15.5 million.

For condos, Kihei, usual leader in sales, logged 24 sales for a median price of $458,750 in September. The number of sales were down from the 32 in August and 39 a year earlier.

Napili/Kahana/Honokowai had 17 sales, for a median price of $440,000, and Wailuku and Kaanapali had 10 sales each, for a median price of $337,500 and $942,500 respectively.

For the first nine months of the year, the condo and single-family home market were aligned — closed sales down and median prices up.

For condos, the number of closed sales was down 24 percent from 1,209 to 915. The median price rose 8 percent to $560,000.

For homes, the number of closed sales was down 11 percent to 751 with the median price rising 4 percent to $775,000.

* Lee Imada can be reached at leeimada@mauinews.com.

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