RAM Reports Good News for Real Estate Buyers
The Realtors Association of Maui has released its compilation of statistics for August 2105.
“Sales reflect the cyclical nature of our market,” said RAM President Marion Haller, R(B) for Fine Island Properties. “Our strongest selling season is winter/spring, so the most closings are seen in spring/summer.
“Our closings were quite robust in July, with 128 being the highest number in a single month in seven years,” said Haller, “and even August was strong, with 96 closings. But this fluctuation is normal; one month does not indicate a trend. We have to look at these numbers over time, and over time, we can say that we have a rising and healthy market right now—particularly under $1million. Above $1 million is a much slower and still wavering market.”
Regarding median home prices, Haller said, “As to the average cost of a single-family home at $550,000 for August vs. the $650,000 two months earlier, again, the market fluctuates and a single month does not determine a trend. For instance, we see that last year the average cost of a single-family residence went above $600,000 just once, yet this year, in just eight months, we have gone over $600,000 for the median price of a single-family residence three times already. So single-family residence price points are definitely rising.”
Haller concluded, “The good news is that with half of the sales being below the current price point of $550,000 for single-family residences and $355,000 for condos, we have sales at a more ‘affordable’ level then when the price points are higher. That’s good news for our local buyers.”
Residential and condo unit sales numbers bounced up and down the last few months, with condo inventory decreasing in August. Although Canadian investors have been big participants in Maui’s real estate market, the current Canadian dollar exchange rate (.76 $US ) may motivate Canadian investors to sell, rather than buy.
Last year’s year-to-date median and average prices were rising across the residential, condo and vacant land markets despite lower number of YTD unit sales. The first half of 2015 broke from that trend; however that may catch up as we proceed through the rest of the year.
Showings and sales have increased and “well-priced” properties are attracting multiple offer, making for a quick sale, the RAM report said.
REO (foreclosures) and short sales are dwindling, with any “hidden inventory” (or overhang) backlog slowly trickling onto the market.
Mortgage interest rates are inching up slightly, which may help motivate would-be buyers to go ahead and buy if they can qualify.
“Cash is king” when making an offer, RAM says. For several months, approximately 40% of all sales were cash. Savvy investors are buying with cash, giving them a strong negotiating position, no financing/appraisal hassles and a quick closing.
While general US economic forecast looks cautiously hopeful, current world and US events will have ripple effects on cost of living, consumer confidence, and financial and real estate markets.
Rising sales prices are causing some homeowners to become sellers.
RAM RECOMMENDATIONS FOR SELLERS
Sharpen your pencil, talk to your CPA and your Realtor to explore the hidden benefits or consequences. Make no assumptions that will sting later. To be successful, sellers need to beat competing properties with better property condition, realistic pricing, good marketing and flexible, creative terms.
Days-on-market figures show that properties priced right will sell in a reasonable timeframe, often with multiple offers. “Priced right” is still the determining factor.
The best deals are selling, while significantly over-priced listings remain unsold.
Pro-active sellers are getting their properties appraised, inspected and surveyed in advance to encourage realistic offers from knowledgeable buyers. This can prevent unanticipated escrow fallout or buyers decreasing an offer amount during the transaction when previously unknown facts come to light.
RAM RECOMMENDATIONS FOR BUYERS
Low interest rates prevail; however, they have started to nudge up and are predicted to rise later in 2015. Buyers should get pre-approved in order to shop with confidence, with fewer last-minute disappointments due to non-funding loans).
Short sales and foreclosures are still in the marketplace, yet they can be less of a bargain than they seem, requiring buyers to leap more hurdles and taking more time to close—often 4 to 12 months—if at all.
Buyers should bee prepared, and be realistic. Lenders are now more stringent about loan approval requirements compared to 2004–08.
RAM RECOMMENDATIONS FOR FIRST-TIME BUYERS
The window of opportunity is quickly closing for first-time homebuyers.
Many programs are available. Attend a first-time homehuyers workshop, get familiar with the process, get qualified/approved, and do your homework to get your own home.
Many current owners never thought they would be able to own until they attended a workshop and discovered they could own a home.
The low point in the market has passed, and opportunities are fading quickly.
If you can’t buy now, start saving your down payment for the next market cycle.
MAUI STATISTICS OVERVIEW FOR AUGUST 2015
Find the full Maui Statistical Report available at the front page of RAM’s website.
Sales unit volume Residential sales declined to 96 homes sold while Condominium sales rose slightly to 99 units sold. Only four land lots sold in August. (See page 4 of the report for more information.)
Median sales prices The residential median price decreased to $550,000 and the condo median price decreased to $355,000. Land median price increased to $347,500. (See page 5 of the report for more information.)
Days on market for residential homes was 119; condos, 127 DOM; land, 132.
These are the average DOMs for properties that sold. If predominantly old inventory sells, it will move this indicator upward, and vice versa. RAM’s DOM figures are calculated from list date to closing date [not contract date], including approximately 60 days of escrow time.) (See page 6 of the report for more information.)
Year-to-date sales numbers compare January through August 2015 to the same time last year. Early 2014 monthly numbers were quite strong, making early 2015 seem “a bit pale” in comparison. Anticipate that they will even out as we progress through the year. Shorter timeframe (monthly) views do not necessarily reflect the longer timeframe trends. Big percentage changes may be misleading or misunderstood so use caution. (See pages 10–14 of the report for more information.) For a more comprehensive view, compare 2014’s year-end (Dec. 2014) figures.
YTD residential unit sales increased (720 homes sold /+94 units / +15% change YTD), average sold price = $913,538 (-1% change YTD), median price = $590,190 (+4% change YTD) and total dollar volume sold = $657,747,643 (+14%YTD).
YTD condo unit sales decreased (807 units s/old / -28 units / -3%YTD), average sold price = $644,900 (-2%YTD), median price = $407,500 (-2%YTD). Total Condo dollar volume sold = $520,434,623 (-5% YTD).
Land lot sales declined (96 lots / -23 units / -19% YTD change), average sold price = $767,148 (+15%), median price = $487,500 (-5%), Total dollar volume = $73,646,241 (-7% YTD). NOTE: Land Lot sales are such a small sampling that statistics in this property class are not necessarily reliable indicators.
Total sales for immediate past 12 months: Residential was 1,038 (with 11.5% being REO or short sales), condo was 1,175 (7.2% REO or SS), land was 144 (4.2% REO or short sales). NOTE: 37.3% of these sales in the last 12 months have been cash transactions.
The current absorption rate base on this month’s active/pending-continue to show/contingent status inventory divided by August sales: Residential was seven months, condo was 9.3 months, land was 95 months of inventory.
For absorption rate enthusiasts who calculate only pure “active,” (no pending/contingent) divided by August sales: residential 516 “active”/96 sold was 5.4 months; condo 772 / 99 sold was 7.8 months; land 353 / 4 sold was 88 months of inventory.
RAM Disclaimer: Zooming in on the figures of a specific geographic area or property type may lead to different conclusions that looking at the overall view. Maui’s market place is much smaller than O‘ahu’s, and a few high or low sales have a greater effect on the statistical numbers without necessarily indicating a big market swing one way or another.