Realtor Lee Potts Provides Insight on Current Maui Market
Maui Now sat down with realtor Lee Potts of Aloha Group Maui and KW Island Living to discuss the current Maui real estate market. Lee tells us if it’s currently a buyers or sellers market, if it’s better to buy or rent and if condos are really a more affordable option. Below is a brief summary of the video.
Maui Now: Is the current Maui market a buyers or sellers market?
Lee Potts: The first thing to know is the difference between a buyers market and a sellers market, and it’s really as simple as supply and demand. If we just look at the residential market the median selling price was $700,000 in May. Median means that half the homes that sold were priced below $700K and half the homes were priced above $700K.
In real estate we refer to the number of homes on the market as the inventory. If we look at that number of sales and the inventory, there were 49 sales below $700K and currently there are 129 homes for sale priced below $700K, so in terms of inventory, if there’s an abundance of buyers and not that many homes for sale then it’s a sellers market.
If you go to the other side, homes that are for sale over $700K, there were 48 sales last month and there’s 405 homes for sale above $700K. That’s enough inventory to last for over eight and a half months, that makes it more of a buyers market. If you jump up a little higher, which is not uncommon here on Maui, to $1.5 million there were only 15 sales but we have 215 homes for sale so that very much is a buyers market above $1.5 million.
MN: Do you see that switching anytime in the near future?
LP: It’s hard to imagine that can sustain itself but right now I still see prices rising and I don’t see any slow down on that. I still see inventory declining, we’re still seeing multiple offers in some cases and on Maui it’s very area centric so the west side is different than the south side is different from central is different from Upcountry so we would all like to see more inventory especially below that $700K price point.
MN: In this current market (where the median home price is at $700K and the median condo price is sitting under half a million dollars) is it more ideal to take the more affordable option and buy a condo and pay the mortgage and HOA fees? Or do you just buy the house and pay the mortgage?
LP: That’s a good question and I think it’s a personal question for the buyer because if it’s just about numbers, which it’s never just about the numbers, but buyers that look at the HOA fees being high and a house being a better option need to understand that all the HOA fees include the maintenance of the exterior of that building, all of the grounds, everything that has to be done in and around that property.
If you were to buy a house and if every month you were to set aside money to replace the roof in 20 years, set aside money to have the house painted when it needs to be painted, replace the plumbing when it needs to be replaced, factor in all of your maintenance costs, all of your interior maintenance and so on and so forth, would the number really be that different? I think it really comes down to a lifestyle choice, what kind of property do you need to fit your lifestyle, so do you need space, do you want privacy, are you good with having neighbors next door? I think that’s what it really comes down to be.
MN: Is it better to buy or continue renting for Maui residents right now?
LP: I have a bias that it’s better to buy, but I do have a couple of concrete examples. We had a condo for sale, it was a studio condo in a complex and I had a young couple walk in and we were just chatting. They were talking about how much rent they were paying in the same building for the same footprint and I just did some quick calculations and it turned out that what they would be paying on a mortgage (and this was with 5% down) with property tax and maintenance fees and all their other expenses was less than the rent they were paying at the time. They left and came back within a half hour and I just feel so good they have have their own place and she said, “this is our dream to own a property on Maui.”
I also did some quick calculations on a neighborhood here in West Maui because we’ve sold a few homes up there in the last year and we know what the rental rates are and if you were to buy a home up there and put 20% down, your monthly nut with property taxes and the association fee there would be $4,200 – $4,300 a month. The homes that are similar that are renting up there are renting between $4,000 and $4,500 a month. So is it better to own the home and earn equity on the home and have the deductability of your mortgage payments, is it better to have that or keep paying rent?
MN: Is 20% down always a requirement?
LP: So, 20% down is the common down payment for conventional loans but there are a lot of loan programs right now there are 0% down loan programs, 3.5%, 5%, there are a wide variety of loan options and most loan officers can talk somebody through that and most realors can help someone figure out what the property qualifies for because the property has to qualify for certain types of loan. I think the main thing is if someone really wants to buy a home they need to connect with a good realtor, a good loan officer, someone that’s going to work for them, and try to figure it out because it’s mostly figure outable.