Haʻikū Real Estate Market Update November 2017
Haʻikū is located in Windward Maui along the island’s North Shore. It is a rural community that covers a large geographic area. It runs from sea level up to about 1,400 feet in elevation. Rainfall ranges from 40 inches to over 100 inches annually.
Historically, the area was known primarily for agriculture. Pineapple plantation, tropical flower farms, some small scale ranching and other small farms have been located throughout various areas of Haʻikū. Larger scale pineapple farms are a thing of the past, but there are still are a variety of small farms around the community. Agriculture also has a big impact on the Haʻikū Real Estate market in that the majority of the properties have agricultural zoning. Ag zoning means lower density with lots of two acres or more.
Haʻikū residents are drawn to the area for a variety of reasons. For those whose vision Hawaii as lush foliage and waterfalls, Haʻikū is the most accessible area of the island that fits this climate zone. It is close to the North Shore’s renowned wind and water sports. The world famous big wave surf spot Peʻahi also known as Jaws is located just offshore from the cliffs of Haʻikū. The area is also popular for wellness activities. The rainfall, larger lots, zoning and climate are an attraction for those who want to farm, have a small orchard and, or even a back yard garden. Some are just attracted to the area’s natural beauty and the potential for a quiet lifestyle.
We wanted to check in to see what is happening in the Haʻikū Real Estate Market after ten months of sales in 2017.
Haʻikū 2017 Market Highlights
There have been 75 homes sold in Haʻikū through October 2017. Last year, over the same period of time, there were 56 homes sold, a 28% increase in sales activity.
The median sales price for the homes sold this year is $733,000. The average price for the 75 homes sold is $868,952. By comparison, the median price over the same period of 2016 was $841,500 and the average sales price was $926,075. Surprisingly, that is a 13% decrease in median price and less than a 1% increase in average price. This lower median is a reflection of more sales activity at the bottom of the market. It does not represent a decrease in values.
The highest priced home to sell for the year to date closed for $3,999,900. The 2.189 acre oceanfront property in Huelo consists of a four bedroom, three bath home with 3,609 square feet of living space, and a separate one bedroom, one-bath cottage with 519 square feet of living space.
The property on Door of Faith was the only home in Haʻikū to have closed this year for over $2,000,000. There were 11 total homes that sold for more than $1,000,000.
The lowest priced home sale to close in Haʻikū this year sold for $335,000. The structure on the residential condominum was in very poor condition. A good portion of the value was due to the associated land. It included 2.287 acres of associated land or limited common element.
There were five bank owned homes that sold and three short sales for the year to date. This is an increase over just the one bank owned sale from last year.
Just over 21% of this year’s sales have been for full price or over asking price.
There were 27 parcels of land that sold in Haʻikū as of November 1. The median price for those sales was $410,000, and the average sales price was $508,950. Last year there were 21 land sales over the same period of time with a median price of $535,000 and an average sales price of $865,023. That means a 29% increase in sales for this year compared to last year, a 23% decrease in median price and a 41% decrease in average price.
The high land sales price for the year closed for $1,725,000 for 31.25 acres with a deluxe barn on the ocean side of Hāna Highway in Western Haʻikū. The high sale price for the year to date for a parcel of land without any structures is $1,295,000 for 2.06 acres of oceanfront land.
The lowest priced lot to sell closed for $300,000. This condominiumized off the grid lot was limited to only a 1,000 square foot cottage and had three acres of limited common element.
Haʻikū Market Activity by Price Point
While the numbers above speak to the big picture, the Haʻikū market isn’t uniform in its behavior across all price points. Jalbert looks at how the market has performed at the various price points in the market.
The Haʻikū market under $500K is a little more limited due to the nature of the community. As mentioned above, most of the properties are agriculturally zoned. A standard ag zoned lot is two acres or more. The price for just two acres of bare land typically starts around $400,000 and it can go up substantially from there. There are some neighborhoods with smaller residential lots in the community. Many of those small lots are clustered near old pineapple canneries that have been repurposed into commercial space.
The homes priced under $500,000 in current market conditions are typically, but not exclusively smaller lots. The sales this year have also included some residential condominiums and distressed properties. It is somewhat surprising to see that the number of homes sold in this price increased this year compared to last year. In many communities around the island, sales activity in this price range has dwindled as the number of homes priced under $500,000 have become more scarce as prices rise.
There has also been a modest uptick in bank owned properties. While an increase in bank owned activity during a strong market cycle may raise a few eyebrows, a little context is needed. These bank owned properties are still lingering from the last downturn. The bulk of foreclosures on this island are going through the judicial foreclosure process. That process can take years for resolution.
Buyers searching for homes for less than $500,000 in Haʻikū will find that the inventory is limited. Of the current inventory, three of the four active listings are cash only purchases due to the condition of the homes or other issues that might prevent financing. Well priced homes in this price range are likely to attract strong buyer interest.
The $500,000-$750,000 price range in Haʻikū currently includes some nicer homes on small lots, a few homes on two acre lots, some homes on lots between 1/2 acre and two acres and quite a few condominiumized homes on agricultural lots. Residential condos are an increasingly popular form of ownership in Haʻikū. Ag zoned lots have entitlements to build a main house and a cottage of 1,000 square feet. Many owners are opting to split the lot into two separate condo units with the main house and a portion of the acreage being one unit and the cottage and a smaller portion of the acreage being another unit. Just under 31% of the homes sold in this price point were residential condos. Many of these were the cottage portion of the condominium.
The overall market activity in this price range was strong. There was a 216% increase in sales recorded when comparing the first ten months of 2017 to the first ten months of 2016. This is particularly impressive as there were a lot of buyers shopping in this price range who reserved homes at the new Pauwela Homes Workforce Housing project.
The 33 unit condominium home development behind the Haʻikū Community Center was not listed on the MLS. For the first few months on the market, the home buyers needed to meet county median income requirements to be eligible for purchase. Twenty-seven of the 33 lots were priced from $516,580-$685,000. All of these lots have been reserved and there is a waiting list for any properties that might fall out of contract. Those homes won’t close until sometime in 2018.
Buyers looking in this price range in Haʻikū will find that current inventory is limited. There is less than three months of inventory based on the number of homes sold for the year to date. As the busiest segment of the Haʻikū market, buyers should be advised that well priced properties in this range get a lot of interest. Potential sellers may find that this is a pretty ideal time to be listing a home in Haʻikū in this range.
The $750,000 to $999,999 price range starts a transition in market composition. There are still some residential condominiums with deluxe cottages and the main homes of the condominiumized properties selling in this price range. This is also the price point where homes on two acres that have not been condominiumized become more frequent. There are even a handful of homes on two acres with cottages available. This part of the market saw a more modest increase in activity with 19% more sales than the first ten months of 2016.
Buyers will find more inventory available in the $750,000-$999,999 price range. This is due in part to a smaller pool of buyers. While this market space is a little less competitive, well priced properties can still generate bidding wars. There were a handful of full price or above asking price sales in this range.
The homes in the $1,000,000 -$1,499,999 price range in Haʻikū that sold this year tend to be more upscale homes on two or more acre lots and homes with cottages on two acre lots. This is the one price range in Haʻikū where sales activity was down over the first ten months of this year compared to the first ten months of 2016. Sales are currently almost 30% below the same period of 2017. That said, there are five properties currently pending in this price range. Those five sales would make up the difference in volume between the two years.
As you get into the even higher price point, the competition for properties continues to thin. None of the homes that sold in this price range sold for over asking price or even full price. That said, quality properties will still go quickly.
When you get to the $1,500,000 price range and above, you are entering a different part of the Haʻikū market.
Historically, this has been a market segment that has seen limited activity. There are a broad range of properties in this price range. They can be larger homes on two acres in nice subdivisions. As you get higher in price, you may have some oceanfront homes added to the mix. If you get to even higher price points in the market, there are some significant estate properties in Haʻikū.
There was a modest uptick in sales this year with one additional close over the same period of 2015. This is the one segment of the market where there is an abundance of inventory. The level of inventory would suggest that we have a buyer’s market at the highest price point of the Haʻikū market. While buyers may find there are a few motivated sellers, the sellers in this segment of the market tend to be deep pocketed and patient. Long days on market are par for the course in the upper price range of Haʻikū.
As noted in the market highlights above, there was an uptick in sales activity. More notable than the recent activity or even the current market activity is the upcoming new land development in Haʻikū. West Maui Land Company is set to release their new Haʻikū Town Development.
The 31 agriculturally zoned lot development will be hitting the market within the next couple of weeks. Jalbert says some of the lots will be coming to market. A good portion of the lots have already been reserved by employees and investors with ties to West Maui Land. The lots in the development range in price from $400K up to just over $700K. There is also one large acreage lot in the development priced in the $800K range.
There is another land development forthcoming off of Lower Kauhikoa Road. The timing for that development is less clear. Considering the fact that the West Maui Land development was predicted to come to market during the first quarter of 2017, Jalbert says he will hold off on predictions on to when this other development might hit the market. He says it will be interesting to see what the relative influx of land does to the overall Haʻikū land market. “While I had thought the new supply might dampen recent appreciation, the volume of properties hitting the open market is a lot lower than what it could have been,” he said.
Haʻikū Market Outlook
Jalbert says the start of peak buying season is just a month away. While there is less amplitude between low and high season in a place like Haʻikū when compared to the resort markets, we may see a few more buyers poking around Haʻikū over the winter months.
“As it stands, I would anticipate that we will see a continuation of current market trends,” he said. “The one place where I suspect activity may decrease some is at the lower price points in the market.”
Inventory is thinning at entry point to the market. Haʻikū would only be following the trends of other communities around the island that have seen decreased sales volume under $500,000. There is also some uncertainty on how the overall economic big picture will impact real estate. Interest rates are forecast to rise. Current tax reform proposals in congress are also less friendly to homeowners. It is hard to project what impact tax reform would have specifically on the Maui market and/or whether congress will pass a bill whatsoever. A more dynamic world makes it that much harder to predict our market.
Check out the current Haʻikū MLS listings here.
The original article was published on Nov. 22, 2017.
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