Homes on Maui in hot demand
By Christie Wilson
Advertiser Neighbor Island Editor
So just what does $632,000 buy in the white-hot Maui real-estate market?
That's the island's March median sale price for single-family homes — the highest in the state. At that cost, a homebuyer can acquire a modest house on a small lot in a newer subdivision, or something older and a little more rundown but on a bigger property with room for an 'ohana unit.
Realtors say both types of properties are in demand, despite a price tag that two or three years ago would have been reserved for the wealthy.
"Prices have gone up so much that people are asking who's buying these homes and where are they getting their money?" said Carol Ball of Carol Ball and Associates, Realtors.
Surprisingly, Ball said, many buyers in the $500,000 to $700,000 range are local working families and individuals who, under most circumstances, would be considered middle class. And they are getting their money from mortgage deals that offer 100 percent financing, interest-only loans, 35-year mortgages and other packages that lower monthly payments and eliminate the need for a down payment.
"It's the same people who were buying before, but because they are able to get these great loans, they don't need a big stash of cash," Ball said.
Small-business owner Danny Boren said he never dreamed he would be able to buy a $615,000 property at age 26. Just this month he purchased a three-bedroom, two-bathroom house of a little more than 1,000 square feet on a half-acre in Kula.
"Growing up in Pa'ia, you could get a mansion for that price," he said.
Boren owns Skyline Eco-Adventures, which sends customers zipping through the Upcountry forest in harnesses attached to aerial cables. He said he decided it was time to become a homeowner after watching the spectacular increase in real-estate prices. "It seems like stuff is just skyrocketing, and I was paying enough in rent that I decided to put it toward a home purchase," he said.
Higher property prices on the Mainland also have boosted interest in Maui homes, Realtors said, and many out-of-state buyers are looking for homes in the $500,000 to $700,000 range either for a permanent move or as a second home.
"California buyers do not consider our prices to be outrageous because their market is just as bad," said Tom Delmore of Delmore Realty.
Ball said that because of the new financing packages that do not require down payments, many home buyers no longer need to sell their old house before buying a new one. They are hanging on to their old homes as investment properties since they can use rental income to cover the mortgage payments.
The $632,000 median price for 116 single-family home sales for Maui last month was the highest in the state. In March 2004, the Maui figure was $499,000. By comparison, the median price on O'ahu in March was $550,000 on 377 single-family home sales.
The median sale price means half the homes sold for above that price and half sold for less. It does not always provide an accurate picture of the real-estate scene, and in a small market such as Maui, looking at the numbers on a month-to-month basis requires caution since the data can be skewed by a handful of multimillion-dollar deals in Wailea and Kapalua.
Although the median sale price on Maui is higher than on O'ahu, $632,000 can buy comparable properties on either island. Current O'ahu listings include a newer 1,899-square-foot home on a 5,128-square-foot lot in 'Ewa Gentry priced at $635,000, and a much older 1,526-square-foot house on a 10,555-square-foot lot in 'Ahuimanu Hills in Kane'ohe for $630,000.
On Maui, a 1,525-square-foot home on a 7,674-square-foot lot in the Kehalani subdivision in Wailuku is listed at $639,000, while a 1,300-square-foot plantation home on a lush 12,404-square-foot lot in 'Iao Valley is offered at $635,000.
Donna Ting of Tri-Isle Realty & Development Co. said many homebuyers don't seem to be concerned about whether they are getting good value in the long run, even with properties in obvious need of repair or in less-desirable neighborhoods. "For that price today you're not getting a whole lot," she said. "The problem is that there isn't any inventory and new subdivisions are few and far between. There just isn't any supply. It's Economics 101."
Delmore agrees: "Any house that's selling for $550,000 is gone before you can blink."
All three Maui Realtors said they don't see the local market cooling off any time soon, especially if buyers remain optimistic about the future. "That's what really empowers buyers," Ball said.
A rise in interest rates is one thing that could dampen that enthusiasm. Delmore said low interest rates have allowed typical working families to buy in the median range. Since monthly mortgage payments are mostly interest, an increase of 1 percent or 2 percent could knock a lot of these people out of the market, he said.
And Ting cautioned that buyers who take advantage of exotic financing deals to purchase homes that normally would be out of their price range may be headed for trouble down the road if the economy shifts.
Reach Christie Wilson at (808) 244-4880 or cwilson@honoluluadvertiser.com.
