Honua Kai 2014 Sales Update

Being in the midst of high season and anecdotally seeing a significant amount of activity, it can cloud judgment of actual market conditions. In an effort to provide our clients with transparency on micro-market positioning and shifts in one of the most sought-after properties on Maui, we present our Honua Kai Real Estate 2014 Sales Report.

Overview

With an increase of roughly 10% in sales volume, from 2013's $90.3M to 2014's $99.4M, demand is clearly keeping up through the upswing in values. The number of sales decreased slightly, from 76 the previous year to 73 in 2014 - one could argue that the slight decrease is due to less inventory - in 2013, 51 units were listed for sale, compared to 45 in 2014. Furthermore, the Median sales price rose from $944K to $1.1M, while average sales price increased from $1.19M to $1.36M. 

Price per Square Foot

Take a look at the chart below - the most comprehensive yet easy-to-digest breakdown of values at Honua Kai since its introduction to the West Maui real estate market. Worth noting is that of all the unit sizes, only one unit type has increase its price per square foot above its peak, set in 2009 and 2010 from pre-sales coming to fruition. And although the 3 bedroom villas trail significantly ($1,388 per sq. ft. in 2014 compared to $1,581 in 2010), it is due to the type of unit, with the 'best of the best' sales in 2010 pushing the average much higher due to the uniqueness of the particular villas sold. Have questions? Contact us for a more in-depth explanation.

Breakdown by Size

The size of units being sold has broken down to a more balanced absorption over the past 3 years. In 2012, it was primarily developer 1 bedroom units being sold - arguably, at very aggressive pricing to get them sold and get traction within the overall Honua Kai micro-market - which transitioned to a much healthier absorption in 2013, leaving many wondering if the sale of larger units could be sustainable. And 2014 affirmed it with a very strong showing, including a rise in sales of 2 bedroom units, which many of them being premium units. Three bedroom units continued to do do well, with the only significant dip being in Studios. However, the lack of sales of Studios is based on complete and absolute lack of viable inventory within this particular niche - fact is, any well-priced Studios are selling quickly.

Developer Versus Resale

In 2012, the influx of developer inventory, particularly so in smaller-sized units resulted in a disproportionately absorption of smaller units - there was only ONE sale of a 3 bedroom residences. In 2013 the shift was significant and it carried over to 2014, in which only 3 Studios were sold and the number of 2 bedroom sales nearly tripled that of 2012's - quite the impressive shift in a 3 year period. 

Developer units being sold still command a significant marketshare, but it has lessened so with its depleting inventory - and with limited inventory remaining, it will be interesting to see how the market responds without the downwards pressure from all the developer inventory. From its commanding 96% share to 2014's more manageable 57%, the developer has been adjusting pricing to reflect current market conditions. The days of 2 years pre-paid HOA are largely gone, with remaining inventory enjoying lessened incentives. 

Cash Vs. Finance

Worth noting is that the number of cash sales increased from 47% in 2013 to 54% in this past year - this could be reflective of more higher-priced units selling, rather than the lending environment becoming more strict. As per a leading loan officer very familiar with Honua Kai, it is one of the few condotel properties where borrowers can still qualify with a 25% down payment - contact us for details. 

Summary

The most frequently asked question by potential purchasers at Honua Kai is whether now is the best time to buy. In general terms, the Honua Kai micro-market hit its bottom in 2011 and 2012, with the two last years seeing significant increases in values - in part due to the growing popularity of Honua Kai as a resort destination. And although every purchaser has completely different circumstances prevailing their decision and one person's ideal time can be substantially different than another's, it can be argued that recent trends are sustainable and all things being equaled, waiting to buy will mean doing so at a higher price point. We understand the intricacies of the Honua Kai market and its relation to the overall Maui condo market, so please don't hesitate to contact us - whether the question is about the HK property, a particular listing, overall trends and its consequences within smaller niches, we are here to be of assistance. Call Alex at 808.385.5034 or fill out the form below.