Maui’s property values continue to rise sharply. At the end of September 2021, the average price per square foot in Maui was $802.51, compared to just $587 during the same month in 2020. This represents 36.85% growth over a single year—all amidst a global pandemic that has limited supply chains, employment, and travel.
The areas of Maui with the biggest increase in sales include South Maui, North Shore, and the West Side. But with low levels of inventory across the island, home values will likely continue to be strong in every community on Maui.
So, what’s causing this unsustainable spike in property values—and how might it affect Maui’s real estate long term?
High demand
Even though they’ve ticked up slightly from the historic lows of the last 18 months, mortgage rates will likely remain comfortably low for most buyers over the year to come. This will continue to allow luxury buyers and banks to purchase an investment property in Maui. Some investors are gobbling up lower-priced homes for rental properties, and taking advantage of their increased home values to take out home equity loans and make large cash offers on competitive real estate. Some people are taking advantage of the low mortgage rates to invest in vacation homes, or Kapalua luxury homes, pouncing on the opportunity to own the second home of their dreams on Maui. Meanwhile, millennials, the largest generational demographic in the United States, have reached a point in their career where they are earning a stable income, and are ready to buy their first homes. But when a property receives multiple offers, cash is king—and Maui’s millennials have less of it than out of state buyers with existing home equity, or access to a real estate investment fund.
Low inventory
Given the allure of larger profit margins, the past several years of new construction on Maui has been focused on higher-priced, luxury homes—rather than on homes in price ranges best suited for first-time homebuyers. With an increased demand for Kaanapali real estate inventory shortages continue to affect Maui real estate.
Material and supply shortages are slowing the pace of new construction. In the time of COVID-19, inventory and supply chain shortages are becoming evident, and the issues have become prevalent across many industries. The supply chain issues in the construction industry started before COVID-19 but were greatly exacerbated by its global impact. As an industry, construction had employment shortages long before COVID-19, and Maui’s housing market is no exception. In the Hawaiian Islands, healthcare jobs and the technology sector have become more appealing than the labor of the construction industry, thanks to higher pay, better benefits, and less physical risk. Meanwhile, on a national level, tariffs, fires, hurricanes, war, and natural disasters have demanded still more resources faster than they can be replenished by fatigued supply chains.
All of this amounts to a low inventory of Maui homes on the market, and a sustained level of high prices.
Freedom to move
The trend toward working from home started before COVID-19, but now as much as 42% of the U.S. labor force are working from home. The appeal of working for a company on the mainland while living in a Kapalua luxury home has drawn buyers from dense urban areas who gave up homes in the city and moved to Maui. Buyers crave larger spaces for living, playing, and entertaining, and they are moving to waterfront properties and rural areas. Meanwhile, for those who dreamed of retiring on Maui, the low mortgage rates have given them the opportunity to make a move—but doing so at the same time as online workers have created a competitive and expensive reaction.
Premium investment real estate
In 2020, 70% of homes and condos purchased in Maui Country were from non-owner occupants. Hawaii has always been a premium choice for real estate investors. Investors from Japan have been choosing Kaanapali real estate for years. Interest from overseas slowed during the height of the pandemic due to uncertainty around when—or if—they would be able to travel to the Hawaiian Islands. This opened the door to US buyers and banks who were looking to take advantage of low-interest rates with slightly lower competition.
Why Maui
Hawaii is a popular tourist destination because of the beauty of the islands, the access to rare beaches and wildlife, and the year-round comfortable weather. These aspects are what the quality of life on Maui is built upon, and are at the core of what keeps people satisfied with life on the islands. Hawaiians have the longest average life expectancy in the nation. The area is environmentally friendly, and Honolulu has the cleanest air of any metropolitan area. The water is clean, filtered by the island’s porous lava rock, and even though Honolulu is one of the twenty largest cities in the United States, it is in the top three for safety and low crime rate. Of course, it’s the aloha spirit and diverse culture of the Hawaiian people that make the state one of the friendliest places to live. Maui is close to the active island of Oahu and the unique natural beauty of the Big Island, the perfect place for enjoying the best of everything. Kaanapali real estate is the most in-demand in West Maui.
Want to Know More?
If you’re considering making the move to Maui or one of the other Hawaiian Islands, a local real estate agent can be your best guide. They’ll have in-depth knowledge you can rely on for choosing the best island and community to fit your lifestyle. When looking for Kapalua luxury homes, working with a realtor who specializes in luxury real estate will make the negotiation process simpler and less stressful. Your Maui luxury real estate professional should be well-connected, and will ideally know about properties that haven’t been publicly listed. A realtor experienced with investment properties will also be able to guide you through the market analysis process and educate you on the procedures unique to purchasing an investment property in Maui.
Looking at homes for sale on Maui?
If you’re looking to make the move to Maui, Jeff Onderko has the knowledge you need to make an informed and profitable decision. He is ready to answer your questions and help you find exactly the home or investment property you’re looking for in Maui. Contact Jeff today!
