The housing market in 2021 was challenging to navigate for any homebuyer, new or experienced. Last year's prices soared, the competition was fiercer than ever, and the short supply of houses guaranteed that many purchasers paid (and continue to spend) top dollar, even while mortgage rates have remained at historic lows.
The western part of Maui has emerged as a leader in Hawaii's housing renaissance, confirming the significant patterns that make the properties more appealing to investors. I anticipated this market climate two years ago in the summer of 2020 when the market began gaining traction.
Maui’s robust real estate market restores the hope and confidence of buyers and sellers, but what can buyers anticipate from the housing market in 2022 now that several measures are starting to shift in their favor? Here are a few rising trends would-be homeowners should be aware of in 2022.
General overview
Many buyers acquired new million-dollar dream houses on the island of Maui. There was, however, growth on each island. Even though Hawaii has a wide range of home options, this is mostly a luxury market. Extremely high real estate prices result from great demand and limited supply. The negative is a scarcity of inexpensive housing and significant obstacles for tenants. The rise of Hawaii's ultra-luxury sector has been extraordinary this year, according to Hawaii Life. In only the first three quarters of 2021, transaction volume increased from $151 million in 2020 to more than $1 billion.
But the big story in Hawaii is how the ultra-high-end market is doing. The luxury market has seen intense sales activity, with inventory falling from 5.3 months to 1.6 months of supply, according to Hawaii Life. Throughout 2020, sales value has increased by 234.5% (by dollar value). According to Hawaii Life's major report, there were 634 sales of homes priced above $3 million in the third quarter of 2021, with 466 sales in the $3 million to $5.99 million range, 104 sales in the $6 million to $9.99 million range, and 64 sales of over $10 million.
Overall economic climate
In the third quarter of 2021, Maui's employment situation improved substantially, although the rate of job recovery has slowed. This is most likely related to the governor's declaration discouraging visitors from visiting the state as COVID-19 cases began to surge again. As reported by Windermere, Maui added just 600 jobs in the third quarter, compared to 3,200 jobs in the second quarter, and Maui has regained 12,400 of the 28,900 jobs lost due to COVID-19 by the end of the third quarter.
There is still work to be done, with employment levels down 16,500 jobs from their pre-pandemic peak. According to Windermere, new cases have begun to reduce, which may result in higher employment growth in the fourth quarter of this year, although a full job recovery will not occur until later in 2022. In September, the unemployment rate in the state was 6.6%, down from 7.7% at the end of the second quarter.
Maui County house prices were up 25.4% year over year in December 2021, with a median price of $915,000. Homes have typically sold after 63 days on the market, down from 101 days last year. In December of 2021, 283 residences sold, up from 276 in 2020.
Potential for more listings
Buyers faced a shortage of home inventory last year, giving sellers an edge. According to Quicken Loans, the nationwide inventory of active listings has decreased by 22.2% since 2020. Compared to 2019 inventories, the reduction in current listings appears to be much more dramatic. The number of active listings has dropped by 52.5 percent since then. Yet, market analysts predict that current house listings will rise this year. Some people believe that investors will take advantage of the rising housing prices by selling rental homes. Inventory growth will be sluggish, and purchasers will continue to face challenges. It might take several years for the shortfall to subside. There are still supply chain disruptions and labor shortages to contend with until then.
The average number of sales
In the third quarter of 2021, 729 residences were sold, an increase of 49.7% over the previous quarter. However, because COVID-19 was only getting started last year at this time, this comparison isn't valid. Sales declined 17.1% in the second quarter of this year compared to the previous year's period.
Sales increased year over year across the board, with notable increases in South Maui, the North Shore, and the West Side. Compared to the second quarter of 2021, sales fell in all areas except the Central. In comparison to the second quarter of 2021, the average number of residences for sale in the period was down 19.5 percent. Fewer listings might explain the reduction in sales between the second and third quarters. Pending home sales fell 14.4% from the previous quarter, implying that closings in the fourth quarter of the year would likely be flat.
Average home prices
Maui's average house price increased 37.8% year over year to $1.419 million. Prices were 2.9 percent higher in the second quarter of 2021 than in the previous quarter. Affordability concerns linger, and analysts believe the island will witness price increases because of attractive financing rates and low inventory levels.
The pace of growth, on the other hand, is progressively declining. Sale prices rose in all markets, but the significant gain in the North Shore area is misleading. With only ten transactions for the whole quarter, the 287 percent rise was an exception. All markets grew in price compared to the second quarter, except the Central area, which saw a minor decline (-.4 percent ). Prices have continued to rise due to limited listing availability and strong demand, but the current price growth rate is unsustainable. It is predicted that a minor slowing in price appreciation will occur, and that looks to be the case.
Increase in value
It's vital to go beyond the average sold price and median sold price to the average selling price per square footage, which is a more trustworthy predictor, to have a clear handle on the direction in which property values are moving.
Residential homes have continued to fetch more value per square foot over the previous 12 months. The year-over-year rise reached $802.51 per square foot in September 2021. The average price per square foot on Maui was $587 in Q3 2020, this is a 36.8% increase. Despite several outliers in the preceding 12 months, the average number of days a property remained on the market before it sold has decreased by 27.1 percent, from 70 in Q3 2020 to 51 in Q3 2021.
With the trendline supporting the decrease in days on the market (DOM), calling the seller's market competitive is an understatement. The number of sold listings increased from 294 in Q3 2020, indicating that demand drives this seller's market. With 346 transactions in the third quarter of this year, the Maui real estate market has seen a significant gain of 17.7%. There was a 6.5 percent rise in pending properties, with 346 homes under contract compared to 325 homes in Q3 of the previous year.
Maui real estate is in great demand, resulting in limited inventory and increased costs. Interest rates are still low, and many purchasers choose to pay cash in full to own a home here. While specific patterns from the housing market in 2021 are expected to continue in 2022, other aspects will differ.
Generally speaking, 2022 will be a year of consistent development but slower than the preceding two years. Furthermore, the market will most likely remain skewed against sellers for the time being. This is owing to anticipated high levels of buyer demand and limited supply. If you’re interested in West Maui real estate, contact agent Jeff Onderko today to find your next dream home in paradise!
Frequently Asked Questions
What was the housing market like in 2021?
In 2021, the housing market was challenging for homebuyers. Prices soared, competition was intense, and there was a short supply of houses, causing many buyers to pay top dollar. Mortgage rates, however, remained at historic lows.
How did Hawaii's luxury real estate market perform in 2020 and 2021?
In 2021, Hawaii's ultra-luxury sector saw substantial growth. Inventory in the luxury market dropped significantly, with sales value increasing by 234.5% from 2020. By the third quarter of 2021, there were 634 sales of homes priced above $3 million.
How has Maui's employment situation been affected by the COVID-19 pandemic?
Maui's employment improved in the third quarter of 2021, but the job recovery rate slowed. Maui added 600 jobs in the third quarter and, by its end, had regained 12,400 of the 28,900 jobs lost to COVID-19. However, employment was still down by 16,500 jobs from pre-pandemic levels.
What is the trend regarding home listings and inventory?
There was a notable shortage of home inventory in the previous year, causing a seller's advantage. Nationwide, active listings decreased by 22.2% since 2020 and 52.5% since 2019. However, market analysts predict an increase in house listings in the upcoming year, though challenges due to supply chain disruptions and labor shortages persist.
How have average home prices on Maui evolved recently?
Maui's average house price surged 37.8% year over year to $1.419 million as of the third quarter of 2021. Despite increases across all areas, the growth rate of these prices is beginning to slow, indicating potential stabilization shortly.
