I just saw this Trulia Headline –> Rising Home Prices: Coming to a Market Near You
In reading the Trulia article, the first thing that struck me was that they are talking about listing or asking prices. Well just because listing prices are going up and it was a miniscule 0.2%, doesn’t mean that’s what’s happening to sales prices which are what determine the market. National news doesn’t phase me much because real estate markets are so local! However, they do make me ask – Does that apply to Maui? I did notice that I don’t have the ability to look at what the average list price was a year ago. Oh well, it got my curiosity up so I went through my archived PDF’s to see if the list prices correlate with the sold prices. Here are the results for April:
Ok, this isn’t the whole United States. Maui has relatively small number of data points. But I see no correlation between list prices and sales prices. Maybe if I plotted each data point, I’d find a nice alternating current like my data seems to show! Average and median changes seem to stick together. Oh well, statistics wouldn’t be fun if you always found a great answer.
Yesterday, I heard another agent say “Our prices will be up 10% this year.” Is it true? As usual, I follow the trends pretty closely AND take a realistic view on what the market is doing. Although he was talking about a specific condo, I think he was speculating based on what he would like to see. My detailed look at surrounding condo prices didn’t indicate that there was any discrepancies. He seemed to infer that the sellers would wait for that perfect cash offer that would justify higher prices compared to what was recently sold. Yes, Maui has many (55-60%) cash buyers out there. Cash buyers are still looking for reasonable deals, often want a “cash discount” and are not willing to pay way over market prices. The market is the market and agents can’t and shouldn’t control it.
I do make predictions based on real trends I see. If the average and median sales prices have been going up over 4-6 months; that is a clear trend! Let’s look at the case of Kihei condos where my agent associate was telling people that prices will go up 10% this year. This Kihei condo data can be found in the detailed reports at the end of this article. Comparing the trend line of average sales price we are up 6% over last year. But median sales prices we are down 7%. That tells me that we are pretty stable.
So then I ask, what are the indicators that will tell us what may happen in the future.
- We clearly have a good increase in sales in the last few months. Typically higher sales will drive prices up. But as we look at seasonal trends, it isn’t that much higher than than last year at the same time (this is peak season!). Per my discussions with other agents and my own client base, it does seem like there are more buyers actively looking. Indicator: Neutral.
- We know there has been a stop on most foreclosures and we expect to see more coming out this summer. Foreclosures drive prices down. If you look at my foreclosure trends, it seems like we’ve hit bottom; few new ones coming in but not much people want to buy. We are just waiting for the banks to start releasing again; we know they are out there in every neighborhood in Maui. Indicator: Down
- The market is defined by supply and demand. The best indication right now is probably inventory. Inventory is the number of active listings divided by the current rate of sales. Our overall inventory levels are lower they’ve been for years with 8 months worth of inventory. Right now we have lower inventory than we’ve seen with under 2000 Active Listings. Compare that to the peak in February of 2009 with over 3400 listings. Indicator: Up
Overall: More of the same through the rest of the year. I think we’ll see more sales in the high end markets that may make averages look better. The lower end of the market has hit it’s affordability factor where it is cheaper to buy than rent so I don’t see it going down much more. Certain parts of the market will have extremely low inventories which will start an upward trend overall. It’s a great time to start being serious if you are considering an upgrade!