You will get a better understanding of our economy and see a great future for real estate. Dave Jenks and Jay Papasan are some of the most respected and knowledgeable people in the industry and explain October 2008 trends in a way that we all understand. Since all markets are local, ask me about Maui-specific numbers or check out my market trends report. If you are interested in local numbers in another area and don’t have a Favorite Realtor®, ask me and I’ll find a great one for you.
After hearing that news it was opportune that we had Terryl Vencl from the Maui Visitors Bureau talk at our team meeting. She gave us updates and insights into what the current visitor situation is and where we think the future may be.
First she told us how the bureau is funded. Of all the Hawaiian Islands, Maui is the only county that provides significant funding for the visitors bureau. Since tourism is such a significant amount of our economy, it makes sense that we put money in to get tourists here!
I hope my numbers are correct but I was taking notes fast that I make no guarantees!
She defined the target markets that they market to: (in order)
- Avid traveler – people who love to travel, and don’t just collapse on the beach when they get here! They get out and do lots of activities and spend $$.
- Romance traveler – The honeymooners, anniversary traveler.
- Spa and relaxation
- Families – although large in number, they tend to be the ones who spend the least amount of money.
Where in the world are we focusing our marketing dollars? I think it was interesting that this didn’t line up closely with actual counts. Canada is big focus area though only 9% of visitors are from Canada; I personally have a tough time believing that number ! Between open houses and my volunteer work at Ahihi it feels like at least half of our visitors are Canadian! The West Coast has traditionally been our biggest draw but with hurting economy has declined, the East Coast is picking up. Oceania is also growing. Japan is picking up and Japanese want to return! Also some efforts in Korea and China. She mentioned that they believe that the Korean “romance” market is huge!
So how much is this industry really down? Overall Maui County (3 islands) is down in visitor arrivals by 12.1% from this time last year. Maui island is down 12.3%. It is interesting to note that of the people who only visit Maui and not other islands, we are only down 6.9%. She commented that the truth seems to get really blown out of proportion. One hotel reported that their occupancy was down 30% and the rumor got out that they only had 30% occupancy!
The really good news is that it is a great time to come to Maui. Even though airline prices are higher, when they look at available inclusive packages they find that it is actually more cost effective to visit Maui than it has been for years.
Where do our visitors come from?
- 47% West Coast (declining)
- 32% East Coast
- 9% Canada
- 3% Japan
- 13% Other (Europe, Oceania, Other Asia, Latin America)
Maui WINS with the most repeat visitors at 66%.
Make your vacation plans today!
P.S. Our beautiful humpback whales have just started returning with a few sitings of young males.
“What effects have the US housing issues had on prices? There was another report out today that indicates all 20 major centers have seen another drop?“
In Maui, we’ve definitely seen a downturn similar to California but not as extensive. Maui traditionally tracks most closely with the San Diego market and interestingly enough is ahead of Honolulu. Our residential market peaked in December 2005 and looks like it is bottoming out as the last few months have been nearly level with increases in some areas.
However, the vacation rental market has not seen price declines until recently. For example, in Kihei condos (includes both vacation rentals and not) the median prices have increased 16% in the last year. For a 2 year period, the increase was 10%. Looking at moving averages of the median price, the comparison is $396k 2 years ago compared to $435k today. Looking at the trend charts, the peak looks like it was in November of last year. I do know that the residential condos have been hit harder than the vacation rentals. Unfortunately, this is not a required field in our MLS system so it is hard to gather specific stats on Vacation Rentals.
So the question is, how low will it go? In particular, the drivers for the vacation rental market are:
- Concerns about the airline industry, where we have 20% fewer airline seats than we did 6 months ago. Increased fuel costs are driving the remaining airline tickets prices up. Since many summer travelers buy tickets far in advance, I don’t think that we’ve seen the true impact of this. Visitor arrivals to Maui by air are down about 15% over last year.
- Concern about the US economy. People are tightening their belts, not buying vacation homes and taking vacations closer to home.
- The low value of the dollar against other currencies actually has a positive impact. We have a lot of Canadians buying here now. The legislation changes impacting visa controls and the buying ability of Korean and Chinese residents is bound to have a positive long-term effect. Both as visitors and property owners, they will drive prices up over the next 10 years. We’re already seeing some large Korean companies looking to purchase multiple units. This is anticipated to be a big market driver in future years. In the last year, the number of international visitor arrivals by air to Maui has increased 35%.
- Of less impact but hopefully positive for Maui is the Big Island vog. While seeing the volcano eruption is awesome, many tourists will choose Maui because of the constant vog haze in many areas of Big Island. Under our normal tradewind conditions, the vog blows past Maui but Oahu and Kauai are pretty badly inundated. We don’t know how long the vog conditions will persist, but I’m hoping that Maui continues to see relative increases.
- Generally the number of new building permits has been falling over the last few years. In Maui, it takes years to get a new development going. This year, we’ve seen been several new projects come on the market. But there are very few permits in the works, which means it will be years before we see bunches of “new inventory”. In the next 2-3 years this should start driving prices up.
The data cited is from real estate trend reports generated from the MLS and economic data from the Department of Business, and the Economic Development and Tourism.
This is the first of what I hope is a weekly blog highlighting some of the houses and condominiums that I see on caravan. A caravan or a broker’s tour is a weekly event where agents are invited to go from house to house in a certain area. It is a great way to see a lot of properties in a short period of time.
In Maui, we have caravans running in the different districts most weekdays, so you could spend most of your time on caravan if you wanted to. Just as an example, here is what our current caravan schedule looks like:
- Tuesday is South Maui and rotates each week between Wailea, South Maui and North Maui (including Ma’alaea).
- Wednesday is West Maui (covering Lahaina, Ka’anapali and Kapalua and rotating between North and South).
- Wednesday is also Central Maui every other week.
- Thursday is Upcountry and North Shore rotating between Kula, Haiku/Pa’ia, Makawao/Pukalani/Olinda.
On each caravan we normally have 10-20 properties and about 2 hours to tour them. Agents don’t always go to every property or in the planned sequence.
Why can understanding caravans benefit a buyer or seller?
- Agents who attend caravan regularly know their inventory! It is one thing to see an MLS listing and pictures. It is a totally different experience to experience a property. An agent who previews properties and knows the inventory will save you tons in time. When interviewing agents, ask them when they last attended a caravan. Many “experienced” agents never attend caravan but the top agents usually do!
- Ask your local agents about when caravans are held in your area. Although they are designed for agents only, they are usually “Open Houses” that are open to the public too. Here in Maui, you may be able to see places that are rarely available for regular opens due to having renters and bookings for vacations rentals. While this may not be as effective as having an agent set up a tour of homes, it may be good thing to consider if you are “just looking”. You can talk to the hosting agents and listen in on comments from other agents as they tour homes.
- Agents work to entice other agents to see their listings. Food and prizes are common. When you interview an agent, ask them about plans to put your property on caravan. For example, I had a listing last year in a condominium that most agents know well. Knowing that it would be tough to get people to see it, I offered a prize drawing and had 23 agents come through! Without the prize, I may have had 5. Of the showings that I had, about 75% were from the agents who saw it on caravan, and I sold the place in 77 days through one of those agents.
Aloha and happy caravan!