Our thoughts and prayers go out to all the people of Japan – we are sending them affirmations of love and Aloha. I did have a pretty hair-raising tsunami experience at my farm down in Maliko Gulch on Maui’s North Shore. Overall, Maui did suffer some damage, but for the most part, we are still intact.
Investors are always looking for the best possible return and the time has truly come for Maui. With the events that transpired this past week related to the earthquake, tsunami, and nuclear meltdown occurring in Japan, investors are fleeing the stock markets across the world looking for safer places for their money.
Naturally, they turn to the bond market, which in turn has immediately increased bond prices. With all of the money pouring out of the stock market, there is an increased worldwide cash supply. With more cash, interest rates are likely to drop as well as mortgage rates, as lenders will have more cash to lend out.
How does this translate into a brighter future for Maui?
Recent currency exchange rates have greatly favored most foreign currencies over the past two years. Canadians are spending because not only is their dollar now worth a Yankee dollar, sometimes it is worth more. Correlate this to a drop of the price levels in segments of our condo market by as much as 70 percent from peak values in 2007, and Canadians are sweeping up our inventory with cash. They don’t have to worry about winter in Alberta any longer, they will be spending it on Maui.
For old geezers with poor eyesight like me, let me point out the highlights that I am trying to illustrate – in the residential home market for the 2010 year end stats – statistical volume was up 17% year to year, total dollar volume sold up 23%, and prices arguably hitting the proverbial “bottom” with the average sales price up 5%, and the median down 8%.
The numbers for the condo market really jump out at you – transactional volume up 39%, total dollar volume up 25%, but it appears that values are still continuing to decline with the average prices down 10% and the median down 16%.
Investors sitting on cash have started to rally to our market. The large presence of REO/bank owned/foreclosed properties, and the fact that short sales are being processed in a much more expeditious fashion, has brought much liquidity and movement to our market. Returns on cash are really starting to finally make sense on Maui which they have not historically done.
Maui has been a vanity market for many, buy it as you would a Rolex which tells time, but not really any better than a Timex. Presently, we have condos and homes priced dramatically lower than what it would actually cost of acquisition and reconstruction costs coupled with rental returns that are more logical than they have ever been. Maui is full of life right now, the hotels and resorts are at near maximum occupancy – people are spending money again and this a very strong sign of a solid recovery.
Why buy now?
There is a very high worldwide recognition of the long term value of Maui both as a destination, and also as a great place to live. Most people know that there is at least 10 reasons why Maui is priceless and that Maui is now affordable. For those looking to reside in Maui part time, it is noteworthy that Maui was just voted the #2 location in the U.S. for second homes by Barron’s magazine.
Prices have dropped greatly in many market segments and very little new inventory is being built; construction is extremely slow. As demand picks up (and is clearly doing so), simple economics will come into play.
Supply remains stagnant if not diminishing + increasing demand as Maui becomes a better buy on an international level every day = prices will start to appreciate. We have a very cyclical market and if buyers wait too long – waiting for the bell to ring alerting everyone of the bottom of the market (yes, I am being sarcastic here) – they will be seeing tail lights pretty soon.
Investors, you have a lot of choices right now: stocks, bonds, money market, commodities, and all have them have enjoyed an incredible run up over the past year. Take some of your profits right now. Maui is a great investment that is much safer in our opinion, and represents more reliable returns and appreciation when done properly rather than overpriced bonds, or losing thousands in a day on the stock market. Invest in Maui, the island that has been voted the #1 island in the world 14 times by Conde Nast. Buy low and someday, if you really want to – sell high.
I am here to be of service to you in any way that I can. Please contact me and ask me about the Stice Team’s increasingly popular monthly newsletter highlighting the best of the Maui real estate market and various facets of the Maui life.
We would like to recommend to the following links as a place to start looking: