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“The housing sector is the most sensitive to and experiences the most immediate impacts from the Federal Reserve’s interest rate policy changes,” said NAR Chief Economist Lawrence Yun. “The softness in home sales reflects this year’s escalating mortgage rates. Nonetheless, homeowners are doing well with near nonexistent distressed property sales and home prices still higher than a year ago.”
August marked the 126th month of year-over-year price increases, the longest-running streak on record. Price gains, however, are clearly moderating from the record high median of $413,800 posted in June. The median price for existing units of all types rose 7.7 percent year-over-year in August, to $389,500. During the first few months of this year, rate gains exceeded 15 percent. The median existing single-family home price was $396,300, up an annual 7.6 percent. The median existing condo price was $333,700, a markup of 7.8 percent.
Inventory declined to 1.28 million units, 1.5 percent less than the July total and unchanged year-over-year. This is considered a 3.2-month supply at the current sales pace – identical to July and up from 2.6 months in August 2021. Properties typically remained on the market for 16 days and 81 percent of August sales were on the market for less than a month.
“Inventory will remain tight in the coming months and even for the next couple of years,” Yun added. “Some homeowners are unwilling to trade up or trade down after locking in historically-low mortgage rates in recent years, increasing the need for more new-home construction to boost supply.”
The Chart below breaks down just where we stand with existing inventory here at home in Maui.
$494,999 or Less: 0.8 | -74.2%, $495,000 to $738,999: 0.8 | -69.2%, $739,000 to $1,207,999: 1.0 | -63.0%, $1,208,000 or More: 3.0 | -49.2%,
All Price Ranges:
1.5 | -57.1% Months of remaining inventory
First-time buyers were responsible for 29 percent of sales in August and individual investors/second-home buyers purchased 16 percent. Twenty-four percent of sales were all-cash.
Existing-home sales in the Northeast grew 1.6 percent from July to an annual rate of 630,000, a 13.7 percent annual pullback. The median price rose 1.5 percent to $413,200. Sales in the Midwest were down 3.3 percent to an annual rate of 1,160,000, 15.9 percent lower than a year earlier. The median price increased 6.6 percent to $287,900.
The South’s annual sales rate of 2,130,000 was unchanged from July, but down 19.3 percent compared to August 2021. The median price grew 12.4 percent to $356,000. Existing-home sales in the West expanded by 1.1 percent to 880,000 units but was a decline of 29.0 percent on an annual basis. The median price rose 7.1 percent to $602,900.
Let's clear up the headlines
If one were to take the news at face value, we would think that the islands were immune to price changes and everybody gets exactly what they are asking for or even more. The chart below shows just that but there is more to the story than charts available to the public.
In the last 24 hours alone there have been 7 price drops and 106 "Price Improvements" IN THE LAST 30 DAYS.
This could be due to the barrage of new licensees trying to get in on the hot real estate market and simply pricing them wrong but it isn't a stretch to understand the Maui Real Estate market is on the decline.
In previous publications we covered how the increase at the federal level effects Mortgage rates and how that puts downward pressure on appreciation and Hawaii may even be more sensitive to those changes given the higher than national prices of nearly everything else.
If you would like a better understanding of how mortgages are priced, start here.
So, should I sell my house or wait until the feds get inflation under control?
There is little doubt the feds are Hell bent on controlling inflation. The problem is that they are creating inflation at the same time. This doesn't bode well for a rosy outcome, even in hawaii. There is an old saying "If we keep going in the direction we are going, we most certainly will end up there" but it may not be as bad as all that for the potential home seller.
Is there a demand? You bet there is and as long as people like having babies more than they like dying the demand will be there. You can see in our first chart that while prices are declining slightly, your home is worth more on the open market than it historically has ever been but I wouldn't be sitting around waiting for another big 30 percent price increase if any at all..
There is an equilibrium in the market now so capturing the most equity for this market is possible provided it is priced correctly and doesn't sit on the market until the next rate increase.
The biggest factor in your favor is the lack of inventory but that will only get you so far. If you are interested in seeing what your home is worth today, start here.
The chart above shows just how few homes there are for sale. so while rates are having their impact across the board, the lack of supply coupled with a still robust demand is a good formula for selling even with mortgage rates topping 6.70 percent as of this morning.
Consider Ascentia Maui to be your resource for all Real Estate Needs with a heavy emphasis on Probate, Trusts, Conservatorships and Guardianship Sales. You can also count on Ascentia Maui as your 'Boots on the Ground' for Cleaning, Lawn service Surveys, Inspections, Contractors or anything you may need.
ascentia Maui, LLC is an organization that operates under the brokerage licensing of Keller Williams Realty Maui. Paragraph
285 W. Kaahumanu ave. #201 Kahului, Hawaii 967362w
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