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Aloha ~

You know what’s really fun? A job that allows you to share lots of good news. And thanks to a still-healthy Maui real estate market, we have that job!

We’ve all seen the gloom-and-doom national headlines about inflation, a possible recession, an imminent housing market crash. After all, U.S. home prices grew at four times the rate of incomes in the past year! A statistic like that would make any economist wonder about a potential bubble.

But this month, once again, we’re happy to have reassuring news about both the national and the local housing market.

We’re sure you read our other recent newsletters closely , so you’re already aware that what we’re seeing at the moment is simply a correction - we’re just easing into more “normal” market conditions after a major boom. And a correction is not a crash.

As you may know, a bubble happens when we have both overvaluation of homes and speculation-driven price increases, like we saw in 2008. At the moment, we have only one of those conditions (overvaluation), and only in some markets.

Keep in mind: real estate is highly regional. Why do we point that out? We’re so glad you asked!

The financial services company CoreLogic recently analyzed 392 individual markets across the country, to rate their likelihood of seeing a drop in home prices in the next 12 months. Here are the factors they considered:

  • Housing inventory levels

  • Present affordability

  • Mortgage rates

  • Debt-to-income ratios

  • Consumer confidence

  • Income growth projections

  • Unemployment predictions

And in fact, based on their data, CoreLogic still predicts that U.S. home prices will continue to rise an average of 5.9% over the coming year. Looking at the data through a regional lens, though, they grouped the markets into five levels of risk for price drops: very high, high, medium, low, and very low.

As we all heard, huge numbers of newly remote workers relocated to hotspots like Austin, Boise, and Charlotte throughout 2020 and 2021 - and the surge in demand sent home prices soaring in those areas. After also experiencing months of rising mortgage interest rates in 2022, those specific markets are likely to see prices fall.

But where does Maui fall on the price drop assessment? In the LOW RISK category.

Here are some local numbers to back that up: as of July, year-to-date:

  • 67% of condos on Maui sold at/over list price

  • 60% of homes on Maui sold at/over list price

And guess what? There’s more good news.

We all watched as the rate on the average 30-year fixed mortgage rose from 3.22% to 5.81% between January and June 2022. But rates actually dipped about half a percentage point in late July - which has caused some economists to speculate that they’ve already peaked! Even if that’s not the case, though, industry experts seem to agree that we’re not at all likely to see big/rapid increases moving forward.

At the same time interest rates were falling last month, nationwide home inventory was up 28% year-over-year. Locally, residential listings rose 11.6% from Q2 2021 to Q2 2022.

What could lower (or at least stable) mortgage rates and higher home inventories mean when you put them together? More buyer enthusiasm! In fact, Redfin has already reported an uptick in home searches in recent weeks.

One last thing to remember: if renting is a great value compared to owning, many would-be buyers will wait out a hot market. But just as home prices have climbed in recent years on Maui, so have rents! So even a small decrease in mortgage interest rates or a slight increase in home inventory can push some of these potential homeowners toward buying.

Long story short: the Maui real estate market is as strong as ever! And as always, we’re here to help guide you through it.



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