RED HOT MAUI CAN’T KEEP UP WITH HOUSING DEMAND

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By Edwin Tanji

WAILUKU, Maui (The Maui News, Aug. 3) - Maui County was adding
more than 1,000 new homes a year to its housing inventory from 2000 to 2002,
according to estimates by the U.S. Census Bureau. 

Maui County real property tax data indicate a slightly lower
count of new homes, although the tax data are lagging because of a delay in
updating county tax maps. 

Whatever the true numbers are, Maui real estate specialists say
there aren’t enough new homes being built. 

A red hot real estate market being pumped up by low interest
rates has been driving prices higher, even for homes intended for middle-income
families. 

Over the first six months of 2003, the median price for all
homes sold in Maui County was $401,750, according to the Realtors Association of
Maui. That means half were below that price and half were above. 

Lack of inventory is also a reason for the rising prices, said
Lloyd Sodetani, whose Maui Realty is one of the oldest real estate companies on
Maui. 

"There are two factors affecting the housing market. One is
the low interest rates that make it possible for more people to afford the
payments," he said. "And the other is the inventory is
non-existent. 

"We’re talking about the Kahului increments where you
have a three-bedroom, 1-bath , 50-year-old hollow-tile home selling for over
$300,000 — for $310,00, $320,000 — and many of them have physical and
functional obsolescence," he said. "That’s unheard-of in my
experience, until now." 

According to the Census Bureau, Maui County builders put up
2,142 new homes between April 1, 2000 — the date of the 2000 census — and
July 1, 2002. That amounts to a 3.8 percent increase over the 56,377 homes that
were counted in the 2000 census. 

During the same period, the population of Maui County increased
by 5,898, or 4.6 percent, to 134,139 people on July 1, 2002, according to the
census data. 

During the period of 2000 to 2002, the Maui County Real Property
Tax Division recorded an increase of 1,647 homeowners applying for a homeowners
exemption, from 23,910 to 25,557. That would represent the increase in
owner-occupants in Maui County. 

There also were 172 new homes added to the inventory of improved
residential properties, according to the county tax data. Improved residential
units generally are homes used as second homes or as rental units. There were
just 9,448 improved residential units as of 2002. 

Real property tax chief Lance Okumura said the real property tax
data may not reflect the housing inventory in Maui — counting just 35,005
residential properties compared to the estimated 58,519 units in census data for
2002. 

The real property tax numbers do not count individual apartments
in rental apartment buildings and may not reflect multiple units on a property,
such as ohana dwellings. 

Because the division also has not been able to update its tax
maps for several years, he said there are additional residential units created
by new subdivisions that have not yet been counted and properly taxed. 

But the county real property data do reflect one of the facets
of the market: Values are continuing to climb. 

The 9,276 improved residential properties recorded in 2000 were
valued at $2.5 billion, or an average of $270,998 per property. In 2002, 9,448
improved residential properties were valued at $3.25 billion, or $344,398 per
property — a 27 percent increase in just two years. 

Even for owner-occupied homes, which include both single-family
and condominium residential units, values increased from an average of $193,947
in 2000 to $227,810 in 2002. 

Wailuku Realtor Tom Delmore said the county valuations were
low. 

"The county always stays behind on the values. They don’t
like to upset people too much by raising their values to the market," he
said. 

But he said the numbers on units being built are "about
right." Given the building that was taking place between 2000 and 2002,
including at Maui Lani, Kahana Ridge, Wailuku Parkside and subdivisions in South
Maui, the numbers on new homes built were reasonable. 

They do indicate that not enough new homes were being built for
residents, he said. If anything, he said, the census data on Maui County’s
population is low. 

"When the census does its survey, I think a lot of people
are reluctant to say there are two, three families living in a single
unit," he said. 

But the rate of home building in Maui County at 3.8 percent was
lagging behind even a possibly flawed estimate of population growth at 4.6
percent. 

At Maui Lani, continuing high demand for homes is keeping prices
from slumping, according to General Manager Leiane Paci. 

"Oh certainly, it you look at what Schuler Homes has been
doing," she said.

During the 2000 to 2002 period, she said, there were 267 new
homes built in Maui Lani, including in a Schuler Homes’ subdivision, the
Islands at Maui Lani, in which 100 homes were sold priced from $325,000 to
$500,000. 

Another Schuler Homes project coming online now has 400 buyers
signed up for 140 homes, Paci said. The demand is encouraging Maui Lani to
continue to develop the 1,200-acre project district, with a subdivision, the
Bluffs, that will offer 560 houselots. 

It still may not be enough. 

Kim Delmore, who has joined her father’s Delmore Realty, said
some buyers are going into sticker shock on the rising prices of homes, but she
has more buyers than there are homes for sale. 

She recently showed a couple an older 2-bedroom, 1 1/2-bath home
in Wailuku priced at $375,000 although it is a relatively small 1,275 square
feet on a 4,358-square-foot lot. The home was built in 1940 and was remodeled
recently but still is showing its age. 

"Some people are pretty shocked at the prices. But most are
willing to look because they really need a home," she said. 

The reaction of buyers to housing prices usually relates to
their experience with real estate, she said. 

"It depends on what kind of history they have with buying a
house. First-time buyers are more willing to accept the prices, but if they have
experience with buying a home, they’re looking more closely at what they’re
getting," she said. 

With interest rates beginning to creep up again, the demand may
slow as hopeful buyers are forced to drop out of the pricey market. 

But Sodetani said he believed the pricing situation is as much a
factor of high demand and low inventory as interest rates during a period that
the Valley Isle economy was creating jobs. He cited the number of major
construction projects that are under way, including the widening of Mokulele
Highway, and the Kaanapali Ocean Front time share at North Beach section of the
Kaanapali Resort. 

"I’m sure it will continue for some time," he said.
"I’d say much of the demand has to do with the construction that’s been
going on from two years ago . . . having all those construction activities
created jobs, and a number of those were very sizable projects." 

The data suggest that Maui County may be doing better than Oahu
in building new homes to accommodate population growth. Over the two-year
period, when Maui County’s population grew by 5,898, there were 2,142 homes
built, according to the census data — a ratio of one home for every 2.7
people. 

On Oahu, the population was up by 19,863, while there were 4,268
new homes built — a ratio of one home for every 4.6 people. Statewide, the
population count was up by 33,361 from 2000 to 2002, and 9,970 homes were built,
one for every 3.35 people. 

But the data don’t show how many of the housing units are
being built for families that are residents, as opposed to housing units being
built as vacation homes or second homes. 

According to the census data, there is one housing unit in Maui
County for every 2.3 people living in Maui County. A more realistic number may
be based on the county’s real property tax data for 2002, which indicates one
"homeowner" unit for every 5.3 residents.

August 5, 2003

The Maui News: www.mauinews.com 

 

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