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Honua Kai Resort Update – One of Maui’s Top Resorts Sees Early Signs of Market Correction

The Honua Kai Resort sales marketplace has been extremely robust in years past; but is now starting to show early signs of a market correction in 2020. It is my personal opinion that we will see this same correction moving forward the next couple of years not only at Honua Kai, but for the Vacation Rental sales market as a whole here on Maui. I believe this segment of the market is most vulnerable because it was outpacing the general market for Maui (Maui Vacation Rentals Outpacing General Maui Market & Becoming More Valuable) and without the significant income figures that owners normally enjoy while still maintaining very high operating costs, it’s prime for reduced prices.

Furthermore, I think it may be likely that we see the buyer demographic shift in the direction of more lifestyle heavy oriented buyers rather than those who are just entirely focused on rental income revenue.

However, I want to make it very clear that this is not a “Doom and Gloom” article and that I don’t think prices are going to drop off a cliff overnight. During Covid, I have had numerous people reach out to me wanting 20% off pre-Covid prices — we are not there and I don’t know if we will even reach that point of correction. It is important to note that Maui has been voted the #1 Island in the World something like 20 times in a row — people love coming here, owning real estate here and we have very limited overall supply.

hk sunset

Sunset during Hurricane Douglas taken on July 26, 2020 from the lanai of Hokulani 409 at Honua Kai. Want to enjoy this view, check out our vacation site for this fine property here.

Key Observations of Honua Kai Marketplace

  • Some sellers are still trying to push the market prices upwards — this is unlikely to happen in my opinion. I believe that these properties will sit unsold unless the sellers continue to reduce their asking prices. The vast majority of the listings on the market right now are significantly overpriced by anywhere from 10-20%. No, I am not contradicting myself from my third opening paragraph above- I think these properties were overpriced even before Covid hit.
  • Buyers are no longer reaching for properties priced above last comparable sales.
  • There is still very strong interest for well priced Honua Kai properties. I listed Konea 240 about 2 months ago and we received competitive cash offers within a week of the property being listed.
  • Far fewer sales — this is more a function of For Sale inventory than anything. I personally feel that there are a lot of potential sellers sitting on the sideline right now who may have the misconception that properties are not selling when in fact they are but they are just not increasing in value anymore.

Hokulani 405 was just listed at $1.6M with multiple showings the first day on the market and went under contract after a couple days on market. It is imperative that if you want to secure a very well priced Honua Kai property, that you are ready to act immediately with a strong initial offer. I do not classify this as a Fire Sale like the properties listed below. Hokulani 405 is a very nice property with a large ocean view that was accurately priced when it first hit the market.

Honua Kai 2020 Sales Revised

The listings circled in red above represent what I am calling “Fire Sales” at Honua Kai because they were significantly off their asking prices and sold considerably lower than their very recent last comparable sales.

More Information on Honua Kai and Historical Sales Data

My personal website has a lot of information and historical sales data about the resort as whole that can be found here — Honua Kai on MauiRealEstateGuideBook.com 

What Has Sold at Honua Kai in 2020

As of July 30, 2020 there have been 50 total sales at Honua Kai. 34 of the 50 closings of Luana Garden Villas original developer units. The other 16 sales took place in the Konea and Hokulani towers and are all resales. During the same period in 2019, there were 21 resales at the Konea and Hokulani tower. In 2019, there were a total of 34 resale properties that closed — I think it is highly unlikely that we see anything close to this in 2020. 

Above, I have outlined 3 different 2020 sales above to illustrate the “Covid pricing trend.” All 3 of these properties were sold during the Pandemic and their sales price reflects this. I don’t believe any of these sellers were in financial trouble but rather had other opportunities that they wanted to capitalize on elsewhere and decided to cash out.

The inner courtyard taken from Hokulani 825 (another property we manage) on July 26, 2020 — the only lights in the house were a local family visiting from Hana staying on the second floor unit you see on the bottom left and where we were staying in unit Hokulani 409 above it. It was absolutely wild to see how quiet it is. Btw don’t you absolutely love the new New night mode on your iPhone camera — crazy what you can capture now from your phone!

What’s Under Contract at Honua Kai Right Now?

There are currently 17 properties under contract right now — 15 of the 17 properties are original developer sales of the Luana Garden Villas which is sold out and they are in the process of closing all these transactions.

Konea 240 – my listing that procured two competing cash offers when it was originally listed at $1,049,000. Link to Konea 240 photos and listing details here. 

Hokulani 405 – just listed at $1,595,000 procuring an immediate cash offer. Link to Hokulani 405 photos and listing details here.

Ladies and Babies

My wife Megan on the left with our 4.5 month old daughter and my cousin’s wife Michaela and their handsome son Warner enjoying the Honua Kai pools during Hurricane Douglas weekend.

Honua Kai Best Buys

Hokulani 337 – the lowest priced inner courtyard studio property on the market listed by me and run by my property management team at Hawaii Life Vacations. Link to Hokulani 337 photos and listing details here. 

Konea 208 – This one bedroom plus den (effectively a smaller two bedroom) property was just recently under contract but fell out of escrow and I believe the seller is really wanting to sell. Link to Konea 208 photos and listing details here. 

My wife Megan and our 4.5 month old baby girl Kiera enjoying the beautiful plumeria tree right below the ’09 stack in the inner courtyard of the Hokulani Tower.

Hokulani 309 – This two bedroom deluxe ocean view residence with the famed wrap around L-shaped lanai was just listed for $2.2M link to Hokulani 309 photos and detailed information 

Just recently and during Hurricane Douglas, my family and stayed in Hokulani 409  which we professionally manage and is one floor above 309. This is the exact same floor plan as Hokulani 309 and what I love best is how open the kitchen and living area is while being oriented towards the pool and ocean. The wrap around L-shaped lanai is quite large and a fantastic place to enjoy the outdoors.

What is Occurring Kaanapali Vacation Rental Sales Market?

Probably to no one’s surprise, the vacation rental sales market in Kaanapali has significantly slowed this year compared to recent year’s past. There is one pending sale at the Whaler, one pending sale at Kaanapali Ali’i, two at Maui Kai, two at Kaanapali Shores, one at Kaanapali Royal, one at Kaanapali Plantation, and one at Maui Kaanapali Villas. These numbers are significantly off from year’s past.

There have been 86 closings so far in 2020 of Kaanapali Vacation Rentals. 52 of these sales are resale properties (the other 34 were Luana Garden Villas developer sales). In the same time period in 2019, there were 67 closings of Kaanapali Vacation Rentals. I think we will see a much stronger disparity when we compare year end 2019 figures vs. year end 2020 figures as the rate of sales have slowed drastically since Covid onset at the end of the first quarter 2020. There is no question that it is harder to sell a property right now due to the many limitations we have in place but I also believe that it is also a function of many Sellers choosing not to list their properties at this time. 

Clearly, this current trend is in stark contrast to what we were seeing earlier this year in 2020. Here is a previous post I wrote in Fed. 2020, Maui Vacation Rentals Outpacing General Maui Market & Becoming More Valuable

My family and I love our sunset walks from our neighborhood in Kaanapali Coffee Farms which overlooks Honua Kai and other resorts on Kaanapali North Beach.

Why Invest at Honua Kai Now?

  • Low interest rates — We are seeing historically low interest rates in effect right now to further stimulate our economy but in order to slow what will likely be an accelerated rate of inflation, it is unlikely that the Fed can keep them here. Keep in mind that a 1% change in interest rate affects your purchasing power by roughly 10%.
  • Possible elimination of 1031 Exchanges if Joe Biden elected — if you have a 1031 exchange to effectuate, it may be prudent to do so in the event that Joe Biden is elected and goes forward with his plan to eliminate 1031 Tax Differed exchanges for select high earning individuals.
  • Enjoy the resort with no one there — it is eerily quiet and peaceful at Honua Kai right now and I think it is unlikely that we will ever see it like this again.

Search all Honua Kai Real Estate here

Search all Maui Real Estate here 

Please reach out to me directly if you are interested in both on and off market properties at Honua Kai as I have successfully closed a number of off-market properties at the resort including our own investment property that we own at Honua Kai. 

Work with a True Honua Kai Specialist

My wife and I have owned an investment property at Honua Kai since 2014, I started representing buyers and sellers at Honua Kai back in 2011 and have successfully closed 30+ transactions at the resort, and we operate a top performing vacation rental program at Honua Kai in addition to other resorts in Maui.

Jeremy Stice R(B) at Your Service

As the director of Hawaii Life’s West Maui Vacation Rental portfolio and one of Hawaii Life’s top-selling Brokers, my team and I are here at your service. I was born and raised here in Maui, am a third-generation Realtor, and my wife and I have called West Maui home for the last 10 years-we enjoy sharing our passion for it with all who are interested. I make a commitment to pick up my cell phone as best as I can, return voicemails, text messages, and email in a timely fashion. I also work 7 days a week so feel free to call me anytime you need me. I am here at your service, I look forward to sharing my passion and expertise with you. Want to follow my blog via email updates? Please enter it below. This will not be used for any other reason than automatic blog updates that I post. Subscribe to the Jeremy Stice Blog Roll Here 

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