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Are Maui Homes Affordable Again?
While housing prices in Maui are still not at a level that allows the average island family to buy, just yet, there are some reasons for optimism. For the most part, the average island income is not enough to comfortably buy an average island house, but the University of Hawaii Economic Research Organization is quick to note that the Housing Affordability Index is on the rise. This index is designed to demonstrate how much of an average house an average income can support and a score of 100 indicates that an average family can afford an average house.
Hawaii has always scored lower than 100 on this index. In general, home ownership in Hawaii is lower than other states and while asking prices are falling the index is still reading below 100 in this state. Nevertheless, the index is higher than it has ever been before.
In 2006, Maui County was perhaps the worst region in Hawaii when it comes to affordable housing. With the index reading an abysmal 46.4, many experts would argue that Maui had the most unaffordable housing in the entire country. Last year however, the index topped out at 65.6 and most signs point to further improvement. Similarly, the Honolulu index which has improved dramatically to 64.4 this year is predicted to reach as high as 76.
The reason for the improvement in the index seems is undoubtedly falling housing prices. Most statistics show that the median house price in Maui is falling more rapidly than other regions, like Oahu, and as such we may see the greatest advances in the index here. Unfortunately, the economy is not only negatively impacting the price of homes as evidenced by the fact that annual incomes appear to be dropping off drastically as well. As Oahu is a larger more diversified community, it has not seen the same negative impact on personal income as Maui. Simply put, Maui is a tourism-based economy which is usually immediately affected by international economic turmoil. Unlike Maui, Oahu is home to a wide range of state and government jobs and as such layoffs and cutbacks may have yet taken effect.
Moreover, there is quite a range of buying patterns across Hawaii and these patterns will affect the Housing Affordability Index. For example, while single-family units saw an increase in median price, condo prices continued to fall. So, as the economy begins to regain its foothold and housing prices level off, we may see more affordable options in the Maui region.