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Rosy Picture for Maui Real Estate
According to Bank of America – Merrill Lynch, home prices will be heading even higher this year with an anticipated increase of 8%. This is due to a shrinking inventory and record high affordability. In addition, the Federal Reserve will keep the mortgage rates at historically low levels this year.
Merrill Lynch also comments that due to the declining inventory, it will only take 4.2 months to clear the current stock of existing homes and 4.1 months in the new construction market. According to the latest Fannie Mae survey, 48% of respondents believe home prices will head higher over the next 12 months while only 10% expect a decline and 39% foresee little change.
Shadow inventory also appears to be less of an issue partially due to successful loan modifications that allow distressed borrowers to stay in their homes. The banks will also continue to accommodate shorts sales as a way to clear distressed inventory more efficiently. About 65% of current foreclosure inventory are in states with judicial process (like Hawaii) which is also slowing the process of clearing up the shadow inventory.
We recently did 4 market evaluations for 4 different sellers, and every single evaluation showed that due to the low inventory, the asking prices of available homes were much higher as compared to comparable sold properties. These properties came from different sectors of the Maui market….a low end condominium in the Kihei area, a house and cottage in the Upcountry area, and a front row 3 bedroom condo on the golf course in Wailea.
We are definitely feeling the effects of increasing home prices on Maui. If you are interested in finding out what your home is worth, email us at [email protected] for a free market evaluation.