There was a recent time in the market when Maui home buyers had to wonder how much above list price they would have to pay in order to buy their dream home. Now, recent statistics show that the market has shifted and an increasing number home sales are closing below the seller’s list price.
Negotiation is back for home buyers
56% of the Maui home sales in August went below the list price which is an 18-month high for that metric in the residential market (February 2021 was the most recent high 63%). This shows that more buyers are feeling empowered to negotiate when it comes making offers and that sellers are increasingly ready to accept prices below their asking price.
The August figure is a significant jump from the previous month in which just 44% of homes sold below the sellers list price. In fact, the last 6 previous months all stayed within percentage ranges of 40% to 45.35%.
Charting the market shift
For the chart above, we analyzed 3,183 home sales over the last 32 months. Percentages shown are based on taking a total count of homes sold in a given month, then counting the number of homes sold above, exactly at, and below list price. For example, In Jan 2022 there were 92 homes sold in total with 35 homes (38.04%) sold above list price, 31 homes (33.70%) sold exactly at list price, and 26 homes (28.26%) sold below list price.
Key moments in the market
The best month for home sellers was probably January 2022 when the highest percentage (38.04%) of homes sold above list price and only 28.26% of homes sold below list price.
July of 2021 was a unique moment of near parity in the residential market when all three indicators were in the 30% range.
There are a lot of ways to interpret this chart but one key takeaway is that the August 2022 percentages show more of a return to the normal pre-pandemic market conditions and a healthy time when buyers and sellers spend more time at the negotiating table.
Why are more homes selling below list price?
At the most basic level you could say that it comes down to a perception mismatch between how sellers and buyers see the market. Sellers bringing their homes on the market in recent months were looking to the past with more than 16 months of surging prices, low inventory and bidding wars. That “rear mirror” view may have caused sellers to price their homes too aggressively because they expected those surging market conditions to continue. Buyers, on the other hand, look forward at the present and near future conditions that affect whether they can buy and what they can afford to spend.
When the market reaches a plateau period there is often a lag time when sellers have not caught up to the change in the market that buyers already see.
The sale of 58 Papuhau Place is a good example of that market perception mismatch. This modern Wailuku home came on the market in March 2022 originally listed for $2,495,000 which was the highest asking price ever seen in the neighborhood of Koa at Kehalani. After 57 days on the market the price was reduced to $2,295,000 (an 8% price reduction) and it still stayed active for another 58 days before the home finally went under contract. The sale finally recorded in August for $1,900,000 which is 17% below list price (and 23.84% below the original price).
How far below list are homes selling?
When it comes to homes that sell below asking price, it’s worth knowing that the majority fall within a bracket of 0.1% to 5% under list price. For example, 26% of all the homes sold in August 2022 were in that bracket. We are seeing an increase for homes selling in the 5% to 10% below list price bracket in recent months as shown in the chart below.
Looking at the gold line in the chart above, you can see a sharp climb for the last three months indicating an increase in the number of homes sold 5% to 10% under list price. This would indicate that sellers are having to make larger concessions on price, possibly because they did not list their home initially at a realistic price for the current market.
Above List sales are still happening
16% of homes sold in August were over the sellers asking price and the majority of those sales were in the bracket of 0.1% to 5% over list price as shown in the chart below.
Above is an example of a Haiku home that sold in August above list price. It was listed for $1,195,000 and sold for $1,325,000 which means it went 10.87% above the sellers asking price.
The sales price index
While the previous charts are useful for understanding how many homes sell above or below list price, it does not reflect the actual amounts off of the list pice that homes are selling for. That’s why we also created a separate chart that treats sales vs list prices as an index.
For the chart above we calculated average percentage difference between list price a sales price for homes sold each month. This aggregate approach gives a sense of how buyers and sellers came to a meeting of minds about property values and how that number changes over time. March 2022 was a highlight, the monthly index number reached 0.321% above list price which is the highest in 32 months.
The August number of -2.6126% signals once again that we are returning to pre-pandemic market conditions which will be good for Maui home buyers.
Contact a Maui Real Estate specialist
Beyond being a trusted advisor in the real estate market, your REALTOR should be a professional who recognizes their role in supporting your wealth building and wealth preservation. Helping to magnify wealth is one of the core values of The Sayles Team, a set of guiding principles for how we serve our clients at the highest level. As experts in the field, we are constantly learning and providing guidance about making the wisest choices for the future. If someone you care about needs guidance or recommendations, please share our contact information and we would be honored to help them! If you would like to receive our in-depth market update or would like an evaluation of your property’s value we would love to hear from you.
Anthony Sayles R(S)
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