Kihei 2023 Housing Market Predictions

Home ownership is part of the American dream, but the deluxe version of this dream is living in Hawaii. Destinations such as Kihei, on the island of Maui, are very attractive to real estate investors. However, when it comes to moving to Hawaii, real estate buyers undoubtedly have questions about what the market will look like in the coming year. Whether you’re living in Kihei, thinking of moving to Kihei, or looking at vacation homes, here’s what you need to consider as we enter the 2023 housing market.

In 2022, a palpable change could be felt in the US real estate market when compared with previous years. Real estate investors saw challenging macroeconomic factors such as rising inflation and interest rate hikes, along with a slowing pace of home sales and rising mortgage rates. For a small window into this macro-level slowdown, we can look at the Existing-Home Sales Housing Snapshot from the National Association of Realtors (NAR). What this “snapshot” of the market shows is that the pace of home sales in the US has declined year-over-year, even though prices have risen. While certain real estate market dynamics are localized, we can get a good idea of where the market is at by looking at the big picture.

 

Mortgage rates are a potential challenge for home buyers going into 2023. As you can see from this Forbes Advisor chart, 15-year fixed rate, 30-year fixed rate, and 5/1 adjustable rate mortgages have all gone up in 2022. Although mortgage rates are not especially high relative to long-term trends, higher mortgage rates mean higher financing costs for buyers, which is liable to reduce demand for properties.

 

While the actual mortgage that a buyer is offered may vary slightly between different brokers, mortgage rates are among those metrics that are relatively uniform nationwide. This is because mortgage rates tend to move in tandem with the Federal Reserve’s benchmark federal funds rate, which is essentially the interest rate that banks pay for short-term capital loans. When the federal funds rate increases, other interest rates such as mortgage rates typically follow its trajectory. With inflation decelerating at the end of 2022, investors in 2023 should be able to look forward to a break from rising rates in 2023. While mortgage rates may climb a little higher, it appears that current conditions will not bring about more than a modest increase.

Whereas many US counties have seen a rebound in housing inventory levels over the course of 2022, Maui County has maintained relatively low inventory. You can see a chart showing active listings in Maui County from the Federal Reserve Economic Data (FRED) website. It is important to note that the methodology for this data changed as of September 2022, so it is difficult to interpret from a long-term perspective. However, it is clear that Maui County has yet to experience a full rebound in inventory, and Maui’s inventory rebound appears to be muted relative to the change in the active listing count for the US as a whole. This makes sense, given the tremendous demand for vacation properties in Kihei and elsewhere in Hawaii.

 

Homeowners in Hawaii saw a lot of capital appreciation between 2020 and 2023. While homeowners in 2023 should not expect to see such excellent price action in 2023, home prices show no signs of really dropping off. Mortgage rates aside, buyers might have a somewhat easier time in 2023 with inventory recovering somewhat.

 

It appears that 2023 will be a relatively slow year for the US real estate market. Kihei’s housing market may see a slower year as well. However, there should be no major issues with buying or selling property in Kihei in 2023. We may not see explosive price appreciation, but this is a good thing for buyers. For those looking to sell in 2023, home prices are not likely to dip too dramatically. You may, however, have to endure waiting slightly longer to sell a home in 2023 than you would have in previous years.

 

If mortgage rates do not make any more significant moves upward in 2023, then it should be a decent year for real estate. Investors should bear in mind that while the American real estate market will probably not boom in 2023, Kihei has its own market dynamics, buoyed largely by the demand for vacation and rental properties.

If you plan to make a move from the continental US, you may wonder about popular Kihei activities, Kihei schools, or general questions such as the cost of living in Hawaii. Living in Hawaii is not for everyone, especially given the state’s isolation from the US mainland. As explained in this World Finance article, Hawaii’s remote location means the state has a higher cost of living relative to most of the US. Hawaii is, however, one of the wealthiest states in the US. Real estate owners enjoy capital appreciation from the large amount of wealth on the island combined with its small size and high demand for vacation homes. Everyone knows that Hawaii is a great place to vacation, but it’s also a wonderful place to raise a family. The schools are well-funded, and there are tons of fun activities, especially for those who love the ocean. Some of Hawaii’s best beaches can be found in Maui, the island where Kihei is located

 

For most real estate investors, Kihei — and Hawaii generally — is a fantastic place to own a vacation home or other investment property. Given the small, exclusive nature of the state and its booming tourism industry, the value of your investment has room for growth. Kihei sees a large influx of visitors every year, most of whom are looking for condos and other properties to occupy during their stay.

To get a stronger sense of the Kihei real estate market, you should talk to a local realtor. Kevin Spaise is an experienced Maui realtor specializing in Kihei, Wailea, and upcountry real estate. If you’re interested in this type of real estate and you’re ready to be wowed by some amazing listings, check out Kevin’s portfolio of gorgeous Hawaiian properties.

_{*Header photo courtesy of Kevin Spaise}