Wailea 2023 Housing Market Predictions

 

Inflation. Interest rate hikes. Economic slowdown. Housing shortages. We’ve heard (and seen) it all in 2022 as the economy surged forward post-Covid. The year will be one for the record books, a milestone to which all future markets will be compared. One day, we will have the clarity of hindsight to inform our understanding of the fluctuations. For now, economists and real estate professionals are looking at current data and surveying historic trends to make housing market predictions for 2023.
 

Kevin Spaise, an experienced Maui realtor, has summarized the data you need to understand what living in Wailea will be like in the months ahead. Read on if you’re currently a resident or moving to Hawaii soon.

The University of Hawaii’s Economic Research Organization released a report that details all of their findings about the current state of Hawaii’s economy. In the report, they compared what was happening within Hawaii to current economic conditions on the mainland and predicted what can be expected for the Aloha State in the months ahead.

Tourism, one of Hawaii’s chief industries, continues to make its recovery as 2022 comes to a close. Initially, most of the visitors were coming from the US mainland, but that has slowed in recent months. Growth has primarily come from the Japanese tourist market, with Oahu and the Big Island most positively impacted. Other international visitors, such as those from Australia and Canada are also contributing to the resurgence of the tourist industry. Maui welcomed 2.36 million visitors in 2021 and 2.93 million in 2022, for a growth rate of 24%.

The economic analysts of UHERO’s study agreed unilaterally that the United States’ mainland was headed into a recession in 2023. Evidence for their prediction came from several factors. First, despite interest rate hikes that have led to doubling what they were a year ago, inflation is proving persistent. Consumers are feeling the pinch of inflation and are reducing their spending. Around the globe, significant events, such as the weakness of China’s yen related to extended Covid protocols and Russia’s war with Ukraine are influencing conditions that are expected to impact the US.

The news comes as a gentle warning, not a cause to panic over impending doom. While recession is expected for the US, it is expected to be a mild one with quick recovery. Consumers are still spending at a conservative 2% rate. Industrial production is high and manufacturers are still seeing orders for goods expand. Unemployment remains low. By definition, a recession is a significant decrease in economic activity across sectors that lasts for several months or longer. Simply put, the US is not there yet. We may continue to see interest rate hikes at the end of 2022 and early in 2023 to force inflation back down to its desired level of 2% (it currently stands at 9%).

Those living in Hawaii stand to fare better than the mainland if a recession does indeed arrive. Job opportunities continue to increase in relation to the tourism industry. Hawaii’s inflation has been less than what the mainland has experienced recently. From the islands, we have the advantage of watching what is coming across the water as several months of advance warning and can make adjustments accordingly.

 

Overall economic conditions can have a tremendous influence on the housing market. Interest rates have caused the price of new home mortgages to soar, and current buyers have been forced to reassess their relocation or vacation property plans. Home sales are shifting from a demand for existing homes, of which the supply has remained low, to tremendous growth in new construction. Prices for homes for sale have remained static for several months as a result.

Condominiums have been in great demand, as evidenced by the almost 10% sales price increase over 2022. They are selling rapidly, selling in 31.5% less time than in 2021. The demand can best be seen by contrasting it with what is happening with single-family dwellings. Single family homes have seen only a 3% sales price increase and are staying on the market 10.5% longer now than they were a year ago.

The runaway seller’s market has passed, and the shift continues toward favorability for buyers. Overall, the cost of living in Hawaii and housing prices have stabilized, and there are more houses from which to choose by nearly 50%. A less frenzied home-shopping pace allows buyers to investigate their options and choose the home that is right for them.

A mild recession is likely heading our way, and we may see additional interest rate hikes. Because of this, many home buyers will find that they have less buying power and will have to wisely choose their properties accordingly. Home prices in Wailea and across Maui are expected to hold steady. Home buyers in the more affluent sector of society are generally less impacted  by shifts in the economy, so the luxury housing market may remain largely unaffected. This sector may also contribute greatly to keeping the tourism industry strong and preventing Maui from feeling serious impact from the recession.

The most encouraging news comes from the observation of previous recession patterns. When recessions do come, interest rates decline. Decreased consumer spending leads to decreasing inflation, and with these changes, investors gain buying power. Further, if buyers secure their perfect property now, despite high interest rates, there is always the option to refinance when rates are more manageable. This prevents losing a great opportunity and gives reassurance that a better deal can be had in the not-so-distant future. The housing market is typically the first sector to recover from inflation, and economists are banking on these patterns to repeat themselves in Hawaii in 2023.

If you are considering buying or selling a home during this shifting market, it is important to seek the advice and guidance of a well-qualified real estate agent with local expertise. Kevin Spaise understands the housing market in Maui and will be happy to answer all of your real estate questions. Contact Kevin for a free consultation.