Cash Sales Up to 51% in 2011

Cash transactions in 2011 surged to a new historical high. 51% of Maui real estate sales were purchased with cash surpassing the previous year’s high of 45% in 2010. The historical chart of cash sales below exposes financial institutions loosening qualifying requirements beginning in 2001 with a continual softening until 2008 when the financial meltdown began.

At the peak of the market (2005), the total dollar volume of sales rose to $2.76 billion reflecting 3,849 closed sales. For 2011, the dollar volume reached $1.346 billion, which is less than half the amount realized in 2005. In addition, the number of closed sales in 2011 at 2,183 is 56.7% off the high set in 2005. It’s a bit uncanny given lending rates are hovering at 4%. However, financial institutions continue to be cautious in their lending practices leaving many who wish to purchase Maui property sitting on the sidelines.

The historical median of cash transactions for Maui County is 22%. Whether this is a healthier figure in a more stabilized market has yet to be determined.

Our data also indicates that the higher the price tag for Maui real estate, the more likely the transaction will trade hands with cash. Whereas, 47% of sales at $500,000 or less closed with cash, 60% paid cash for a property between 1 million to 2 million; 74% were cash sales between 2 and 5 million. 100% of the sales over 10 million were paid in cash.

Some other interesting statistics for 2011 reveal that 67.5% of all the sales closed at $500,000 or less. In addition 89.5% of all the closed transactions recorded at a $1 million or lower, leaving just 10.5% of the sales for 2011 over $1 million. Compare these figures to the current breakdown of available Maui properties for sale currently listed below.

Whereas 67% of Maui sales in 2011 are at $500,000 or less, currently 41% of the Maui properties for sale are actively within this price bracket, resulting in an absorption rate of approximately 6 months. Also as the price point of Maui real estate rises, the number days on the market also increases.

Many residents and visitors visualize excessive price tags for ownership of Maui property, the reality is that the bulk of our real estate sold today is below the $500,000 price point.