Last week, we took a look at how the Spreckeslville Real Estate market performed in 2013 and gave a few thoughts on the outlook for 2014. Today, I wanted to take a look at the neighboring North Shore community of Paia. Paia and Spreckelsville share the same zip code and are technically the same town. That said, each community has its own character. Paia is a town pretty unique to the planet. Once the bustling epicenter of Maui’s sugar industry, it was later discovered by Hippies in the 60s and 70s, windsurfers in the 80s and a more diverse cross section of water sports enthusiasts in the 90s and beyond. For a town of its size, it has a diverse population drawn from all corners of the world. Paia boasts great restaurants, appealing boutiques, galleries, beaches and the best little health food store on the planet. It is also the location where the Maui Real Estate Team office is located.
The map below shows all of the 2013 home sales from the Paia area. We included all transactions in and around downtown Paia, up Baldwin Avenue to the Skill Village neighborhood and East on Hana Highway into Kuau.
This map shows all of the current home inventory in the Paia area. Green pins represent active listings. Yellow pins represent pending sales.
Here are the numbers that I thought were noteworthy for the Paia property market in 2013.
- There were 20 homes sold in the Paia area during 2013. The median sales price for Paia during 2013 was $678,500. By comparison, there were 18 sales in Paia during 2012 with a median price of $367,500. That is an 11% increase in sales and an 87% increase in median prices.
- The high sale for the Paia area was $5,500,000 for a modest home on 1.1 oceanfront acres. The home is a likely tear down and the value was in the land. This is one of the premier oceanfront parcels in the Paia area and the third largest parcel in the Paia/Spreckelsville area. This was the third highest sale ever for a property in the Paia/Spreckelsville area.
- The second highest sale was $4,600,000 for a home across the street from the beach on Kuau Beach place. This was a substantial property with over 2 acres of land, a pool, and multiple structures including a primary residence of almost 5,300 square feet. This was the highest priced non-oceanfront sale ever in the Paia/ Spreckselsville area.
- There were three condo sales during 2013 at Kuau Plaza. There was only one condo sale at Kuau Plaza during 2012.
- There were four land sales in 2013 in Paia. In 2012, there was only one sale.
- The land sales included a $2,300,000 sale for an oceanfront lot on Kuau Point. This 18,875 square foot lot had an ideal west/northwest orientation.
- There were two commercial properties that sold in Paia during 2013 and one of the four lots sold was a commercial lot downtown. Paia had one commercial sale in 2012.
- There was one property bought directly from an asset management company and one short sale in 2013. There were three bank owned properties (REO) and four short sales that closed in Paia during 2012.
There were a couple things in the numbers above that merit additional discussion. First and foremost, the difference in median sales price for Paia homes really jumps off the page. To be clear up front, the 87% increase in median price over 2012 does not mean that there was an 87% increase in home values. The drastic shift in median prices can be attributed to two factors. First, there was a big shift in the distribution of sales. There were nine sales under $400,000 in 2012 compared to four sales in 2013. There was a lot more lower priced inventory during 2012. A fair amount of that lower priced inventory consisted of either REO listings or potential short sales. There were also fewer high end sales in 2012 with only one property that sold for over 1 million compared to 3 million dollar plus sales in 2013. The second factor was an increase in overall values. Part of the reason that we saw fewer lower priced sales was due to appreciation. The appreciation wasn’t just limited to the bottom of the market. You can make an argument that you saw solid increases in value at all price points of the market in Paia.
Two Paia neighborhoods saw prices near or above previous peak market prices. In 2013, the Kuau Bayview neighborhood had homes sell for the first, second and fifth highest ever sales prices. A fourth home sold for the second ever highest cost per square foot. The Skill Village neighborhood had the highest ever cost per square foot sale. You could also argue that the two highest priced transactions in Paia were at or near peak market prices. It is tough to quantify the absolute rates of appreciation though with the relative heterogeneity of Paia homes. Regardless of the percentage increase, Paia was the only community on island where we saw sales prices at or near peak market prices. The Paia market rebound has been driven by its lack of new supply combined with increasing demand due to its growing recognition as a desirable community to live and call a second home.
The desirability of Paia is also reflected in its increasing popularity for luxury home buyers. While two sales in one year over $4,000,000 doesn’t seem like a lot compared to traditional Maui resort markets like Kapalua or Wailea, there were only three sales prior to 2013 for more than $4,000,000. The land sale of $2,300,000 was another ultra luxury purchase. Neighboring Spreckelsville also had two sales around the $3,000,000 mark and four properties that went under contract in the last two months of 2013 priced $4,000,000 or above. More ultra luxury home buyers have been attracted to the North Shore lifestyle whether it be wellness or water sports. Regardless, Paia is becoming a community of understated affluence.
What can we expect for 2014? With the home market, I would not count on seeing similar rates of appreciation to what we saw in 2013. During the last boom cycle, we saw varying rates of appreciation within any one year that eventually evened out over longer periods. Hot neighborhoods would cool when the comparative value with neighboring communities became too far out of line. Those neighboring communities would then see their values increase before we started to see a return to more substantive appreciation in the hot neighborhoods. I think we may well see that in Paia during 2014. While Paia’s limited supply may lend itself to greater appreciation in the long term, it doesn’t seem like prices will really bust through the roof this year. Interest rates are another factor worth watching. As it stands, rates have the potential to go up with the cut backs to quantitative easing. A more significant bump in rates has the potential to dampen appreciation.
The luxury home market tends to be a little less interest rate driven. The one external economic factor that could impact the Paia luxury home market is the stock market. In our 2013 Maui market overview, I surmised that the luxury real estate market for Maui received a bump thanks to a strong year for stock markets. Better stock returns mean more discretionary income and more funds available for luxury home purchases. Global stock markets have recently been in a sell off based on mixed economic news.
If the stock market shakes off its stupor, the conditions are favorable in Paia for more luxury home sales. There is no oceanfront inventory in Spreckelsville which could shift more market attention towards Paia. As mentioned before, we are seeing more luxury home buyers in the Paia area of late due to the allure of the North Shore lifestyle. The question then becomes whether or not we can come to a meeting of the minds between luxury home buyers and sellers. Some of the current Paia luxury listings are pushing the envelope on pricing. While oceanfront home buyers may be very affluent, they still appreciate value.
The condo and land market will see limited activity largely due to limited inventory. There are no active land listings in Paia at this time. For that matter, there isn’t a whole lot of vacant land period. There are a handful of lots in the community that have not been developed. There are only two condo listings at Kuau Plaza. This complex saw three sales in the first half of 2013 and it went quiet the rest of the year. It appears as if sellers may have overshot the market with their pricing. During 2013, one bedrooms sold in the low 200s and two bedrooms were selling in the high 200s. The current inventory of one bedrooms are listed at $300,000 and $289,900 respectively. It will be interesting to see if the lack of other home options in Paia attracts buyers at those price points or if sellers will need to adjust their prices to find the market.
You can see all of the current Paia Real Estate listings on MauiRealEstate.com. Contact the Maui Real Estate Team with questions on the Paia market or the local community. Paia is our backyard. We know it well.
