Housing on familiar track

This week’s news that the median price for single-family Maui homes topped the $1 million mark for the first time reminded us of an analogy a friend often used in the 1980s to describe island real estate.

He said it was a train moving ever forward. Wage-earning homeowners could get off anytime they wanted. Cash out, pay the bills and take the profit. The problem was the train promptly chugged from the station and left them behind.

Those former owners would never be able to jump back on at the level of property they sold. Not on Maui at least. That is one reason why so many folks relocated to the Mainland through the years. The American Dream of homeownership is more obtainable there.

Lately we’ve heard stories of Maui residents who qualify to buy, but cannot purchase a home because they are continually outbid by Mainland and international buyers. The competition is said to be willing to pay well beyond asking price, often pulling the trigger sight unseen and with cash.

This may be more prevalent now, but it is not new. Nor is it only happening in Hawaii. Casting back once again to the 1980s, we recall an era when Japanese investors seemed intent on buying every hotel and beachfront property available. Japan’s economy was booming. The value of the yen more than doubled against the dollar during the decade. It became trendy to purchase comparatively cheap Maui real estate. Oahu was targeted even more.

Time allows us to see that many of those Japanese investments were of the buy high and sell low variety. The Grand Wailea Hotel developed by Takeshi Sekiguchi cost an estimated $650 million to build when it opened in 1991. It sold seven years later for $263 million. He also helped build a pair of golf courses in Waikapu. One of those, Kahili Golf Course, is currently closed.

There will always be swings in the island economy and its real estate prices. The people paying $100,000 over asking price for Kahului fixer-uppers may well find themselves following in Sekiguchi’s footsteps. Another constant has been that after the market corrects itself prices generally remain higher than they were before the spike.

Wage stagnation on Maui means it will only get harder for working-class residents to purchase their own homes unless affordable subdivisions and apartments are made available. Affordable rentals are an option, but they do not provide the benefits of ownership, such as building equity and having the opportunity to put that equity to work.

For those who are lucky to own a home on Maui, it must be impossible to hear the prices neighbors are fetching and not wonder how much they could sell for. Those thoughts should come with a warning hiss of steam and lonely train whistle, the sounds of the Maui real estate express leaving the station.