Since Mayor Richard Bissen announced a proposal to phase out thousands of short-term rentals in apartment districts three months ago, the number of completed condo sales has declined by double-digit percentages, according to monthly statistics from the Realtors Association of Maui.

While it’s too early to declare a long-term trend, the downturn could be the first sign of a cooling in Maui’s hot real estate market, which has made purchasing homes and condos unaffordable for most longtime island residents.

Bissen announced a bill during a press conference in early May that would make short-term rentals in residential neighborhoods an unauthorized use. The proposal has been reviewed by the county’s planning commissions and is now before the Maui County Council.

Here’s how condo sales volumes in Maui County developed in the two months (March and April) before the law was announced on May 2 and in the three months after (May, June and July). The association’s market statistics show:

• March: 122 condo sales in 2023 and 93 in 2024; down 23.8%.
• April: 90 in 2023 and 106 in 2024; plus 17.8%.
• May: 91 in 2023 and 76 in 2024; minus 16.5%.
• June: 93 in 2023 and 59 in 2024; minus 36.6%.
• July: 76 in 2023 and 64 in 2024; minus 15.8%.

RAM President Lynette Pendergast attributed the decline in sales volume in part to uncertainty surrounding short-term rental laws, although high property listing prices and interest rates also play a role.

“The uncertainty surrounding short-term vacation rentals is certainly a significant factor, particularly in the condo market where such properties are often used for short-term stays,” Pendergast said in an email. “However, it’s important to note that this is only part of a larger picture. Interest rates and the high prices we’re seeing for single-family homes are also heavily influencing the market.”

In an email response to a Maui Now inquiry, Bissen said the downward trend in condo sales volume is a positive sign that housing is affordable for island residents.

“It is understandable that the uncertainty surrounding the TVR abolition could impact the condo resale market,” he said. “This data shows that condo owners, the vast majority of whom are not local homeowners, are more interested in selling and fewer buyers are willing to pay the higher prices of the recent past. These are desirable trends for local housing affordability and we expect these trends to be reinforced if the County Council approves the abolition, making it more affordable for residents and long-term landlords to purchase these units.”

While the number or volume of sales has declined over the past three months, sales prices have not declined by the same amount. Compared to the same month last year, median sales prices for condos rose 1.3% in May, were unchanged in June, and fell 6.3% in July – an average price reduction of 1.3% over three months.

By comparison, median sales prices for single-family homes increased in each of the last three months: 2% in May to $1,297,500, 30.8% in June to $1,350,000, and 0.8% in July to $1,210,000—an average three-month price increase of 11.2%.

Pendergast said the noticeable decline in the number of completed sales of both single-family homes and condominiums in July “reflects the dynamic nature of our housing market, which is influenced by various economic factors, consumer preferences and uncertainties related to short-term rental laws.”

When asked to elaborate on her comment on “short-term rental laws,” Pendergast said she was considering “the general environment of regulatory changes with respect to vacation rentals on Maui.”

Bissen’s proposal to ban vacation rentals in apartment districts came shortly before Governor Josh Green signed Senate Bill 2919, which clarified counties’ authority to regulate vacation rentals.

“Both bills add to the uncertainty in the market and together have created a cautious atmosphere among both buyers and sellers, particularly in the condominium market where vacation rentals are most common,” Pendergast said.

The measure to phase out vacation rentals is ultimately aimed at encouraging owners to convert vacation rentals into long-term housing for residents, although many condominium owners say the units are too expensive for residents and not suitable for permanent residential use.

The measure would affect units in apartment zones, or about 7,000 of Maui County’s 13,000 vacation rentals. Single-family homes are not in apartment zones.

Pendergast said the proposed regulation of short-term rentals could impact the entire real estate market on Maui, both single-family homes and condominiums.

“Buyers who are not fully aware of the nuances or are concerned about potential future regulations may take a more cautious approach, which could slow sales in various market segments, not just condos,” she said.

When asked if three months of data is enough to identify a “trend,” Pendergast said, “While it’s too early to definitively say there’s a long-term trend, the immediate impact of the announcement is obvious and could cool the market. If this pattern continues over the next few months, the trend would solidify. Monitoring next quarter’s sales data will be critical to understanding the full impact of the law phasing out short-term rentals.”

The association’s analysis of real estate statistics is based on data collected from its Multiple Listing Service system. Click here to view the full statistical report for July.

The number of new listings for single-family homes increased 12.3% year over year in July, while the number of new listings for condos increased 47.8%. In addition, the median time on the market for single-family homes and condos was 126 days.

The association’s housing affordability index for single-family homes was 33 in July (no change from July 2023), two index points above the 12-month average of 31. For condominiums, the index number was 50 (6.4% higher than July 2023), four index points above the annual average.

The index scores show the affordability of housing in the area. For example, an index score of 120 means that the median household income is 120% of what is needed to qualify for a median-priced home at prevailing interest rates. A higher score indicates greater affordability.

For more information on the Maui County real estate market, visit the association’s website at https://www.ramaui.com/. Consumers can browse single-family homes and condominiums on Maui, Molokaʻi and Lānaʻi and view a comprehensive list of open houses. Searches can be made by geographic location, home type and/or price range. The website provides useful information on buying and selling real estate in Hawaii.