The Gospel According to Paul

Recently, noted economist Paul Brew baker was on Maui discussing the real estate market. Below is a summary of some of his conclusions. Please email us if you’d like us to send you a link to the data supporting these claims. Maui’s housing market has turned the corner. Low production, low inventories suggest change in housing stock demand will overwhelm

new flow supply. Historical relationship between underlying trends in Maui house price appreciation and

(lagged) Maui days on market suggests that housing cycle is solidly in appreciation phase. Mainland markets with more severe housing downturns rebounding more sharply; ditto for

Maui and Neighbor Islands with more severe housing downturns than on Oahu. Longer-term appreciation trends suggest that neither the so-called “Sub-Prime Bubble” nor

the prior “Japan Bubble” are anomalies: valuation cycles are normal for markets with geographic and regulatory restrictions on supply side of market (ask the Sierra Club).

Role for demand-side bubbliciousness is not ruled out (viz. Phoenix and Las Vegas with subprime lending) but supply-side constraints assure Maui of another period of rapid house price appreciation.

Aloha,

Ken