Moratorium On Water

Home prices on Maui will certainly be affected by recently mandated restrictions on water meters. Although parts of the island of Maui are one of the wettest places on earth, Maui County bureaucrats have not delegated enough money to draw water from these sources to accommodate the increasing demand. Developers who want to build a subdivision or condominiums will first have to prove they have a long-term source of water. Meaning, the County will no longer deliver water to new projects. Maui County Council passed such a bill on December 7, 2007. Essentially this is a water moratorium that will have a significant impact on growth. Many developers are concerned and the County council hides behind the statement that the developers have been warned for years. Interestingly, the County has been collecting developer fees for years and property values have skyrocketed thereby County's property tax collection has skyrocketed. Where does the money go to plan for inevitable growth and demand for water. Obviously, it is not going to infrastructure. The County has been wrestling with the issue of developers not offering affordable "local" housing due to the rapid appreciation of real estate prices. The insatiable demand for Maui real estate continues and is anticipated to increase on an international level as previously mentioned in this blog. County Council has just accommodated the basic principles of supply and demand by way of slowing development growth through these restrictions. This fact, coupled with increasing demand for Maui real estate, will create the "perfect economic storm" for inflation in the real estate market in the years to come.