What The Heck Is The Honolulu Real Estate Market Doing?
August 30th, 2010 categories: The Market
Now that the end of summer is here and nearly 75% of 2010 is gone, many have been asking me what is going on with the Honolulu real estate market? Here are my thoughts.
1. In general, the market is good for properties that show well and are priced within the range of the most recent comparable closed sales. Is it as strong as it was at the peak? No, but there is good demand and I have been seeing listings sell relatively quickly in core Honolulu.
2. Financing is the key. Houses and condos that fit into conventional, FHA and VA financing guidelines are in demand and they’re selling quicker than properties that need jumbo financing.
3. Appraisers seem to be loosening up. Last year at this time, it seemed that appraisers were being very stingy with their valuation prices for homes. A year ago, appraisers were committed to giving values at the lowest possible market level and therefore; they were, in my opinion, artificially holding back the market. In the last 5 months, I have noticed that appraisers are more willing to move prices to the middle and upper range of a properties market value.
4. Washington needs to get its act together. In general, Hawaii is seeing gains in our tourism market and since this is one of the major driving forces in our economy, it is not surprising to see Waikiki, Ala Moana and retailers full of shoppers. HOWEVER, I sense a bit of fear regarding the national economy! It seems that people are unsure of what will be coming out of the elected “nuts” in D.C. and therefore they are a bit hesitant to jump into the real estate market with reckless abandon. When things settle down on a national level, I believe you will see Hawaii real estate pick up very quickly.
5. Potential increase in taxes. Since taxes are scheduled to go up on January 1 (if congress does nothing), I have a number of clients that are selling their properties this year to take advantage of the lower long-term capital gains rate. If you are thinking about selling next year, you may want to investigate your exposure to the capital gains tax. If you have to pay taxes, then it might make sense move the sale into 2010 (CHECK WITH YOUR ACCOUNTANT).
In summary, I am pessimistically optimistic about our market. For reasons outlined in this blog over the last several years, Honolulu remains a good long-term investment. Given the recent slowing in the number of homes resold nationally, now may be a very good time to buy into our market. Since urban Honolulu has recovered some of the equity it lost between 2007 and 2009, this maybe a very good time to sell (if you are planning on selling between now and 2012).
If you would like to discuss your real estate needs, feel free to call me at 808-737-2093 or toll free at 877-737-2093. You can email me at keahi@lava.net.
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Honolulu Hotel Occupancy Leads Hawaii
August 19th, 2010 categories: The Market
Pacific Business News is reporting the following.
“Oahu maintained the highest occupancy rate at 87.8 percent, up 4 percentage points from a year ago.”
CLICK HERE TO READ THE ENTIRE ARTICLE
This may explain why a past client mentioned that Honolulu doesn’t feel like it is having economically hard times. He noted that malls and restaurants are packed. What does this mean for Honolulu real estate?
Though hotel occupancy is a single indicator, it is one of the more important ones in our market. As tourism improves, businesses reliant on visitors will do better and this will strengthen other sectors too. If you have not yet purchased your part of Oahu, then now may be a great time to do to step up and buyer your house or condo.
If you would like to discuss your real estate needs, feel free to call me at 808-737-2093 or toll free at 877-737-2093. You can email me at keahi@lava.net.
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Buyers Of Hawaii Oceanfront Properties Beware!
August 16th, 2010 categories: For Buyers, For Sellers
If you are thinking about buying an oceanfront home or parcel be sure to do your homework. There has always been a large set back from the waterfront property line and determining the location of this mark has required a Special Management Area (SMA) survey. The Honolulu StarAdvertiser is reporting a clarification and change in the SMA Rules.
“The proposed change would establish the setback line about 40 feet from the certified shoreline, plus 70 times the average annual coastal erosion rate. The city and University of Hawaii is working on establishing that rate, said Samuel Lemmo, administrator for the state Office of Conservation and Coastal Lands, which oversees about 2 million acres of private and public lands in the state Land Use Conservation District.” CLICK HERE TO READ THE ENTIRE ARTICLE
Given the importance of determining the certified shoreline, BEFORE CLOSING AN OCEANFRONT SALE, a buyer should get a valid and approved SMA survey on any ocean front property. If you don’t get it or decide to make improvements on your lot, you may are exposing yourself to serious penalties and problems. Ironically, a few days after the article above was posted, The Maui News posted an article about the largest fine ever paid for violating SMA rules.
“The largest fine for shoreline setback encroachments ever imposed by Maui County was approved as part of a settlement agreement by the Maui Planning Commission on Tuesday. Larry and Sara Dodge, of Rancho Santa Fe, Calif., and Makena, will pay $65,000 to settle four county violations, remove a wall and seek after-the-fact permits for repairs done to their deck.” CLICK HERE TO READ THE ENTIRE ARTICLE
If you are a seller of an oceanfront property, it is a good idea to get your SMA survey in advance. This way you can show the buyer exactly where the line is and where they can place the home they want to build. Furthermore, because getting the survey can take a few years, getting it up front will save time and head ache.
If you would like to discuss your real estate needs, feel free to call me at 808-737-2093 or toll free at 877-737-2093. You can email me at keahi@lava.net.
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Great Honolulu Foreclosure News
August 12th, 2010 categories: The Market
The Honolulu StarAdvertiser is reporting some great news!
“A 37-month string of rising Hawaii foreclosure filings was broken last month, but industry observers don’t agree on whether homeowner mortgage troubles are subsiding.”
CLICK HERE TO READ THE ENTIRE ARTICLE
The Honolulu real estate market has been brisk since the first of the year and this news could show that another drag on the market could be falling by the wayside.
If you would like to discuss your real estate needs, feel free to call me at 808-737-2093 or toll free at 877-737-2093. You can email me at keahi@lava.net.
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Put College Money To Work For You
August 10th, 2010 categories: Rants & Riffs
A recent Wall Street Journal online article estimated that the average college student attending a public four-year university spends approximately $8,193 per year for room and board.
Consider that students attend college for 9 months a year; this means they are spending $910 per month to pay for their housing. If a student used this money to purchase an apartment, this amount will pay for a mortgage of $170,000 (5.0% amortized over 30 years).
Proper planning may help a family reduce the cost of going to college and create the possibility of gaining a good return on investment for funds that might otherwise be used for rent only. Think about it.
If you would like to discuss your real estate needs, feel free to call me at 808-737-2093 or toll free at 877-737-2093. You can email me at keahi@lava.net.
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Seats For More Behinds
August 6th, 2010 categories: The Market
A friend of mine in the car business once told me, “There is an okole for every seat”. One of the challenges Hawaii’s tourism market faced over the last few years was the loss of air carrier flights. The fewer the flights and the fewer the people that could come to our beautiful islands. The Honolulu StarAdvertiser is reporting the addition of a significant number of airline seats.
“An influx of new airline seats to Hawaii from the mainland this year will make up about half of the 1 million seats that were lost in 2008 and 2009.” CLICK HERE TO READ THE ENTIRE ARTICLE
Additional flights will mean more tourists and this will lead to a further recovery of our very important tourism market. As tourism gets healthier demand for Honolulu real estate will rise, which means now may be a terrific time to buy. Let’s hope the additional seats fill quickly with more okoles.
If you would like to discuss your real estate needs, feel free to call me at 808-737-2093 or toll free at 877-737-2093. You can email me at keahi@lava.net
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Not A Laffer
August 4th, 2010 categories: Rants & Riffs
Sorry to be political, but taxes directly and indirectly impact owners of Honolulu real estate. Since it looks like the Obama administration and Congress are going to allow our taxes to increase on January 1, 2011, I feel it is my duty to make my opposition known. In past posts, I have quoted the economist Arthur Laffer and today I quote his post at the Wall Street Journal online. Laffer starts his article with the following.
“Tax reduction thus sets off a process that can bring gains for everyone, gains won by marshalling resources that would otherwise stand idle—workers without jobs and farm and factory capacity without markets. Yet many taxpayers seemed prepared to deny the nation the fruits of tax reduction because they question the financial soundness of reducing taxes when the federal budget is already in deficit. Let me make clear why, in today’s economy, fiscal prudence and responsibility call for tax reduction even if it temporarily enlarged the federal deficit—why reducing taxes is the best way open to us to increase revenues.”—President John F. Kennedy,
Economic Report of the President, January 1963
President Kennedy understood that tax cuts spur the economy and leads to more money going to the government. Here is what I think he knew. 39.6% of $100 is $39.60. 25% of $200 is $50. By lowering taxes, economic activity grows and the taxable pie grows, thus a lower tax rate means more tax dollars for the feds. Our nation doesn’t have problem with have to little in the way of taxes, our problem is that we have a bunch of drunken sailors in Washington, DC, that are spending geometrically more money than they have.
Laffer writes the following.
“Anyone who is familiar with the historical data available from the IRS knows full well that raising income tax rates on the top 1% of income earners will most likely reduce the direct tax receipts from the now higher taxed income—even without considering the secondary tax revenue effects, all of which will be negative. And who on Earth wants higher tax rates on anyone if it means larger deficits?” CLICK HERE TO READ THE ENTIRE ARTICLE
In summary, its not too late, let your Senator, Congressman and the President know that they need to stop spending and to not allow our taxes to be increased in 2011.
If you would like to discuss your real estate needs, feel free to call me at 808-737-2093 or toll free at 877-737-2093. You can email me at keahi@lava.net.
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Media Mixed Message On Honolulu Commercial RE
August 3rd, 2010 categories: The Market
Pacific Business New online had two recent articles concerning the Honolulu commercial real estate market and they seemed to contradict each other.
“Oahu’s commercial real estate market is showing signs of recovery, but it could take at least another year before it is back on firm footing.” CLICK HERE TO READ THE ENTIRE ARTICLE
“Hawaii Commercial Real Estate said the outlook isn’t good, as large tenants plan to consolidate or move to lower-cost facilities in the next two quarters. They include Morgan Staley Smith Barney, which will vacate 20,000 square feet at Alii Place to consolidate operations at Pacific Guardian Center; Kiewit, which will move from Harbor Court to Iwilei; and KPMG, which will downsize its office by 6,000 square feet, the report said.” CLICK HERE TO READ THE ENTIRE ARTICLE
Based on my conversations with local commercial brokers, it seems sales are slow and vacancies are up. What does commercial real estate have to do with my focus, Honolulu residential real estate? I believe it is key economic indicator. High vacancy rates are reflective of a sluggish economy, as these rates get lower they will be evidence of market confidence and growth. Confidence in the commercial sector should drive residential real estate values to higher levels. Think about it.
If you would like to discuss your real estate needs, feel free to call me at 808-737-2093 or toll free at 877-737-2093. You can email me at keahi@lava.net.
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Honolulu Foreclosures Up
August 2nd, 2010 categories: The Market
The Honolulu StarAdvertser is reporting a significant increase in the number of foreclosures in Honolulu. Generally, Honolulu includes all of the island of Oahu and since the reporting company, RealtyTrac, doesn’t delineate between the different communities it is difficult to tell whether the increase is in outlying areas or the urban core.
“Home foreclosures in Honolulu shot up more than 70 percent during the first half of this year even as foreclosure rates began abating in the hardest-hit cities on the mainland, according to report released today.
A total of 2,784 Honolulu homeowners received a foreclosure filing between January and the end of June, up 72.3 percent from the first half of 2009, according to the report from real estate research firm RealtyTrac.”
CLICK HERE TO READ THE ENTIRE ARTICLE
It seems that demand for well priced homes and condos in urban Honolulu is still high. Let’s see what happens over the next six months.
If you would like to discuss your real estate needs, feel free to call me at 808-737-2093 or toll free at 877-737-2093. You can email me at keahi@lava.net.
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Lessons From Negotiating
July 30th, 2010 categories: Negotiating Contracts
In today’s video blog, I talk about 3 really important lessons I have learned over my years of negotiating Honolulu real estate transactions.
If you would like to discuss your real estate needs, feel free to call me at 808-737-2093 or toll free at 877-737-2093. You can email me at keahi@lava.net.
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