July – September Mixed Plate of Talk Story

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Home sales on Oahu continued to decline in the third quarter with year-to-date total sales (houses plus condos) down from 7,221 in 2007 to 5,307 in 2008 (-26.5%). The slumping housing market is finally being reflected by declining median sales prices. For some time, the subprime lending problems coupled with declining sales have kept the median sales prices biased high, a topic I discussed at some length in my last newsletter here.

Trends are far more important than the data for any specific month. Having said that, it would appear as though there have been breakthroughs in the median sales prices for both houses and condos with September’s data. The median sales price for houses fell below $600,000 for only the third time in the last 41 months and at $590,000, was the lowest median price since April of 2005. The median sales price for condos fell below $300,000 for the first time in 32 months and at $296,000, was the lowest median price since January of 2006.

To provide some idea of recent trends, the median sales prices for houses and condos over the past six months (April through September) follows. Houses: $639,000; $649,500; $625,000; $620,000; $635,000; $590,000. Condos: $327,000; $337,300; $327,500; $329,900; $328,000; $296,000 . . . For the past two years, Hawaii has had one of the lowest foreclosure rates in the nation; however, that rate is now starting to increase. In August there were a total of 336 foreclosure filings in Hawaii, up 132% from a year ago and placing the state in 35th place nationwide in households per filing at 1,488.

Here we go again . . . in early August, a new federal court lawsuit was filed challenging the Kamehameha Schools admissions policy. The lawsuit was filed on behalf of four unnamed students who allege they were denied entry because of their non-Native Hawaiian ethnicity. One of the attorneys filing the suit is the same attorney that filed a similar claim in 2003 on behalf of a Big Island youth referred to as John Doe who subsequently agreed to drop his suit last year for a $7 million settlement after pursuing it all the way to the U.S. Supreme Court. In that case, the 9th U.S. Circuit Court ruled 2 to 1 that the school policy was illegal. The ruling was appealed and a subsequent, unusual “en banc” hearing before 15 Circuit Court justices ruled 8-7 that the school policy was legal. That ruling was then appealed to the U.S. Supreme Court. The school decided to settle rather than having the Supreme Court rule on this matter. The two Circuit Court rulings were both decided by a one-vote margin with different decisions. Thus far, 18 Circuit Court justices have heard the case with nine ruling on each side of the issue. Who knows how the Supreme Court would rule?

While most of the country was rooting for our Olympic athletes, Hawaii had a competing TV attraction . . . the Waipi’o little league team that earned a spot in the Little League World Series at Williamsport, PA after winning the Western Regional title in San Bernardino, CA. Perhaps, it was destiny when rain fell them on their opening game and a rainbow appeared in the sky over Williamsport, as what followed was a continuation of the winning ways started by West Oahu’s championship team in 2005. Waipi’o cruised through the World Series beating Shelton, CT 3-1; Tampa 10-2; Rapid City, S.D. 6-4; and Mill Creek, WA 9-4 before reaching the U.S. finals against Lake Charles, LA. With the score 5-1 in favor of Lake Charles going into the 6th and final inning and with fans heading to the exits, Waipi’o exploded with six runs and won 7-5 in a spectacular come-from-behind at-bat that will long be remembered in Hawaii. The World Title game (U.S. winner vs. non-U.S. winner) was almost an after thought as Waipi’o easily beat Mexico 12-3. For thirteen 12 & 13 year-olds, their coaches and a host of fans, August was a fantastic month. Two championship teams from Hawaii in four years . . . Wow!

Honolulu is the second healthiest U.S. city in which to retire or live in according to a report in the Sept/Oct issue of “AARP the Magazine.” Ann Arbor, home of the University of Michigan with one of the largest university medical centers in the world, was ranked first. Others in the Top Ten were Madison, WI; Santa Fe, N.M.; Boulder, CO; Fargo, N.D.; Charlottesville, VA; Minneapolis-St. Paul, MN; the San Francisco Bay area; and Naples-Marco Island, FL. The magazine considered more than 20 criteria such as clean air and water, the health and habits of inhabitants, and quality-of-life issues. For Honolulu, an impressive 95% of residents are covered by health insurance (required by state law for full-time employees). Our residents spend more time exercising than almost any other city surveyed and have one of the highest rates of life expectancy among surveyed cities.

A primary election in September had the lowest voter turnout in Hawaii (percentage) since 1959 statehood with only about 35% of the registered voters going to the polls. Previous primary election turnouts have ranged from a low of 40% to a high of 84%. The Oahu mayoral election had the greatest attention. Incumbent Mayor Mufi Hannemann had to win over 50% of the vote to be elected. He came close at 49.4% but now will have to face the second highest vote getter, former Councilwoman Ann Kobayashi, in the November general election.

The “Wheel of Fortune” taped 20 shows on the Big Island in September with 15 scheduled to be shown after the November elections and the remaining five in February before Valentine’s Day. About 15 million viewers watch the program each evening. The Big Island site at the Waikoloa Hilton was converted from a seaside putting green into an outdoor studio with seating for 1,200 people. Almost 100 tons of equipment including six miles of electrical cable and two diesel generators were shipped to Hawaii. The Waikoloa production will cost an estimated $5 million. It’s the fourth time the show has been produced in Hawaii.

Kamehameha Schools (formerly Bishop Estate) is seeking real estate investors to buy the leased fee land under some 900 Oahu homes in a push by the trust to divest remnants of its formerly vast residential property holdings. The homeowners have all declined past offers to buy the fee, so the trust is looking for third parties to buy the land. The new owners would take over negotiating future rent increases and ultimately assume ownership of the property and improvements when the leases expire. Apparently, the sales are not proceeding too well; as of late-September, a couple of sales were pending but none had closed.

Minus 5 Group, a New Zealand company with a growing chain of bars serving vodka to customers in a frozen environment, is planning on opening an “ice lounge” in Waikiki. Minus 5 bars are named for their interior air temperature of minus 5 C (23 F) that preserves interior walls, tables, chairs, sculptures, and drink glasses all made of ice. Customers are provided parkas, gloves and boots to keep warm. Except for non-alcoholic alternatives, all drinks at Minus 5 are made with vodka, which doesn’t freeze at the bar’s temperature. Entry to Minus 5 costs $30 and includes one free drink. There is a three-drink maximum and a 30-minute time limit. There are two “ice lounges” in New Zealand, two in Australia and one in Portugal. A sixth will open in September in Las Vegas with the seventh planned for Waikiki.

Honolulu was the top city in the nation when it came to six of 45 categories relating to travel in a recent survey conducted by Travel & Leisure magazine and Headline News. The America’s Favorite Cities survey asked people to rate 25 U.S. cities. Honolulu ranked in the top five in 14 categories and first in the following six categories: for weather; for active/adventure vacations; as a relaxing retreat; as a romantic escape; for winter/Christmas travel; and for Thanksgiving travel . . . Over half of Honolulu’s General Fund comes from property taxes. With property values declining, the market value of many properties is less than their assessed value for taxes. So, hang on to your wallet and expect tax rates on Oahu to increase next year.

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