February 2010 E-mail Update

This is my 2/3/10 E-Mail Update. I send updates out after the statistical data for the preceding month has been posted on the Honolulu Board of Realtors website. Our staff automatically adds new e-mail addresses we receive to our distribution list for the monthly e-mail update. To be removed, hit reply and tell us to remove you. Please include your first and last name to make it easier for us to find you in our database. If you want us to change your e-mail address, please  include your old address along with your new address. The graphs in this e-mail reflect calendar years during the 2000-2009 decade.

Oahu’s housing market appears to have turned the corner but it’s much too soon to tell whether 2010 sales data will surpass 2009. Last year finished very strong, however, even with the strong finish, sales for the entire calendar year of 2009 were still down 6% for houses and 12% for condos (high-rise units & townhouses) compared to 2008. Sales during the 2000–2009 decade jumped all over the place particularly for condos.

Oahu sales began the 2000–2009 decade at 200/mo. for houses and 251/mo. for condos and then rose to a high of 467/mo. in 7/04 for houses and to 831/mo. in 8/05 for condos. Sales then declined to a low of 122/mo. for houses and 159/mo. for condos both in 1/09 and ended the decade at 265/mo. for houses and 159/mo. for condos. Looking only at last year (2009), sales of houses from January to December increased from 122/mo. to 265/mo. (+117%) while condos increased from 159/mo. to 349/mo. (+119%).

Median (midway) sales prices were much more stable over the past decade and showed a fairly constant increase over most of the decade. Prices began the decade at $300,000 for houses and $119,000 for condos, had lows of $250,000 (in 2/01) for houses and $115,000 (in 8/00) for condos then rose to highs of $685,000 (in 6/07) for houses and $335,00 (in 7/07) for condos and ended the decade at $550,000 for houses and $300,000 for condos.

Sales data for houses and condos by area comparing calendar year 2009 to 2008 follow. The year-to-date figures are far more meaningful than the monthly data for December.

The $8,000 first-time homebuyer’s tax credit helped spur sales during the late summer and early fall as buyers rushed to meet a November 30 deadline in 2009. The tax credit deadline has now been increased to April 30th. Also contributing to the active market were the low interest rates. Whether interest rates will remain low or start to rise is one of the big unknowns for this year. Once interest rates do start to rise, the buyer’s buying power will go down creating a sense of urgency for buyers that should spur the market for both buyers and sellers.

One issue hampering buyers that are ready to buy now is the low inventory of listings that are available. At the beginning of 2009, there were 1,903 houses and 2,494 condos on the market. At the end of the year, the inventory had been reduced to 1,100 houses down 42% and 1,588 condos down 36%. As a result, we experienced multiple offers and backup contracts on some of our listings that are now in escrow. Competing offers usually enable the seller to realize a higher sales price than would be available with only a single offer.

Hawaii has the same problem that is besetting most other states . . . generating sufficient state income in the depressed economy. Only four states . . . N.D., S.D., Wyo., and Mont. are on track for  balanced budgets in fiscal 2010. In Hawaii’s case, it is a $1.2 billion shortfall. The answer is easy . . . raise taxes. But, it’s an election year. From an elected official’s viewpoint that is a nightmare scenario . . . raising taxes in an election year. Already being discussed is increasing the General Excise Tax (GET) with possible exceptions on groceries and prescription drugs. Also being discussed is opening the Pandora’s box of legalized gambling, most likely through the enactment of a state lottery.

One thing the State has done to reduce costs is to implement furloughs for state workers. In past e-mails I’ve discussed the hullabaloo created by furloughing public school teachers. We’re now experiencing various other furloughing problems. For example, we manage over 400 rental properties island-wide on Oahu. The loss of jobs and salary reductions via furloughs have made increased evictions an unfortunate way of life for most property management companies. The state is now furloughing court judges two Fridays per month. Friday is also the day of the week that the court processes those cases where a tenant is deliberately evading a sheriff who is attempting to serve a summons. As a result, we have had recent evictions delayed because we had to wait for the court to be able to rule that the sheriff could post a summons. Eventually, there will be new court calendars prepared, so everyone is working from the same playbook. However, right now furloughs have become a source of chaos.

In 2009, one in every 56 Hawaii households experienced a foreclosure placing Hawaii in 15th place nationally. The worse areas on Oahu were Ewa Beach, Waikiki, Kapolei, Waianae, and Waipahu.

The fourth “Pirates of the Caribbean” installment “On Stranger Tides” starring Johnnie Depp, Orlando Bloom and Naomie Harris is scheduled to be shot on Kauai and Oahu this summer.

Two former Hawaii Superferry vessels whose histories were marked by controversy will now be bringing desperately needed relief to earthquake-ravaged Haiti. Alakai, the Superferry that actually make it to Hawaii and its sister ship, the Huakai, are both being prepared for service to Haiti in a Norfolk, VA shipyard. The ferries are each capable of carrying 866 passengers and 282 cars at speeds approaching 40 knots. The two ships can transport heavy equipment like bulldozers, large generators, mobile hospitals, etc.

On Sunday, January 31st, high-ranking military officials opened a gate separating Hickam Air Force Base and Naval Station Pearl Harbor thereby starting the process of combining management support at the two facilities.. The new military installation will be known as Joint-Base Pearl Harbor-Hickam. A Navy Captain will be commander of the installation which is scheduled to be completed in October. The two facilities are among the 26 bases nationwide being combined into 12 bases.

Lots of local interest in the sixth and final season of TV show “Lost” that started last night. Most of the show has been shot on Oahu. Several of the actors have been living in Kailua with their children attending local schools.