June 2010 E-mail Update

This is my June 9th e-mail update. I send an e-mail out after the statistical data for the preceding month has been posted on the Honolulu Board of Realtors website. Our staff routinely adds new e-mail addresses we receive to our distribution list. To be removed, hit reply and send me an e-mail stating that. Please include your first and last name so that it is easier to find you in our database.

Sales compared to last year look pretty impressive but not if you go back another year to 2008. Year-to-date (Jan-May) sales of single-family homes were 1,171 in 2008, fell to 847 in 2009 and then increased to 1,183 in 2010. Condos were 1,803 in 2008, fell to 1,088 in 2009 and then increased to 1,605 in 2010. We are still seeing the results of the housing incentive program where buyers were able to obtain an $8,000 credit for escrows opened prior to April 30th that closed prior to June 30th. An applicable link in today’s newspaper is here by Honolulu is now a single newspaper city with the paper being the Honolulu Star Advertiser.

Honolulu City Councilman, Republican Charles Djou, pierced the Democrats’ hold on the state’s congressional delegation in a May winner-take-all special election for Congress by becoming the first Republican in 20 years to represent Hawaii in Washington. Djou took advantage of a bitter split between the two major Democratic candidates, Senate President Colleen Hanabusa and former congressman Ed Case, to win the seat vacated by Neil Abercrombie who is concentrating on a gubernatorial race against Honolulu mayor Mufi Hannemann. Djou finished with 39.4% of the votes while Hanabusa had 30.8% and Case 27.6%. It was expected there would be a hot Democratic primary; however, Case bowed out thereby giving Hanabusa a virtual free ride . . . Lots of rumors circulating as to why Case took such a step; perhaps a combination of all of the following: A Democratic win in November versus Djou is no sure even with the Democratic majority; Case is in debt to his extended family; he would have difficulty raising funds for another race against Hanabusa who raised twice the funds he did for the special election; someone offered to help Case with his debt if he would bow out of the race; Case realizes he needs support in any future race from the established Democrats and labor unions that supported Hanabusa; Case now has his eye on a 2012 race, possibly for the Senate.

Contrary to what you may have heard about short sales not applying to investors, we have been successful in getting several absentee owners (investors) approved for short sales in Hawaii. Approval is far more likely if we can start the short sale process early on, preferably before you start missing any mortgage payments. If you can document that you will be unable to continue making mortgage payments 3-4 months in the future, we should start the short sale process now. Contact us by e-mail at team@stott.com or toll-free at 1-800-922-6811.

In the latter part of 2009 a state tax auditor assumed that a Gulfport, Mississippi rental property I own was located in Hawaii and that I had failed to pay General Excise Tax (GET) for several years. Without verifying her assumption, the auditor generated several pages of computer detail as to the taxes I owed . . . all the back GET plus a 50% penalty plus interest at 8% . . . GET is not required for rental properties not located in Hawaii. Copies of my Federal Schedule E’s easily resolved my problem. My experience made me believe, though, that Hawaii may be examining new auditing areas. We didn’t see any indication of this until very recently; we have now gotten ten Notices of Non-Filed GET Tax Returns sent to us with requests for filing information. Five of the Notices were sent to us on the same day. To date, none of our clients have had to pay any back taxes.

We have had several non-client recipients of our newsletter contact us for advice. If you are not paying GET on your gross rental income, as a minimum, we recommend that you or your property manager file for a GET license and start paying GET immediately. Your mitigation to the state would be that you commenced paying GET as soon as you became aware that it was required. Click here and select “Forms” at the top of the page and then select “Alphabetical List” under “Forms” and scrolling down to “BB-1.” There is a  $20, one-time application fee.

Republican Gov. Linda Lingle recently signed into law the “birther” bill that is intended to limit the number of requests for President Obama’s Hawaii birth certificate. The state Department of Health receives about 50 e-mail inquiries each month for Obama’s birth certificate, primarily from the same 4-6 people on the Mainland. The new law, Act 100, allows state agencies a limited exemption from Freedom of Information requirements when the same person makes duplicate requests for information. Republican Gov. Lingle has gone on record stating that Obama was born in Hawaii. Other members of her staff have appeared on various radio/TV talk shows trying to put this to bed without much success. Act 100 was introduced by a request from Gov Lingle to lessen the time and resources required of the state to respond to repeated, often convoluted requests.

Hawaii leads the nation in endangered species with 58 animals and 319 plants for a total of 377. California is in second place with a total of 302 followed by Florida with 108. Some recent success stories in Hawaii range from the nene (Hawaiian goose) to the kohola (humpback whale) to the Moana Loa silversword plant . . . Nearly one-third of marriages in the Islands are between interracial couples, by far the largest percentage in the country and four times the national average . . . Castle & Cooke plans to convert 120 acres of an agricultural park it owns just south of Mililani into fields of photovoltaic panels early next year thereby producing enough electricity from the sun to power 6,000 homes.

At a time when several of their WAC opponents are lamenting the cost of jetting to Hawaii to play a football game, some of the schools have learned how to make it cost effective. The NCAA limits teams to a maximum of 12 regular football games unless they play one in Hawaii in which case the so-called Hawaii Exemption permits a 13th game. This year, five of UH’s six major college home opponents will take advantage of the Hawaii Exemption to add a 13th game to their schedule. For some schools like USC, the game against UH is their bonus payday. For others like UNLV are able to arrange a game that provides considerably more net income; e.g., UNLV will play their 13th game at West Virginia for a payout of $740,000 along with $10,000 in travel fees.

Alika Smith, a standout local basketball player and a former starter at UH is going home. Prior to going to UH, Alika was a three-time All-State player at Kalaheo H.S. (1992-1994) playing for his father, the late Pete Smith, who was the Mustang coach for 16 seasons.  Pete Smith was one of Hawaii’s winningest basketball coaches, leading the Mustangs into the state tournament in  all 16 years, going to the final four 14 times and winning the state championship three times. The new Mustang coach is his son . . . Alika Smith.

The final weekend in May was marvelous for Hawaii sports teams. The #1 ranked Alabama Crimson Tide were ahead of the #16 ranked wahine softball team in the Super Regionals being played at Alabama with two outs and a 4-3 deficit in the bottom of the final inning. A wahine was on base; however, little to worry, as the Tide pitcher had struck out 16 UH batters. Then Jenna Rodriguez stepped to the plate and promptly hit the first pitch for a walk-off homerun sending the ‘Bows to the College World Series for the first time in school history . . . The UH men’s baseball team won the Western Athletic Conference (WAC) baseball crown for the first time in 18 years by defeating heavily favored Fresno State and is now off to the Arizona State Regional . . . Hawaii Pacific’s female Softball team won the Division II national championship with a harrowing 4-3 win over 51-9 Valdosta State to end their season at 50-8. Valdosta State loaded the bases with one out in the seventh inning but could not bring in a tying or go-ahead run. Baseball and softball has come to an end. Each of the ‘Bow teams advanced in post season but neither was able to make it to the final four. Still it was a great season that resulted in pay increases for the two Rainbow coaches.

What a mess . . . click here.