May 2011 E-Mail Update

This is my 5/10/11 E-Mail Update. I send an Update out each month after the statistics for the preceding month have been posted on the Honolulu Board of Realtor’s website. If you want to be taken off the distribution list for our monthly E-Mail Update, hit reply and send me an e-mail stating that. Please include your first and last name to make it easier to identify you.

The median sales price for houses sold on Oahu rose for the first time this year with a slight gain in April; however, the number of sales fell sharply.  During April, sales of 229 houses and 279 condominiums were reported by the Board’s MLS, decreases of 19.6% and 6.7% compared to a year ago. Median sales prices were mixed, $585,000 for single-family homes, up 3.5% and $305,000 for condominiums down 0.7% compared to April of last year. April’s gain for houses, although small, followed three consecutive year-over-year declines for median sales prices in January, February and March.

Hawaii dodged a bullet with only an estimated $30 million in property damage and no loss of life from the devastating Japan earthquake and tsunami. While our thoughts and prayers obviously go out to the victims in Japan, it is important to also turn our attention to the economic impact the disaster will have on Hawaii. Nearly one in five visitors to Hawaii normally come from Japan. The University of Hawaii Economic Research Organization (UHERO) estimates that visitor arrivals from Japan will fall by 10.8% this year before rebounding by 10.3% in 2012. Recent passenger counts from Japan have been running about 25% below year-ago levels.

Hawaii lawmakers have been massaging a host of proposals to close a projected $1.3 billion budget deficit over the next two years. Near and dear to those in the retirement community was a successful effort to block a state tax on retirement or pension income in Hawaii, a new tax favored by Gov. Neil Abercrombie. AARP Hawaii mobilized on this one with seniors in red tee-shirts descending on the capitol, phone calls to legislators, etc..

Many Oahu residents are concerned not only about the ballooning cost of the multibillion dollar rail project, but also how the 20-mile steel on steel elevated rail system through downtown Honolulu will impact upon the environment, view planes, ancient Hawaiian burial sites, historic buildings, property rights, traffic and noise levels. Former Democratic Governor Benjamin Cayetano, Republican State Senator Sam Slom and Honolulu transportation expert Cliff Slater have combined to file a federal lawsuit to stop the rail. Assisting them is San Francisco attorney Nicolas Yost one of the top environmental lawyers in the country who specializes in Native American Law.

As is so often the case, the final decision may be determined by cost. The rail project estimates jumped from $2.7 billion in 2004 to $4.6 billion in 2006 to $5.3 billion in 2011 and is still climbing, While the newly elected Honolulu Mayor, Peter Carlisle, maintains the rail is on track and recently held a $30,000 ceremonial groundbreaking and press conference to announce contracts that have been awarded, the promised $1.865 billion in federal funds has not materialized. In fact, the city has apparently received just $34 million from Congress. Getting more federal funds may be difficult at a time when the new Republican House leadership in Congress is fighting for huge spending cuts.

Only $623 Million, a fraction of the $1.6 billion in contracts already awarded by the city, has been collected from Oahu taxpayers via the 5% increase in GET from 4% to 4.5%. With street pavements deteriorating and seemingly minimal paving currently being accomplished, with the city sewer system in need of $7 billion in EPA mandated upgrades, with a water system that sees on average one break a day with little funds for long term repairs and with other city infrastructure going unrepaired despite record high property taxes and user fees, many are wondering why Carlisle is pushing so vigilantly for the rail project. Despite not having the necessary funds and despite the legal challenges, the city is moving ahead with plans to spend up to $248 million to acquire property and relocate tenants that are in the path of the 20-mile system.

Most conventions of 1,000 or more attendees are booked about five years out. As a result of the global downturn in the economy that began in 2008, the ability of the Hawaii Convention Center to secure bookings for 2012 and 2013 was negatively impacted. The Convention Center now has only ten events planned for 2012 that should generate an estimated 314,804 room nights and just nine events in 2013 that should generate an estimated 323,721 room nights. The two years will probably be the two worse years on record for bookings; each falling far short of the annual benchmark of 700,000 room nights set by the Hawaii Tourism Authority. Even if various last-ditch efforts now underway materialize into additional short-term bookings, it is unlikely the numbers for 2012 and 2013 will exceed 400,000 room nights. The record year for Hawaii was 2005 when 46 events generated 706,489 room nights. For 2011, there are 30 events booked that should generate 517,814 room nights.

The Hartford Colonials of the United Football League have secured the rights to former University of Hawaii QB Colt Brennan.  Hartford’s head coach is Jerry Glanville, a former head coach with the NFL Houston Oilers and Atlanta Falcons, who was UH’s defensive coordinator during Brennan’s sophomore and junior seasons in 2005 and 2006. Brennan, who will turn 28 in August, threw an NCAA record 58 TD’s in 2006. He was drafted by the Washington Redskins in the 6th round in 2008; however, following surgeries, on each hip and each knee, he was released last spring. He then signed with the Oakland Raiders, but was cut  prior to the season opener. There were talks with various NFL teams with the possibility of Brennan being signed to a practice squad near the end of the 2010 season before Brennan suffered several major injuries in a two-car crash on the Big Island. Brennan has healed and is back in “football shape” But with the NFL lockout and limited opportunities to work out for NFL teams, his options are limited. The eight-game United Football League season ends in November, possibly enough time for Brennan to receive an end of season role with an NFL team.

Hawaii has frequently been the source of large linemen in the NFL draft, often of Samoan descent. This year it was different as three skill players were selected: Alexander Green (FB) in the 3rd round to the Super Bowl Champion  Green Bay Packers; Gregory Salas (WR) in the 4th round to the St. Louis Rams; and Kealoha Pilares (WR) in the 5th round to the Carolina Panthers.

Lowe’s opened in Iwilei in April. So, now there are three hardware giants almost within spitting distance of each other . . . Lowe’s, Home Depot and City Mill. Other large stores in Iwilei are Dole Cannery and Costco.

Average salaries for University of Hawaii professors are well below those of other higher education institutions according to a survey released in April by the American Association of University Professors. The average annual salary for professors at UH Manoa was about $109,700. That puts UH below the 40th percentile meaning 60% of other doctorial institutions’ averages were higher.