Here is our 12/08/2017 e-mail update. It is sent after the statistics for the preceding month have been posted on the Board of Realtors website. You can find previous newsletters by visiting www.stott.com/news.
The November median sales price for single-family homes was $773,500 (3.1% higher than November, 2016) and for condos was $405,000 (2.5% higher than November, 2016). Buyers are currently scrambling to find available homes as supply continues to shrink. There is currently only 2.2 months or remaining inventory for houses and only 2.5 months of remaining inventory for condos. Supply will remain tight in the near future since pending sales (properties under contract to sell but have not sold) are 24% higher for houses and 21% higher for condos compared to November of 2016.
Zumper has confirmed what many property managers, including Stott Property Management, have noticed. Zumper recently reported that the median rent for a two-bedroom apartment dropped 11% compared to the same time last year. A second report by Apartment List reported a much smaller decline of 0.3% for one- and two-bedroom apartments. Stott Property Management has recently had to lower asking rents in order to find new tenants for several vacant properties.
Uber has reached an agreement with the state of Hawaii to pick up airline passengers at Daniel K. Inouye International Airport (formerly known as Honolulu International Airport). According to Uber, you can find directions to the pickup locations within the app.
California police captured Randall Saito, who was acquitted by reason of insanity in a 1979 murder of a 29-year old woman by shooting her with a pellet gun and repeatedly stabbing her. Saito walked out of the Hawaii State Hospital in Kaneohe on Sunday, November 12th, took a cab to the airport, chartered a plane to Maui, and then took a commercial flight from Maui to California. Seven hospital employees have been suspended without pay and Governor David Ige has ordered an investigation to find out how Saito was able to get the money and means to escape after being confined for 38 years. Hawaii State Attorney General Douglas Chin plans on making a case that Saito does not currently suffer from a mental defect due to the planning involved in the escape.
The high cost of living may be driving down the state’s unemployment rate. The unemployment rate dropped to 2.2% in October from 2.4% in September even though the total people employed dropped by 300 employees during the month. One of the state’s chief economists reported that the numbers indicate people are moving from the state to seek employment elsewhere. Stott Property Management recently saw one of its contractors close business when their last licensed plumber moved from the state and the owner could not find a replacement. Hawaii’s high cost of living has led some people to turn to credit cards to make ends meet. Hawaii currently has the highest credit card debt to cost-of-living ratio according to CardRatings.
Homelessness continues to capture headlines in the local newspapers and an article in the Honolulu Star Advertiser highlights the need to roll back regulation and unnecessary red tape before meaningful relief can take place. An Oregon based developer completed a 209-unit apartment building, Keauhou Lane, and started taking applications in August for 167 apartments reserved for residents that earn no more than the median income in Hawaii. The remaining 42 are reserved for residents that earn no more than 80 percent of the median income. As of November 11, 2017, when the article was written, only 33 of the apartments have been rented. The developer’s director of property management points out that the city’s income verification process and documentation requirements create unnecessary bottlenecks and wait times for tenants seeking approval. What is more striking is that the rents for a studio start at about $1,400, don’t include utilities, and don’t include parking which is $145 more per month. Stott Property Management does not have one studio apartment on the island that it manages charging more than $1,350 and several of those studio apartments are located in Waikiki and include assigned parking.
Don’t expect any regulatory relief any time soon. A recent summit by the mayors of each county and representatives of Governor David Ige’s administration did not commit to any regulatory relief despite the numbers presented by Paul Brewbaker, one of Hawaii’s leading economists. Brewbaker showed in his presentation that 13,000 houses were built in 1973 and that roughly equals the number combined homes in Hoopili and Koa Ridge that will take over ten years to build. Brewbaker cited economic studies showing affordable housing mandates like Hawaii’s actually drive housing prices higher. However, instead of reducing regulation, the Honolulu City Council is currently considering a bill that would make the affordable housing mandates more restrictive.
Some property owners are responding to the housing shortage by tearing down old three bedroom houses and building three-story buildings that are triple in size. In one extreme case, and owner recently built a 29-bedroom, 18-bathroom dwelling. The Honolulu Star Advertiser reported eight “single-family” homes that had at least 11 bedrooms. While the city and county has issued violations on some of the houses, officials admit that others currently meet the building codes and zoning restrictions.
Stott Real Estate, Inc. recently felt the impact of the lawlessness associated with Honolulu’s homeless population when a fire under the H-1 viaduct damaged communication cables supplying Hawaiian Telcom’s phone and internet services. The fire caused cellular, cable TV, phone, and internet disruptions throughout Oahu and on parts of Maui. Our office was without phones and internet for the entire day on November 16th. While the fire remains under investigation, officials believe that the fire was intentionally set. The state recently cleared out 2,050 tons of trash from the area at a cost of $516,000. The state completed its last large homeless sweep in 2017 at a bike path near the H-1 viaduct early this month. 70 people, 20 dogs, and 22 guinea pigs were occupying the area when the sweep began.
The State Tax Director resigned amid concerns over the progress of the department’s IT upgrade and after the consultant for the project accused tax officials of interfering with its independent assessment of the project. The tax department requested changes to the reports before it was made public; a request that the consultant stated was not standard procedure. The consultant was hired after a string of failed information technology projects at the state government level dating back several administrations. The first two phases of the tax modernization project have been completed with hearings on the problems related to the General Excise Tax modernization efforts. The latest report stated, “At present, the program is not operating in an optimal way. There continue to be a number of issues and risks related to the program execution that, if not addressed and remediated immediately, may have a significant negative impact on the program’s ability.” House Finance Chairwoman, Sylvia Luke, a frequent critic of the tax office stated that the report is “shocking and it’s sad.” Luke went further by stating, “It completely undermines the credibility of the report and what they have said in the past, and I’m not sure how the consultant can allow this to happen, and I don’t know how the Department personnel can ethically insert themselves to maneuver and manipulate the information in these reports. Governor Ige tried to explain away the tax officials’ behavior by stating, “change is hard.”
A report by the University of Hawaii and nonprofit Hawaii Children’s Action Network issued a report highlighting that Hawaii has a critical shortage of childcare on the island. The study reported that there are 37 children under the age of three for every licensed infant-toddler center seat and the average cost of childcare costs about $9,000 per year. It is no surprise to Hawaiian families who often rely on “Uncles” and “Aunties” to watch young children while the parents work to earn a living.
The Honolulu Police Department mailed letters to registered gun owners who hold medical marijuana cards to “voluntarily” turn in their firearms in 30 days. Marijuana is still considered an illegal drug by federal law and the U.S. Bureau of Alcohol, Tobacco, Firearms, and Explosives prohibits people who use marijuana to possess firearms.
Erosion, which accelerated this summer from king tides, has exposed concrete structures on parts of Waikiki Beach has forced the closure of an area at Kuhio Beach. The Waikiki Beach Special District Improvement Association, funded by a tax on commercial property in Waikiki, discussed replenishing the sand, among other necessary capital projects, during its first meeting on December 5th. The annual taxes generate about $600,000 per year to address Waikiki’s aging infrastructure.
The Kauai Island Utility Cooperative (KIUC) continues to lead Hawaii’s innovation in renewable energy by seeking bids to build the first pumped storage hydro system on the island. The system pumps water up to an uphill reservoir during daylight hours when photovoltaic cells are generating excess electricity. Gravity then powers electric generators to provide electricity during the nighttime hours, minimizing the need for electricity generated by fossil fuels. KIUC said the project could provide 15% of the islands energy needs when completed.
Kamehameha Schools finds itself embroiled in another controversy and lawsuit as a result of accusations from 34 prior students that a school psychiatrist, Dr. Robert Browne, sexually molested them during his tenure from the 1960’s through the 1980’s. The past students claim that the school failed to investigate complaints, and was negligent in failing to discover and put an end to the abuse. Dr. Browne committed suicide by shooting himself in 1991.
Longtime Honolulu resident, Jim Nabors, best known for his role as Gomer Pyle, died on November 30th at the age of 87. Tim and Tracey attended a Merry Christmas show at the Hawaii Theatre starring Nabors. His tremendous singing voice and low-key nature endeared him to many in Hawaii and made him a local fan favorite.
Chaminade University pulled off its first upset in the Maui invitational in five years by beating the University of California 96-72. The tiny Division II School is known for upsetting #1 Virginia back in back in 1982. The Maui Invitational has decided to invite Chaminade back to the tournament every two years in the future.
Island Air joined the ranks of Hawaii’s failed island airlines after closing its doors on November 10th after 37 years in business. Island Air accounted for about 5% of the interisland market while Hawaiian Airlines had 90% market share before Friday’s closure. Island Air had been profitable while operating older 40-seat aircraft and ran into trouble when those older planes had to be replaced with newer planes that seated many more people. Island Air was unable to keep the newer planes full and ultimately ran out of cash.
Rat lungworm, a disease from a microscopic parasitic worm that migrates to a person’s brain may drive many of Hawaii’s local farmers out of business according to the state Department of Agriculture. The worms are carried by slugs and snails and can be ingested from poorly washed vegetables. There were 22 cases of rat lungworm in Hawaii last year and 17 confirmed cases so far this year. The brain disease can be devastating and has caused a couple of deaths.
A Big Island woman found a five-pound avocado during her Sunday walk that she described as “big as my head.” She has submitted the avocado to Guinness World Records and is waiting to hear back. Guinness World Records does have a heaviest avocado record. The woman stated that she found the avocado under a tree that hangs over the street. Anything overhanging or dropped outside a private property line is free for anyone to take.
Dry weather has dented Christmas Tree deliveries to Hawaii. Fortunately, our office was still able to obtain one. Merry Christmas and Happy New Year!