Here is our 03/10/2016 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 clicking here.
Please take the time to visit our upgraded company website and new property management website when you get a chance (www.stott.com and www.stottpropertymanagement.com). Our goal is to provide customers and clients a platform that allows them to quickly and efficiently review content that they want to see. The new websites are the product of three months of hard work and collaboration by the staffs of Stott Real Estate, Inc. and Wind on Water Communications.
The median price for single-family homes rose 8.0% to $700,000 (compared to $648,000 in February 2015) and for condos rose 16.1% to $378,444 (compared to $326,000 in February 2015). The strong annual increases are more due to an unusual dip in median prices last year than an acceleration of the median price increases. When viewed graphically, median prices show the same gradual increase that we have seen over the past two years. The trend should continue in the short run since inventory is still constrained. There are only 2.7 months of remaining inventory for single-family homes and 2.9 months of remaining inventory for condos. Demand is likely to continue to exceed supply as both the number of sales and the number of pending sales remain very strong.
Monstrous waves pounded the North Shore prompting the closure of 11.5 miles of roads on Monday, February 22, 2016 as waves with 60-foot faces slammed into Waimea Bay. The large surf ripped surfboards from contestants of The Quiksilver in Memory of Eddie Aikau as the surf contest was held for only the ninth time in 30 years. The waves in Waimea bay must have a sustained face height of 30 to 40 feet for eight hours in order to hold the event. Some wave faces that reached 60 feet in height intimidated seasoned professional big wave surfers. Haleiwa’s own John John Florence won the event and took home the $75,000 check. 66-year old Clyde Aikau, Eddie’s brother, competed in his last “Eddie.” The following link shows some highlights of the 2015/2016 Quiksilver in Memory of Eddie Aikau: Click for Video
6.2% more visitors came to Hawaii in January 2016. The growth marked the 11th consecutive month that total visitor arrivals surpassed prior monthly records. The increased visitor counts were slightly offset by shorter average stays resulting in tourist spending rising at a more modest 2.9%.
Hawaiian Airlines was on-time 88.4% of the time in 2015 making it the most punctual airline for the last twelve years. The 2015 industry average was 79.9%.
Marriott Vacations Worldwide plans to add 202 additional timeshare units to its Ko Olina Beach Club in West Oahu to the existing 546 units.
If you listened to Hawaii’s legislature and governor, you would think that residents are being forced out of their homes by people on the mainland buying homes and renting them out to tourists on Airbnb and vrbo.com. Airbnb just released the results of a survey that sheds some light on the housing market. 60% of those people that list rooms or properties on Airbnb are renting out space in their primary residence. Only about 14% of the respondents rent out space in a second home where they live part of the year. About 19% of those surveyed stated that renting on Airbnb helped them avoid foreclosure and another 65% stated that renting on Airbnb helped them afford to stay in their homes.
Howard Hughes Corp. officially began construction on its third mixed-use condo, Ae’o, that will include a Whole Foods on February 11th. The project will have 12,000 square feet of retail space, 700 parking spaces, and a high rise with 466 residential units. Whole Foods is expected to open in the first quarter of 2018 with residents moving into the condos later in the year. Howard Hughes Corp. is also developing a 43-story mixed-use tower containing mostly affordable units with a Longs Drugs Store called Ke Kilohana. The company took a unique approach to meeting the developer’s affordable housing requirement by building all of the affordable units for the Ward Village in one tower. Most developers place the “affordable” units in the same building as the market priced units.
Is Hawaii a great place to retire, or not? Apparently, it depends on what survey you read. Bankrate.com ranks Hawaii as the sixth-worst state to retire mainly due to Hawaii’s high cost of living and high state income tax rates. However, Gallup-Healthways Well-Being index, which measures perceptions about quality of life, ranked Hawaii #1. The survey ranked Hawaii tops for physical health, ranked second for community, third for financial well-being, and forth for purpose. We guess in a way, money can buy some happiness. It appears that those that can afford to live in Hawaii, are happy and healthy. “Lucky to live Hawaii.”
The U.S. Congress did Hawaii internet users a small favor by eliminating a tax on internet use that Hawaii currently collects. The bill that President Obama has indicated that he will sign will require Hawaii to remove the tax by 2020. Hawaii is only one of seven states that taxes a customer’s internet access.
The U.S. Army has changed a policy regarding club membership at the Hale Koa’s fitness center, The Point. The Hale Koa Hotel is an Armed Forces Recreation Center managed by U.S. Army that until recently offered eligible members the opportunity to buy paid memberships to its fitness center and access to the hotel’s pool and Jacuzzi. Eligible members included active duty and military retirees, Department of Defense workers and retirees, and members of the Army League and Navy League. The U.S. Army will limit access to the fitness center to hotel guests and grandfather 66 eligible members of the program. Many members are upset because those retirees that have access to military bases should continue to have the option of being a member at The Point. Many current members are residents of Waikiki, regularly work out at The Point, visit with guests that return every year, and socialize with other retired military members living in Honolulu. The Waikiki Neighborhood Board will formally ask the U.S. Army to reconsider.
Hawaii’s Department of Land and Natural Resources has established a new coral nursery on Sand Island to help restore damaged reefs and serve as a bank for Hawaii’s native corals. Nursery staff are using techniques designed to double the growth rate of coral in its natural setting from a rate of one to two centimeters per year to almost three centimeters per year. The staff harvests coral from Hawaii harbors and places small fragments of the coral into tanks filled with water that includes minerals to maximize survival and exposed to lighting to optimize growth. The growing fragments are later placed in large outdoor seawater tanks where they naturally fuse together. The larger the coral, the less likely that it will be affected by sediment and invasive species when introduced back into the wild.
The Third Circuit Court completely vacated the Thirty Meter Telescope project’s conservation district use permit on February 22, 2016. The Board of Land and Natural Resources must hold a new contested hearing before the permitting process can begin. TMT hopes to secure a new conservation district use permit by early 2017 and target construction for April 2018. TMT may consider other sites if they are not granted access to Mauna Kea later next year. The court action has negatively affected Hawaii’s business reputation as the arbitrary ruling by the courts has placed TMTs investment at risk. TMT has already invested $170 million to date for construction and manufacturing.
Last month we poked fun at David Lassner, University of Hawaii (UH) President, for requesting additional taxpayer funds from the state legislature after UH failed to follow through with the planned tuition increases. Lassner announced in late February that UH will propose a two-percent tuition increase every year for three years beginning in 2017 to help address a $505 million backlog in deferred maintenance. UH must hold 11 public hearings prior to submitting the proposal to the board for approval. We might be a little gun-shy about raising tuition if we had to submit plans to increase tuition just to keep up with inflation. Our empathy goes out to the administration for having to jump through hoops like these just to run an education business.
The State of Hawaii is looking to replace the synthetic turf at Aloha Stadium, possibly in response to the United States Women’s National Team’s decision to cancel the earlier friendly match against Trinidad and Tobago. The state has released a request for proposals with an estimated price tag of $1 million to $1.5 million.
The City and County of Honolulu has recently hired two full-time and three part-time inspectors to scan the internet for vacation rental ads and visit those properties in their respective neighborhoods. The increased activity has resulted in 12 notices of violations against the transient-vacation-rental owners, two of which are repeat offenders. The two owners with recurring violations continued to violate the minimum 30-day lease requirement will likely receive fines.
The Hawaii Authority for Rapid Transportation (HART) appears to have quickly forgotten who pays their bills. Last year, HART went hat in hand to ask the legislature to extend Oahu’s General Excise Tax surcharge and the legislature reluctantly agreed. This year, the Hawaii Department of Transportation made a reasonable request for HART to take on additional traffic signal improvements that they would fund since it could be done at the same time as the rail construction. The goal was to save money because the work would be done at the same time as the rail construction and it would help minimize the impact on traffic because the improvements would not be scheduled at a later date. Unfortunately, HART turned it down for political reasons since they are already receiving heat for the rail project’s rapidly rising price tag. Regrettably, taxpayers once again lose because different government agencies rarely play well together.
Renewable energy in Hawaii has had a tough month. Hawaiian Electric Company (HECO) terminated purchase agreements with SunEdison Inc. for three solar farms when SunEdison failed to meet several financing deadlines. Many solar energy companies are having a much harder time in securing financing as the prolonged plunge in oil prices has made solar power less economically competitive.
Ormat Technologies, the company selected by Hawaii Electric Light Company (HELCO) withdrew from contract negotiations to develop a 25-megawatt geothermal energy project on Hawaii’s Big Island because the strict requirements of the request for proposals was not economically viable. Ormat Technologies currently operates the 38-megawatt Puna Geothermal Venture plant on the Big Island. The subsidiary of Hawaiian Electric said it would continue in its efforts to increase geothermal electricity in future energy plans.
A second renewal energy project was shelved by HECO when it announced that it will terminate its power purchase agreement with Hu Honua Bioenergy due to the company’s inability to begin commercial operations by January 22, 2016 as contracted. Hu Honua was in the process of refurbishing an old sugar mill power plant in Hilo. Hawaiian Dredging Construction Company, the original general contractor, pulled the last of its workers from the job site because it had not been paid. Hawaiian Dredging company claims that Hu Honua Bioenergy owes them $24.5 million for work done at the plant. The 21.5-megawatt biomass plant was expected to generate 10% of the Big Island’s energy needs.
Hawaii’s High Technology Development Corp. (HTDC) has sponsored a demonstration of the Air Force’s $6.8 million investment in a waste to energy generating system. The project demonstration will show how 10 tons of waste per day can be converted to electricity through gasification technology. Applications of the system include solid waste, animal and crop waste, cellulosic biomass, tires, non-recyclable plastics, and industrial waste. The system was installed at Joint Base Pearl Harbor-Hickam late last year and is currently going through initial testing. The system will soon run specific programs to collect data and then eventually will be used to produce liquid jet fuel from waste. The demonstration will run through summer 2016.
Island Air has announced that it will stop flying to Lanai a month after Larry Ellison sold a majority stake of the company to local investors. Ellison purchased Island Air in 2013 after buying 98% of Lanai in 2012 in an apparent attempt to transform the island into a vacation destination of his design. It appears the original design is more expensive than he is willing to tolerate. We are interested to see how Ellison approach towards the island adapts over time.
This is a first for us, but it may not be as much of a surprise for Ewa Beach residents who purchased homes in Ocean Pointe and Hoakalei. Haseko, the Japanese developer who lost a class action lawsuit for failing to build a promised marina, also built a private golf course seven years ago and never built a club-house for the invitation only country club. The new owners announced that construction of the clubhouse would begin later this year. We hope the new owners of the golf course got a good deal. We can’t imagine that there are currently many paying members of a private country club with no clubhouse.
Do you like Cheesecake? If you do, then you may want to visit Uncle Tetsu’s Cheesecake, a popular Japanese dessert chain owned by the same company as Panda Express. Uncle Tetsu’s will open March 1, 2016 in the Royal Hawaiian Center. You could compare Uncle Tetsu’s cheesecake to The Cheesecake Factory’s, which is also located in the Royal Hawaiian Center.