Here is our 11/11/2016 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 visiting www.stott.com/news.
The October median price for single family homes was $742,000 (3.1% higher than October 2015) and for condos was $396,000 (7.0% higher than October 2015) while supply continues to be constrained. Demand continues to be strong with number of pending sales above last year’s totals. There are only 2.9 months of remaining inventory for single family homes and 2.8 months of remaining inventory for condos.
Some tenants have started voting with their feet in response to high rent prices in the priciest U.S. cities. The Wall Street Journal reported that the highest priced cities, including Honolulu, have experienced a net migration out of the cities to more affordable locations. Stott Property Management has spoken to many tenants over the past year that can no longer afford Oahu’s high housing costs and have moved elsewhere. Real estate website, Zumper, has reported the third straight month of declining rents for one and two bedroom apartments.
The most common complaint that Stott Property Management receives from their clients involves repair costs. That is not likely to change according to a report from Rider Levett Bucknall that ranks Honolulu as having the second highest construction costs in the world behind Oslo, Norway. The report anticipates a relatively stable economic environment through 2017 as tourism continues to grow.
Strong demand for seats and low fuel prices helped Hawaiian Airlines post a 46% jump in quarterly profits. Hawaiian’s expansion of non-stop daily flights between Narita, Japan and Honolulu, helped boost quarterly revenue by 6.3% over last year. Strong tourism numbers continue to help Hawaii’s economy.
Hawaii Tax Appeal Court Judge Gary Chang delivered some great news to Hawaii residential investors and 2nd homeowners by ruling the Residential A real property tax illegal and unconstitutional. The controversial tax measure imposed a 72% increase on property owners of homes assessed more than $1 million from 0.35% to 0.6% in 2014. The City of Honolulu plans on appealing the tax court ruling to the Hawaii appellate courts. We hope that the appellate court upholds the ruling and restores elected official’s accountability for tax increases. The Residential A classification unfairly targets property owners who can’t vote for city council members and the mayor.
A study conducted by travel news website, ThePointsGuy.com, ranked Honolulu as the fifth best airport nationally. The study analyzed data at the 30 busiest U.S. airports from a number of sources to measure how well each airport gets passengers to their destinations on time, how easy it is to get to the airport, followed by amenities offered (restaurants, lounges, parking fees, etc.).
Mayor Kirk Caldwell signed two bills into law that allows Haseko to build out the planned recreational lagoon area of its Ewa Beach community. Homeowners in 2013 successfully sued for damages when Haseko made the decision to build a lagoon instead of the heavily marketed marina that was part of the original plan. Haseko has begun focusing on the commercial side of the master development which includes the recreational lagoon.
Hawaiian Electric Company, HECO, announced its new time-of-use rates for Oahu. The current rate is 24.1 cents per kilowatt-hour (kwh). The first 5,000 customers that sign up for the following plan will be charged the following rates under time of use. Customers will pay 14.9 cents per kwh for usage between 9:00 am to 5:00 pm, 37.3 cents per kwh between 5:00 pm and 10:00pm, and 23.7 cents per kwh between 10:00 pm and 5:00 am. The rates are indicative of the large penetration of roof-top photovoltaic systems (PV) on Oahu’s grid. Prior to PV, the higher demand for electricity would result in higher prices during the day and lower prices in the evening as air conditioners consumed less energy. Some electrical grid experts argue that time-of-use billing is necessary to more fully integrate renewable energy and encourage consumers to adjust their electrical demand to match available supply.
Hawaii’s largest solar farm is currently under construction and has a scheduled December completion date. The 27.6-megawatt project on 200 acres of land in Waianae has received approval to sell electricity to HECO at a rate of about 14.5 cents per kWh. It will be one of Hawaii’s lowest-cost renewable energy projects.
The end of Hawaii’s popular net metering program has claimed another victim. Bonterra Solar, which was one of Hawaii’s largest and fastest growing solar companies from 2010 through 2012, has closed its doors due to drastically reduced demand. Employment in the solar power industry has dropped more than 40% since 2015 and the only solar companies that may survive are those businesses that also include electrical contracting.
Seven of the eight wind turbines in Maui’s 21-megawatt Auwahi Wind project are back up and running after the catastrophic failure of one turbine prompted a shut-down for safety reasons. An initial inspection revealed that the nacelle, the housing for the generating components, and the blades fell to the ground due to problems with the fasteners connecting the nacelle to the tower. The seven remaining turbines were restarted once the fasteners were replaced. The wind project generates enough electricity to power 10,000 homes on Maui.
The Board of Water Supply, Honolulu’s semi-autonomous city agency supplying water to most of Oahu’s citizens, has signed a $33 million agreement with Noresco LLC, to provide $56 million in guaranteed savings over 20 years from energy efficiency and renewable energy (Photovoltaic) projects. The project is being financed by the Department of Health and will be paid back by the savings from reduced electricity bills.
WalletHub ranked Honolulu as the 2nd greenest large city in the United States. The WalletHub Report scored the cities by comparing greenhouse gas emissions, transportation used, energy sources (like photovoltaic usage, etc.), and public policies. Honolulu ranked first in greenhouse gas emissions, percentage of green spaces, and median air quality.
The Honolulu Star-Advertiser first ran an article earlier in October noting that the Honolulu Police Department (HPD) does not include violent crimes on their crime mapping site. HPD’s website is the only site among more than 150 police websites that the newspaper investigated that excludes violent crimes. Since the article ran, neighborhood boards have complained to the newspaper that HPD has provided little detail in their crime reporting data, essentially making the information provided worthless. HPD has been accused by several sources of becoming less cooperative over the past few years with sharing data in an era of greater transparency. At this point, it appears that HPD is more interested in providing excuses to their reporting failures instead of researching best practices that exist around the country.
Thirty Meter Telescope (TMT) officials have chosen Spain’s Canary Islands as an alternative site for the $1.4 billion observatory. TMT would still prefer to build on the summit of Mauna Kea but will move if the permitting process doesn’t get started soon. In December 2015, the Hawaii Supreme Court ruled that TMT’s conservation district permit was improperly awarded eight years after the permitting process began. TMT has reported that it has invested $170 million for construction and manufacturing. When completed, the observatory will house the most advanced and powerful optical telescope on the planet with a 30-meter diameter primary mirror.
Maui Brewing Company and Kohola Brewery walked away with awards at the 35th Great American Beer Festival in Denver. Maui Brewing Company won a gold medal for its Imperial Coconut Porter, one of Tim’s favorites, and Kohola Brewery earned a bronze medal for its Lokahi Pilsner. Maui Brewery Company also just announced a new beer, Liquid Breadfruit Ale. The new ale is currently only available on Maui. Hawaii, like the rest of the country, has seen rapid growth in the craft beer industry.
Kauai’s iconic Coco Palms, received approval from the state Board of Land and Natural Resources to obtain permits for the state-owned portion of Coco Palms from the previous property owners. The resort, featured in the 1961 Elvis Presley movie “Blue Hawaii,” is scheduled to begin construction in January. The project should be finished in the spring of 2018.
The Mauna Kea Beach Hotel on the Big Island was inducted into the Historic Hotels of America. The 252-room hotel was the first to be built on the Kohala Coast and features the championship 18-hole Mauna Kea Golf Course and overlooks Kaunaoa Bay. Induction into the program is based on quality of the accommodations, historic significance, record of preserving authenticity, sense of place, and architectural design. 34 hotels have been inducted including three other Oahu hotels, the Hilton Hawaiian Village Waikiki Beach Resort, The Royal Hawaiian, and the Moana Surfrider.
Two men fell from the fourth floor of an older section of Ala Moana Center when a corroded railing that the men were leaning on gave way. One man died and the second man was taken to the hospital in critical condition. The incident is a tragic reminder of how Hawaii’s humid climate can severely degrade metal structures over time.
A North Carolina man has pleaded guilty to swindling the University of Hawaii and its supporters out of $250,000 for a Stevie Wonder concert that never took place in 2012. For those that remember, the loss of the money paled in comparison to the amount of money the university faculty paid in attorney fees during the subsequent state senate hearings investigating the scandal.
The state of Hawaii faces a conundrum. Apparently as the number of nene geese recover, taro farmers face a growing threat from the hungry, endangered species. Both the nene and taro have cultural significance to Native Hawaiians. A pilot project that involves planting rice around taro plots in the hopes that the nene will eat the rice instead of taro.
Hawaii tennis fans received some great news when the United States Tennis Association announced that Maui will host the 2017 Fed Cup, the premier international women’s team tennis competition, February 11 and 12. The United States will square off against Germany. Tim and Tracey attended the Fed Cup match between USA and Poland this past February on the Big Island. It was a sold out and energetic crowd that enjoyed watching world-class tennis. Tim and Tracey were literally 20 feet away from Venus Williams as she bombed serves at her opponent.
The Hula Bowl, a college all-star game, was established in 1946 and has traditionally been played in Hawaii to showcase top collegiate athletes. The game was suspended during the recession in 2008 and officials have been looking for opportunities to restart the game. The owner of Hula Bowl, LLC has announced that the all-star game will be restarted as an East vs. West classic and alternate between Raleigh, NC and Aloha Stadium on Oahu in January 2018.
Due to popular demand, Ward Village will bring back the open-air ice skating rink from November 25 through January 16 for the third year. Apparently, the nostalgia associated with ice-skating during the holidays even entices those celebrating in the tropics.