July 2019 Buyer Blog

Our July 2019 Buyer Blog includes:
-Happy 4th of July video from Melissa
-Oahu Short Term Rentals FAQ
-Commentary from Lender Keri Shepherd
-Today’s Rates from Keri Shepherd

 

Oahu Short Term Rental Frequently Asked Questions

June 21, 2019

City Department of Planning and Permitting

New Regulations on Short-Term Rentals 

Bill 89 CD2 was adopted by City Council on Monday, June 17. It is awaiting action by Mayor Kirk Caldwell. Its main points:

 Allows a limited number of new Bed and Breakfast Homes (B&B) in non-resort areas under a new registration process, with annual renewal required.

 Continues to prohibit Transient Vacation Units, or “unhosted” rentals, in non-resort areas, unless the dwelling has a Nonconforming Use Certificate (NUC).

 Regulates hosting platforms, such as Expedia or Airbnb, requiring monthly reports to be filed with the Department of Planning and Permitting, which will share the information with City Council.

 Makes illegal any form of advertising short-term rentals which are not in compliance with zoning regulations as provided in Bill 89.

Bill 89 CD2: http://bit.ly/2Kt9Qu9

The following Questions and Answers are based on the assumption that Bill 89 CD2 will shortly be enacted into law.

ADVERTISING 

I own an unhosted, “whole house,” or Transient Vacation Unit. I pay taxes. Can I continue to advertise online and in the local newspaper? 

Only if the dwelling has a NUC or is located in a resort district.

When will the department start enforcing the new advertising restrictions? 

Beginning August 1, 2019.

What are the fines for illegal advertising?

Owners of the property involved in illegal advertising will be notified, and if the advertisement is taken down in 7 days, no fine will be imposed for a first offense. If not taken down within this deadline, fines of between $1,000 and $10,000 can be imposed for each day the advertisement remains on display. 2

If the management company for my property places an illegal ad, will the company get cited? 

They may be cited, but Bill 89 CD2 says, “The burden of proof is on the owner of the subject real property to establish that the property is not being used as a bed and breakfast home or transient vacation unit or that the advertisement was placed without the property owner’s knowledge or consent.”

REGISTRATION OF NEW BED AND BREAKFAST HOMES 

I have been operating a Bed and Breakfast Home for several years. Do I still have to obtain a registration number? 

Yes, unless you have a NUC.

I only rent out my house for more than 30 days at a time. Do I need to register? 

No.

I only rent my house while my family spends 2 weeks each year visiting family on the mainland. Do I need to register? 

Yes.

When can I register? 

Registration will begin no sooner than October 1, 2020.

Why do we have to wait more than year to register? 

The time is required for the Department to develop more specific procedures for implementing Bill 89 CD2, including the adoption of rules, and creating the software to help with enforcement and the registration process. If necessary, it provides time to acquire more staff and to train them.

What are the registration requirements? 

There are more than a dozen requirements. Most notable:

 Applicants must be “natural persons,” and not an organization or company

 Applicants must have a home exemption granted under real property tax law

 There must be insurance coverage for bed and breakfast use

 The initial registration fee is $1,000. For annual renewals, the fee is $2,000

 No more than 2 bedrooms can be used for visitor accommodations

 Quiet hours must be observed between 10 pm and 8 am

 If part of a homeowners or apartment owners association, approval by that association must be obtained

 Neighbors within 250 feet must be given a phone number to contact to make complaints 24 hours a day

For the complete list of requirements, refer to Bill 89 CD2: http://bit.ly/2Kt9Qu9 3

Are there other requirements? 

Density Limit. No more than 0.5% of the total number of dwelling units in each regional development plan area (DPA) can be used as B&Bs. Here are the limits by area:

New B&Bs are not allowed in the North Shore area, based on directives of the North Shore Sustainable Communities Plan: http://bit.ly/2Y4QpLg

Condominium Limit. Up to 50% of units in a condominium building may be allowed a B&B, subject to AOAO approval.

Nontransferable. Registration numbers are not transferable to another property, nor transferable to another homeowner.

Separation Minimum. B&Bs must be at least 1,000 feet from each other. This does not apply to units in resort areas and NUCs.

Renewal Criteria. Noise and other nuisance complaints can be grounds to deny renewal requests.

For the complete list of requirements, refer to Bill 89 CD2: http://bit.ly/2Kt9Qu9

How long will it take to get registered? 

It is not yet determined. An online registration process is anticipated, but certain requirements will have to be verified; e.g. compliance with parking requirements. 4

If only a limited number of registration numbers will be given out, how can I guarantee to get one? 

There is no provision for guarantees.

How will it be determined who gets a registration number? 

Generally on first-come, first-served basis. If the number of requests exceeds the limit for a DPA, then a lottery will be held.

How will the lottery system work? 

This will be fleshed out in the Rules. There will be a public hearing on the draft Rules before they are finalized.

I am currently operating a B&B, and do not have a NUC, so will need to register. Will I get priority in the registration process? 

No.

Can I advertise and operate a short-term rental once I register? 

No. To avoid a citation, operation cannot occur until the registration process has been completed and registration number issued.

MORE INFORMATION 

Refer to the Department’s website:honoluludpp.org

Follow the Department’s Twitter account: @hnl_dpp

Email the Department:info@honoluludpp.org

Call the Department:

Advertising Restrictions: 768-8127

Registration Process: 768-8127

General Zoning Information: 768-8252

Make a complaint: 768-8127

Public Information Officer: 768-8284

Lender Commentary 

Calm Before The G20 Storm

“It’s like watching paint dry.”

That was this past week as financial markets around the globe traded in a bit of a calm, sideways pattern ahead of arguably the most important economic event of 2019 — the US/China trade talks at the G20 meeting.

Depending on when you read this newsletter, the headlines may already be out as talks between President Trump and China’s President Xi are to take place on Saturday, June 29th.

The trade talks could have a major impact on global economies and even determine whether the Fed cuts rates, which at the moment is widely expected to happen in late July.

So, if you are looking to buy a home or potentially refinance an existing one, it’s hard to overstate the magnitude this event can have on rates for the foreseeable future.

At the moment we are watching the 10-Year Note yield hover near 2.00%, which has served as a psychological barrier preventing rates from moving lower. How the US/China talks go could very well determine which side of 2.00% the 10-Year Note trades.

Why is this important? Because if the 10-Year Note yield moves lower and beneath 2.00%, it will push mortgage bond prices higher and home loan rates lower still. The opposite is also true.

Bottom line: home loan rates are within .50% of the best rates ever and there is a very real chance we might see even lower rates in the near future.

The upcoming week is holiday-shortened with the 4th of July on Thursday. The bond markets will close early on Wednesday at 2:00 p.m. ET and all US markets will be closed on the 4th for Independence Day. All US markets are open with normal trading hours on Friday.

This is typically a slow trading week, but not this time around. With US/China headlines coming over the weekend, there is no telling what could happen Monday morning in both stocks and bonds.

Moreover, with many traders away for the big vacation week, the low volume in financial markets could spark some exaggerated price movements — meaning rates can swing sharply.

And if that weren’t enough, come Friday the important Jobs Report will be delivered, which is likely the last meaningful economic report before the July Fed Meeting. This means if it is a stinker like the last three, you can count on a Fed rate cut at month’s end.

The national ISM Manufacturing Index will be released on Monday followed by the ISM Service Indexon Wednesday.
ADP Private Payrolls will be delivered on Wednesday with Weekly Initial Jobless Claims on Thursday.
On Friday, Non-Farm Payrolls, Hourly Earnings, the Average Workweek and the Unemployment Rate will be released.

If you or someone you know has any questions about home loan rates, please give me a call. I’d be happy to help.

Source: Vantage

Rates for July 3, 2019

Today’s Most Prevalent Rates

  • 30YR FIXED – 3.875%
  • FHA/VA – 3.25-3.75%
  • 15 YEAR FIXED – 3.75%
  • 5 YEAR ARMS –  3.625-4.125% depending on the lender

 

Rates, terms, and fees as of 7/3/2019 10:15 AM Eastern Daylight Time and subject to change without notice.  

Need help?  Have Questions?  Call Tracey or Melissa.