August 2020 Email Update
The median price in July for single-family homes was $815,000 (2.4% lower than July 2019) and for condos was $440,000 (4.7% lower than July 2019). The Covid-19 pandemic continues to have an impact on the types of properties selling and in demand. While single-family home sales fell 3.0 % compared to last year, pending sales of single-family homes are 16.9% higher and the inventory of available single-family homes has dropped 29.9%. Competition for single-family homes is currently fierce. Tracey recently listed two single-family homes and she received fifteen offers on one house and nine offers on the other. The story is different for condos. The number of sales in July dropped 17.0% compared to the previous year, the number of pending sales was 9.8% lower, and the supply of available condos has crept up to 4.1 months of inventory.
Condominium units located on mixed use, hotel, or commercial will be automatically taxed, unless already approved, at the appropriate rate unless a petition to dedicate the property for residential use is filed by September 1, 2020 for the fiscal year beginning July 1, 2021. A Home Exemption does not automatically qualify the unit for the Residential classification. If your condo is zoned mixed use, hotel, or commercial and it is currently used as a residential property, then you can use the link below to download the form.
Tim and Tracey recently discussed if landlords could give tenants written notice to vacate their rental properties when the leases expired or when the tenants were renting on a month-to-month basis. Both read Governor Ige’s emergency proclamations in detail that suspended various laws including several impacting the state’s landlord tenant code. They ultimately decided to contact the real estate legal hotline that Stott Real Estate, Inc. and Stott Property Management, LLC subscribe to and were told initially over the phone that the emergency proclamation allowed landlords to give written notice even if they could not currently evict holdover tenants in civil court. When they asked for that opinion in writing (an opinion that they were willing to pay for), the law firm stated that upon further review, the emergency proclamation was too vague and it appears to be purposefully vague. The Hawaii Association of Realtors has unsuccessfully pressed the administration for clarification of the issue. Tim and Tracey both find the state’s stripping of landlord property rights particularly disturbing and it is causing unnecessary financial distress among some investment property owners. Stott Property Management, LLC has one client who is in assisted living and relying on her cousin’s financial support to remain in the facility because she has been unable to sell her rental property as a result of the emergency proclamation. She can’t qualify for Medicare assistance because she owns this valuable asset that does not provide enough monthly income to support her needs. Fortunately, the tenants voluntarily moved on July 31st when their lease expired after Tracey spoke with them earlier and described the owner’s dire financial bind to them. Owners with negative cash flow or suffering economic hardship might consider selling their Hawaii investment property in residential neighborhoods if it becomes vacant due to the governor’s arbitrary power grab and the legislature’s failure to push back.
An 8/5/2020 article in the Honolulu Star Advertiser reported that legal advocates are seeing an increase of illegal activity by landlords and stepping up efforts against landlords that violate Hawaii’s moratorium on evictions. The Legal Aid Society of Hawaii currently receives about 25 calls per week with tenants alleging verbal and written harassment and eviction threats, landlords locking tenants out of their rentals, and landlords shutting off utilities. While locking out tenants and shutting off utilities have always been illegal without a court order, violating the emergency proclamations can result in a misdemeanor with penalties up to $5,000 and/or up to a year in jail. Tim Kelley has been advising Stott Property Management, LLCs clients that all landlords can currently do is contact tenants about their financial situation, request a payment plan, and try to help the tenants find some financial relief.
The world-class Halekulani Hotel in Waikiki announced that it will remain closed through July 2021 to complete a series of renovations. Stott Property Management, LLC had one of Halekulani’s furloughed employees vacate their Waikiki rental on July 31st to move in with another person because she could no longer afford her rent. Tim anticipates that this trend will accelerate as more business closures become permanent and unemployment benefits drop to a maximum of $648 per week. The supply of vacant rentals advertised for rent has soared and demand has dropped in tourist dominated Waikiki. Stott Property Management, LLC has witnessed Waikiki rents drop between $150 and $300 per month since the pandemically driven economic shutdown started in March.
Hawaii’s political leaders appear to be in a full-blown panic after confirmed Coronavirus cases have surged recently and 124 new cases were reported on Thursday, July 30th, including 32 children. Mayor Kirk Caldwell ordered bars to close again for three weeks and ordered restaurants to stop serving alcohol at 10pm. Restaurants found serving alcohol after 10 pm will be shut down by the Liquor Commission for 24 hours. Bar owners and employees are understandably complaining about being blamed for a rise of infections that can’t be attributed to the lack of social distancing found at a couple of establishments. The virus is rapidly spreading through the Micronesian community where large families often live together. Micronesians represent 25% of the new cases while only consisting of 4% of Hawaii’s population. Mayor Kirk Caldwell and Lieutenant Governor Josh Green have been quick to lecture residents’ on their failure to maintain their social distancing vigilance, when keeping numbers low may not be that simple or even possible based on the struggles of many other states throughout the country and countries throughout the globe.
The USS Arizona Memorial re-opened on July 10th to visitors wanting to step foot on the hallowed site. The new program will consist of a brief orientation and a U.S. Navy boat ride to the memorial. Visitors will get to spend more time on the memorial because the 24-minute movie that normally proceeds the boat ride has been suspended during the Covid-19 pandemic. There is currently a 50-person limit per boat (1/3 the normal capacity) to accommodate social distancing. You can obtain tickets by visiting recreation.gov. or click the link below.
July 13th was an unlucky day for the tourism industry when Governor David Ige extended the 14-day quarantine requirement for trans-Pacific travelers until August 31, 2020. Ige stated that the uptick in local cases and shortages of available testing from surges on the mainland were reasons for the delay. A recent report released by Yelp highlighted that 899 Hawaii businesses have closed either temporarily or permanently between March 1st and July 10th. A survey by the University of Hawaii Economic Research Organization (UHERO) recently conducted a survey and 40% of the businesses reported that they couldn’t continue to operate until the 14-day quarantine has been lifted. Sea Life Park announced that 55 employees would be permanently laid off and the Polynesian Cultural Center will lay off 80 employees as a result of the extended quarantine requirement. To see the see the full report, click the link below.
Hawaiian Airlines plans to reduce its current operations by 15% to 25%, highlighting the long-term challenges Hawaii’s economy will face once the 14-day quarantine for trans-Pacific travelers to Hawaii is lifted. Hawaiian’s second quarter revenue dropped 92% compared to the second quarter of 2019 and it reported a cash burn of roughly $3.3 million per day.
The state of Hawaii has once again created unnecessary uncertainty when it comes to allowing previously approved projects to open for business or remain open. Two of the most memorable failures include the Hawaii SuperFerry and the still ongoing Thirty-Meter Telescope project (TMT). The latest involves a biomass energy plant on the Big Island, Honua Ola Bioenergy, a six-year, $400 million endeavor, that is 99% complete. The state Public Utilities Commission (PUC) struck down the amended power purchase agreement between Honua and Hawaii Electric Light Company (HELCO), effectively ending the project. Honua would provide electricity to HELCO by burning trees, which is an arguably dubious “renewable energy” project. PUC denied the agreement after the Hawaii Supreme Court rejected the 2017 power purchase agreement when an environmental organization successfully sued claiming that Honua and HELCO had not shown that it helped the state reduce greenhouse gases.
Hawaii students must wait another two weeks before school starts after three unions representing principals, teachers, and support staff claimed that they are not prepared to teach students in classroom environments. The recent surge in confirmed Coronavirus cases helped convince the state board of education to delay the start of the new school year. The public school is currently scheduled to start on August 17th while the education establishment is scrambling to define what percentage of the school week will be in the classroom and what percentage will be conducted remotely.
Governor David Ige continues to show that he favors public sector employees over those in the private sector with his latest veto of a spending plan to add $100 to the state of Hawaii’s weekly unemployment benefits. The legislature had passed the measure to help alleviate financial distress of unemployed workers due to the expiration of the federal governments $600 benefit. The money was allocated from the $635 million in federal CARES Act funding that must be spend by the end of 2020. Hawaii’s maximum payout for unemployment will shrink from $1,248 per week to $648 per week. An article by Civil Beat reported that Hawaii received $1.25 billion from the federal government through the CARES Act by has only spent $150 million. Where is the sense of urgency in helping out the same Hawaii citizens that have lost their jobs by the state mandated shutdowns? The argument that the $600 benefit discouraged workers to return to their jobs does not apply to a state where many of the jobs have disappeared due to Governor Ige’s 14-day quarantine requirement for trans-Pacific travelers.
Stott Property Management, LLC has spoken to several tenants whose Pandemic Unemployment Assistant (PUA) checks abruptly stopped in June because the Department of Labor and Industrial Relations (DLIR) realized that it paid roughly $32 million of benefits to fraudsters. The impacted individuals promptly provided documentation required by the department and still have not received any money. The DLIR website has documented the status of their claims as pending for weeks and no one can get through on the phone to obtain an update or assistance. An article on Sunday, August 2nd, highlighted that it took a question from a reporter during one of David Ige’s press conferences to address the issue after the same reporter was stonewalled by DLIR for weeks. The department has finally started working with counties to verify identities after holding up payments for more than six weeks.
The Honolulu City Council appears to be backtracking on their commitment to issue roughly 1,700 vacation rental permits on October first per ordinance 19-18 passed last summer. The proposed bill pushes the start dates for permits to January 31, 2021 and the permits will be available for only bed-and-breakfast type vacation rentals where the owner or operator lives on-site. One reason given for introducing the bill is that the city is having trouble enforcing ordinance 19-18.
The Thirty Meter Telescope (TMT) construction has been delayed until next summer at the earliest. The global pandemic has lengthened planned construction preparation times to double and construction can’t realistically occur during the winter months. TMT recently reported that 80% of the subsystems have been built or are under construction. TMT acknowledged that they have received the green light to begin construction on the Spanish Canary Island, La Palma, but stated that the project is still committed to Mauna Kea. While the mostly Native Hawaiian protestors have grabbed the limelight, a group of pro-TMT Native Hawaiian activists are lobbying the project to commence building.
Researches have found that ohia seedlings can survive for at least a year in forests that have been devastated by rapid ohia death. The finding offers hope for a species that has suffered over one million deaths since discovered a decade ago.
A new seaweed is threatening coral reefs in the Papahanaumokuakea Marine National Monument. The rapidly growing algae blankets coral reefs and smothers the coral beneath it. Scientists discovered the algae on an outer reef near Midway Atoll. Researchers first saw small clumps of the seaweed in 2016 only to find that it had taken over huge areas of the reef with seaweed eight inches thick. The area was mostly void of the large schools of fish that usually swim along the reef and the fish that typically eat algae were not eating the new seaweed. The seaweed is a new species of red algae that can spread by either tumbleweed-like clumps that move around or by spores that can travel greater distances. To find more about Red Alge click the button below.
Hurricane Douglas came the closest to landing on Oahu since the era of reliable weather tracking and record keeping began. The eye of the storm passed 30 miles north of Kahuku and tropical storm strength winds passed 10 miles north of the island on Sunday, 7/26/2020. Once again, a tropical atmospheric circulation known as the Hadley Cell provided wind shear that caused the storm to miss Hawaii’s populated islands and prevented widespread damage. Tim & Tracey managed to binge watch “The Last Dance,” a documentary about the career of Michael Jordan and his years with the Chicago Bulls during the six hours they were hunkered down waiting for Douglas’ anticipated arrival.
A recent study published by UHERO reported that Oahu’s current pumping of 117 million gallons of water per day (MGD) from the Pearl Harbor aquifer is near the optimal capacity of 127 MGD. The states current allowable pump rate of 182 MGD is much higher that that figure and could violate Hawaii’s State Water Code that specifies several protections including spring discharge to Sumida Farm, a historically important 10-acre watercress farm in Pearl City. The farm is the only green space in Pearl City and is the state’s largest watercress producer in the state growing 4-5 tons per week. The farm is dependent on free-flowing water from Kalauao Spring and the discharge at the farm had dropped about 50% since the farm began in 1928 from 10 MGD to 5 MGD by the 1990s resulting in lower crop yields.
Monterey Bay Canners, a popular restaurant in Aiea known for its seafood and oyster bar, has closed for good after more than 35 years in business. The Hawaii Restaurant Association estimates that 50% of Hawaii’s restaurants have not reopened yet or have closed their doors for good.
Tracey was recognized as one of the top 1.5% of the real estate agents in the country by REAL Trends America’s Best Real Estate Professionals report. The report ranked the most productive real estate agents in each state by closed sales volume and the number of transactions. REAL Trends and Tom Ferry International published the report. Stott Real Estate, Inc. thanks all of their clients who put their trust in Tracey to help realize their real estate goals.
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