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December 2019 Email Update Oahu Real Estate

Here is our 12/10/2019 e-mail update. The newsletter 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.

We wish you a Happy Holidays and look forward to a prosperous 2020.

The November median sales price for single-family homes was $794,750 (0.3% less than November 2018) and for condos was $415,000 (1.2% less than November 2018).  Demand remains strong with 11.1% more November single-family homes sales than the previous year and 1.2% more condo sales, however, the higher demand and low supply, 3.1 months of single-family homes and 3.7 months of condos, has no longer resulted in a modest but steady median price increase.  It appears that Oahu home prices have reached the limits of what buyers are willing and able to afford in Hawaii’s currently stagnating economy.

A report from real estate website Zumper, confirms information that Tim has been passing on to his property management clients during the second half of 2019.  Honolulu rents have been falling in comparison to the previous year.  Zumper reports that median rents for a one-bedroom Honolulu rental have dropped 10% to $1,600 month and median rents for a two-bedroom Honolulu rental have dropped 4.5% to $2,100 per month.  Stott Property Management, LLC advertises their vacant properties on several real estate websites including Zumper.  You can review the complete report by clicking on the link below:

https://www.zumper.com/blog/rental-price-data

A federal report showed that Hawaii finished dead last in 2nd quarter economic growth in a trend of disturbing economic developments for the 50th state.  Hawaii’s GDP grew 0.5% between April and June compared to growth rates of 4% in top growing states like Texas, Wyoming, Alaska, and New Mexico.  University of Hawaii (UH) economist Carl Bonham says that it is a mistake to look at Hawaii’s 3% unemployment rate as a positive sign because the workers are leaving the state.  Hawaii’s workforce has shrunk from 682,000 workers in 2016 to 678,000 workers in 2018.

Hawaii fell two spots to #3 in United Health Foundations annual report on the healthiest states.  An increase in drug-related deaths, an increase in diabetes, and an increase in mental distress helped knock Hawaii off the top perch.  Despite falling two spots, Hawaii has remained one of the top five healthiest states to live in for the past 30 years.  The state of Vermont took top honors this year.

Hawaiian Airlines flight attendants have voted to strike as early as December 20, 2019 if an agreement to a new contract has not been completed after a 30-day cooling off period mandated by the National Mediation Board.  The board must approve the strike before flight attendants begin.  The flight attendants are demanding parity in pay and benefits compared to other major airlines.  The highest paid Hawaiian flight attendant currently makes $55 per hour while the highest paid flight attendants for other airlines make $71 per hour.  Flight attendants are only paid for time in the air.  Hawaiian airlines recently celebrated its 90th year in operation and this would be the airline’s first strike.

The Canary Islands Astro-physics Institute Director has announced that the building permit for the Thirty Meter Telescope (TMT) was granted on the La Palma Island and no additional permitting is needed.  Both the summits of Mauna Kea and La Palma are considered among the best sites for deep-space observation and astronomers hope that TMT will enable them to examine the time immediately following the Big Bang.  The state of Hawaii might squander a great opportunity if Governor David Ige fails to break the impasse with the protestors and Mauna Kea.

The University of Hawaii Board of Regents approved administration rules addressing land management at the Mauna Kea Summit.  The new rules involve shutting down five telescopes currently operating on Mauna Kea and restoring the area to its natural state.  UH has taken these steps in response to criticism from how it managed the area over the years from various groups including the Native Hawaiian protestors currently blocking the access road.  The protestors have stated that they will continue trying to prevent TMT construction on Mauna Kea and force TMT to be built on La Palma.

Mauna Loa has been receiving more visitors as the protestors continue to block the access road to Mauna Kea.  The summit can be reached via a 17-mile access road near the Mauna Kea access road on the opposite side of Daniel K. Inouye Highway, but the lack of public restrooms and a visitor center near the summit create a major challenge.  The Department of Land and Natural Resources (DLNR) is trying to come up with a solution like providing portable toilets, but no company is currently willing or has the capacity to drive up the long road and service the area weekly.  The hike to the summit should only be attempted by seasoned backpackers with appropriate clothing, boots, food, and water to handle the long strenuous hike in high altitude and cold weather.  Hawaii Volcanoes National Park provides a backcountry planner at 808ne.ws/2ptAf1Z and a map for planning a Mauna Loa hike at 808ne.ws/2QzvJKa.

The Big Island of Hawaii completed a major step in its recovery efforts from last year’s eruption that destroyed over 700 homes by rebuilding Highway 132 that links Pahoa village with the rest of the island.  The lava flow buried more than three miles of the highway and buried or blocked access to over 1,600 acres of farmland.  A blessing by a resident displaced by the eruption on the East Rift Zone marked the opening at noon on November 27th, the day before Thanksgiving.

A steaming lake has recently formed in Halemaumau Crater Kilauea’s summit as the underground water table feeds the lake.  The lake is currently 60 feet deep and could reach a depth of 150 to 180 feet deep when the lake will reach the level of the underground water table.  Scientists are keeping a close eye on activity in the area because magma can cause explosive events when it comes in touch with water.  Magma drained from the summit during the 2018 eruption in the East Rift Zone and has been steadily returning to the underground chambers.  The magma currently remains deep in the system.

The state of Hawaii continues to struggle with the relentless natural forces of beach erosion and continues to search for consensus on how to effectively slow the ocean’s advance.  The latest saga involves neighboring communities expressing concern about the Marine Corps plan to drive 1,500 feet of steel along the boundary of rifle ranges that are threatened by erosion.  Neighbors have signed a petition to study alternatives to the project including the development of artificial reefs offshore to reduce the effects of waves on beach erosion.

A recent UH study reports that a lack of opportunity in Hawaii has led to shorter lifespans of Native Hawaiians in Hawaii compared to lifespans of Native Hawaiians in other parts of the United States.  The study concluded that better educational and employment opportunities elsewhere lead to healthier lifestyles and a median life expectancy of 80 years versus 76.6 years on the islands.  The study pulled data from a 2017 report by the U.S. Census Bureau and looked at major racial ethnic groups in Hawaii.  The study found that Native Hawaiians scored the lowest in many health categories.

On December 4th, a group of 76 people including 50 nurses, doctors, and other health care workers, including Lt. Gov. Josh Green, flew out on an emergency medical mission to Samoa to help vaccinate residents.  A severe measles epidemic has killed 55 people, mostly children.  The preventable and highly contagious disease can spread quickly through a large population in a matter of hours or days.  The pediatric intensive care unit in Samoa normally has two to four patients and currently is trying to care for up to 20 patients during the crisis.  The volunteers vaccinated roughly 34,000 people in a 48-hour period.  Samoa hopes that the immunizations can help alleviate the epidemic in six to twelve weeks.  The medical mission was completely funded by charitable donations.

The Honolulu City Council passed a new tax category for residential real estate owners that operate short-term rentals legally under Ordinance 19-18.  Bill 55 will keep the tax rates the same for those owners that have been operating Bed & Breakfasts and Transient Vacation Units under existing non-conforming use certificates.  Rates for the new category will likely be raised between the current residential rate of $3.50 per $1,000 of assessed value and the hotel rate of $13.90 per $1,000 of assessed value.  The city council will set tax rates in June 2020 for the following fiscal year.  The city council wants the new category in place in preparation of the roughly 1,700 new permits for hosted bed-and-breakfast operations that the Department of Planning and Permitting (DPP) beginning October 2020 under Ordinance 19-18 that passed in June.  Additionally, the cost of renewing a bed-and-breakfast license will jump from $200 per year to $2,000 per year.  The bill goes to Mayor Kirk Caldwell for signature.

The Honolulu Authority for Rapid Transportation (HART) received another batch of subpoenas last month and just approved a budget that includes $200,000 to hire legal counsel to assist employees that have been served.   HART is prohibited from using state and federal funds to address the subpoenas and must receive any funding from the City and County of Honolulu.  Meanwhile, HART has approved change orders to existing contract raising the cost of the three West Oahu Stations from $56 million to $87.1 million and stations along Kamehameha Highway from $115.8 million to $131.15 million.  Systems for fare gates, escalators, and rail line control systems were not yet designed when the initial bids were approved.

City and County of Honolulu taxpayers are footing the legal bills for corruption involving HART’s rail project and Louis and Katherine Kealoha’s defense.  Farella, Braun and Martel had already billed HART for $50,000 in legal fees despite the city council rejecting HART’s request to hire them to defend HART employees.  The Kealoha’s bill amounted to roughly $700,000.

Roughly 100 protestors attended a Public Utilities Commission (PUC) hearing Friday and silently observed three attorneys challenge to PUCs decision to approve the Na Pua Makani wind farm project in Kahuku.  Some of the protestors wore yellow pieces of duct tape across their mouths.  The protest has entered a new phase since the project’s contractor finished delivery of the wind turbine parts over the span of five weeks and involved the arrest of approximately 200 protestors.

A city auditor has faulted DPP with lax, inconsistent, and ineffective managing of building permits and allowing the proliferation of large homes in older Honolulu neighborhoods that tax available infrastructure including street parking.  These homes have become prevalent in the Palolo, Kaimuki, and Kalihi neighborhoods and construction of the homes have continued even after several laws passed by the Honolulu City Council and signed by Mayor Kirk Caldwell prohibiting construction of these very buildings.

The Honolulu Museum of Art’s historic Spalding House has been listed for sale for $15 million after the board of trustees decided to focus its resources on the South Beretania Street campus.  The house was originally built as a residence in 1925 and converted to The Contemporary Museum in 1988.  The Honolulu Museum of Art received The Contemporary Museum as a gift in 2011 and continued to hold special events at the property until it ceased operations this past summer.

Two of the main attractions of the Puu Alii complex in Kaneohe, spectacular Kaneohe Bay views and lush landscaping are part of a continuing dispute involving DPP, the Puu Alii Community Association (PCA), and several condominium owners.  A lack of an approved plan and uneven enforcement has resulted in blocked bay views and the removal of “protected” trees since the development was approved in 1975.  39 buildings were built in four phases from the late 1970s through the mid 1990s in two complexes, Puu Alii and Poha Kea Point.  The breathtaking bay views were a major part of the premium attached to selling the condos.  Under a city ordinance, the PCA was supposed to submit a detailed landscaping plan identifying roughly 1,300 trees for retention, removal, or replacement.  Failure of an approved plan has resulted in PCA contending that DPP has provided conflicting advice and DPP accusing the PCA of removing trees without authorization.  In the meantime, a group of condominium owners are threatening a lawsuit because growing trees has blocked their spectacular ocean views.  One version of an old plan noted that it could take 30 years to replace trees that no longer exist and remove trees blocking views.

Lauren Bruner’s ashes were placed in gun turret 4 of the USS Arizona Memorial on the 78th anniversary of the Japanese attack on Pearl Harbor during a sunset internment ceremony.  Bruner, who died at the age of 98 on September 10th, was likely the last survivor to join 43 other Arizona survivors who chose to be interred in gun turret 4.  There are only three shipmates remaining alive of the original crew of 1,512 sailors and they have chosen to be buried in family plots.  A ceremony was also held for the 58 sailors killed on the USS Utah that was torpedoed, capsized, and sank within 12 minutes.  54 sailors were never recovered and the USS Utah serves as a burial for those that died.  96-year old Burke Waldron attended the ceremony honoring those that had fallen and 100-year old Warren Upton listened to the names of his fallen shipmates read allowed.  They are two of the remaining three survivors of the USS Utah still alive.

Both the University of Hawaii (UH) Rainbow Wahine volleyball team and Rainbow Warriors football team notched big wins the weekend prior to Thanksgiving.  The Rainbow Warriors beat San Diego State 14-11 to win the Mountain West Conferences West Division and lost a rematch against Boise State 31-10 in the conference finals this past weekend.  The Rainbow Warriors will face Brigham Young University in the Hawaii Bowl on Christmas Eve.

The UH Rainbow Wahine volleyball team swept Long Beach State to win the Big West Conference title for the first time since 2016.  The Rainbow Wahine hosted the first two rounds of the NCAA tournament and beat Northern Colorado in the first round and #20 San Diego in the second round to advance to the Sweet 16 against #5 Nebraska in Madison, WI on December 13th.  San Diego ended up losing their first match and last match of the 2019 season to the Rainbow Wahine.

Residents and visitors now have a new option to view Hawaii’s reefs with the launch of SemiSub One.   The $30 million jet powered catamaran has three decks and can partially submerge itself underwater so that guests can see some of Hawaii’s coral reefs and ocean life.  SemiSub One has a capacity to hold 149 passengers, has two full bars, IMAX style theater, and a lounge in addition to the underwater viewing area.  The opening culminates eight years of overcoming structural flaws and regulatory issues when the vessel first arrived in Oahu in 2011.  More information is available on their website.

http://www.semisub.com/

Anheuser-Busch is buying the remaining interest in Craft Brew Alliance (CBA) and Kona Brewing Company.  CBA consists of Kona Brewing Company, Redhook, Appalachian Mountain Brewery, and Widmer Brothers whose products are brewed in Portland and distributed throughout the United States.  Kona Brewing Company is currently building a $20 million brewery in Kona to brew and distribute its beer throughout the islands.  The brewery is scheduled to open early next year.

A new brewery, Hana Koa Brewing Company, has opened in Kakaako.  The 10,000 square foot facility contains a brewery in one half of the building and a kitchen, bar, and dining area in the other half.  The brewery currently has a selection of an IPA, stout, and variety of blondes.

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Current Oahu Homes for Sale
Area # Price Range
Central Oahu 61 $75k - $3.7m
Ewa Plain 53 $215k - $2.3m
Diamond Head 266 $40k - $37.0m
Hawaii Kai 89 $23k - $18.9m
Kailua 88 $346k - $27.5m
Kaneohe 121 $64k - $3.7m
Leeward Coast 91 $118k - $2.3m
Makakilo 24 $230k - $1.5m
Metro Honolulu 1607 $40k - $15.9m
North Shore 161 $195k - $45.0m
Pearl City 68 $95k - $10.0m
Waipahu 30 $220k - $4.5m
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