January 2018 E-Mail Update
HAPPY NEW YEAR!
Here is our 01/10/2018 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.
Please click here to access our most recently published quarterly newsletter.
The Oahu median sales price continues to climb as supply constraints force buyers to pay more. The median sales price for single-family homes was $750,000 (2.7% higher than December 2016) and for condos was $405,000 (3.8% higher than December 2016) in December. There is currently only 2.1 months of remaining inventory of single-family homes and 2.3 months of remaining inventory for condos. Stricter lending standards and the relatively unaffordable housing prices appear to be constraining price increases when comparing this current housing price expansion to the previous decade’s.
Outward migration and a strong economy have resulted in the lowest unemployment rate on record. Hawaii’s unemployment rate in November dropped to 2% and the pool of available workers dropped 1,100 from October to November to 670,300. The U.S. Census Bureau estimates that about 13,500 more people have left the islands for other states than have arrived from other states from July 2016 to July 2017 and about 37,000 people have left the islands over the past five years. The state’s chief economist stated that a robust national economy and the lower cost of living elsewhere in the U.S. are contributing to the net losses. A recent study conducted by Harvard University reported that about one-third of tenants must dedicate at least 50% of their take-home pay on rent. Stott Property Management, LLC, lost the services of one of its plumbers when he moved off island. Skilled repair personnel are becoming harder to find across the board resulting in longer wait times.
Hawaii is expected to welcome a record, 9.3 million visitors, in 2017, a 4.5% increase over 2016 visitor counts. The Department of Business, Economic Development and Tourism expects another 2.3% increase in 2018.
Hawaii’s medical marijuana industry continues to experience delays as the state struggles to fill vacant positions. Seven of the eleven positions in the Department of Health remain unfilled. Many patients do not want to smoke and want alternatives like oils, capsules, and lozenges. However, the state has still not certified a lab to test these alternative products. Hawaii first legalized medical marijuana in 2000 and patients were not legally able to buy medical marijuana until the first authorized dispensaries started selling product in January 2017.
Hawaii’s failing green energy loan program, the Green Energy Market Securitization (GEMS) program, has been instructed to return any interest to the public benefits fund to help offset the cost to ratepayers. The state of Hawaii issued a $150 million bond in 2015 to fund the GEMS program and all of the money was supposed to be loaned out by November. Only $77.8 million has been deployed so far and $46.4 million of that money is in the form of an interest free loan to another government agency. GEMS has generated only $999,000 in interest revenue versus the $2.7 million in administrative costs over the past two years.
Honolulu Mayor Kirk Caldwell fulfilled a 2013 campaign promise by completing a five-year project to pave the roads identified as substandard in a 2012 study. The study found that 43% of Oahu’s 3,517 lane-miles of roads were substandard. The city and county has repaved all the deficient roads and plans to continue repaving roads next year. Exposure to Hawaii’s intense sunlight and ultraviolet radiation causes pavement to degrade faster.
Mayor Caldwell announced the purchase of a vacant office building for $6.28 million and plans on spending $5.5 million to renovate it into 30 studio apartments for tenants who earn just over $36,000 per year. The figure comes out to $376,000 per unit, over $100,000 more than the highest priced studio condo sold in the same neighborhood in the last six months. Honolulu taxpayers continue to overpay for Mayor Caldwell’s capital projects.
About 50 chronically homeless people continue to find places to set up camp as both state and city officials try to figure out how to keep people from setting up camp in Kakaako parks and streets. Homeless that were recently forced to move from Kakaako Waterfront Park have erected tents and shelters in nearby Mother Waldron Park and the bordering street. A city official stated that they are familiar with this group of people since they were originally part of one of the country’s largest homeless camps that was broken up in 2015. The people have resisted services offered by city officials and non-profit organizations because the prefer living a homeless lifestyle.
The Hawaiian Humane Society wants a study to determine how many of Oahu’s 5,000 homeless people won’t move to a shelter because they don’t want to part with their pets. There are currently only two emergency shelters on Oahu that allow pets. Other shelters will accept service animals if the homeless person provides proper documentation. It is ironic that Oahu’s condo associations and landlords must accept an Emotional Support Animal with a simple doctor’s note while most city and state shelters have erected more difficult barriers to allowing pets.
After two months and several failed attempts, the U.S. Coast Guard finally dislodged a commercial fishing boat from a reef off Waikiki Beach that ran aground two months ago. The 79-foot long line fishing vessel snapped towing lines, caught fire, irritated residents, and generated curiosity in tourists before finally being sunk 13-miles offshore at an Environmental Protection Agency approved site. The U.S. Coast Guard will now investigate the cause of the grounding and environmental groups will assess any damage to the reef.
Ward Village, the mixed-use neighborhood being developed by Howard Hughes Corp., has gotten off to a rocky start with the recent completion of the first tower, Waiea. Howard Hughes Corp. has sued the contractor for budget over-runs, delays, and defective work while the contractor, Nordic PLS Construction, has counter-sued claiming that Howard Hughes Corp. has not paid them in full. Howard Hughes Corp. has also sued its insurance company for failing to reimburse it for water damage suffered during a storm on July 24, 2016 while the tower was still under construction. Waiea condo sales averaged a staggering $3.6 million per unit.
Hawaii Pacific University HPU is taking video gaming to the next level with the opening of its collegiate esports arena at the Aloha Tower Marketplace campus. The arena will be open for competitive and casual gaming to HPU students. Additionally, the school will be offering scholarships ranging from $1,000 to $6,000 per year for students representing HPU in the College League of Legends season.
Some Kailua residents are not happy about Alexander & Baldwin’s (A & B) plans to redevelop the Pali Lanes bowling alley site into a central gathering place for downtown Kailua. A second-generation Kailua resident has started a petition urging A & B to renew the lease for Pali Lanes. A & B will create landscaped features that will host the farmers market and monthly entertainment that are currently held on the first floor of a parking structure behind Long’s and the Lau Hala Shops scheduled to open this year.
Severe erosion at Sunset Beach has forced the City and County of Honolulu to move a bike path closer to Kamehameha Highway, take down a storage shed used by the life guards, and move the life guard tower farther inland. A 20-foot drop off now marks the area where winter waves removed tons of sand from Sunset Beach. The city is working with the state to come up with a long-term plan since the erosion is expected to continue and there are no easy solutions. City officials’ short-term goals consist of taking measures to keep people from getting hurt at Sunset Beach and other Oahu locations that have experienced significant erosion over the past couple of years.
The Kauai Island Utility Cooperative (KIUC) continues to drive forward with its renewable energy focus with the announcement of a 19.3-megawatt solar facility and 70 megawatt-hour battery storage system. The KIUC is leasing space from the U.S. Department of the Navy at the Pacific Missile Range Facility – Barking Sands. The new facility will provide electricity after sunset to help meet electricity demand during peak usage hours while providing the missile range emergency power in the event of a power-grid outage. A Colorado-based company will build the facility and has signed an agreement to sell the electricity to KIUC at a rate of 10.85 cents per kWh. The KIUC’s money saving initiatives are a marked contrast from Hawaii’s Hawaiian Electric Company, HECO, who just received a 2.5% rate increase from the Hawaii Public Utility Commission.
Singapore’s low-cost airline, Scoot, started non-stop flights from Osaka Japan in December. One-way tickets to Osaka will start at $240 and one-way tickets to Singapore will start at $400. The December 19th flight represented the first direct flight from Singapore in 25 years.
Hawaii was ranked as the second healthiest state in 2017 after occupying the top spot over the past five years. Hawaii’s strong ranking resulted from low obesity rate and its high percentage of people with health insurance.