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January 2021 Email Update

|   C l i c k  h e r e  t o  l i s t e n   | Happy New Year!  Here is our 01/08/2021 e-mail update. The newsletter is sent after the statistics for the preceding month have been posted on the Board of Realtors website. 

Median prices for both single-family homes and condos are hovering new records as limited supply continues to be absorbed by strong demand.  The December median price for single-family homes was $870,000 (6.1% higher than December 2019) and for condos was $455,000 (6.9% higher than December 2019).  35.9% more single-family homes and 20.1% more condos were sold in December 2020 compared to December 2019 and pending sales for single-family homes climbed 45.4% and for condos climbed 29.5%.  There is only 1.4 months of single-family homes available and 3.3 months of condos.  It appears that the extremely limited number of available single-family homes and buyers increased confidence with social distancing practices has led to a resurgence in condo sales.
 
The FY 2021 federal appropriations bill contains $25 billion in rental assistance to be distributed by state and local governments.  In this round, landlords can apply on behalf of their tenants and can cover back rent and up to three months in the future.  The Centers for Disease Control and Prevention (CDC) eviction moratorium was extended through January 31, 2021 yet that has little effect on Hawaii landlords because Governor David Ige has extended the state moratorium through February 14, 2021.  One other piece of legislation to note is that Carbon monoxide detectors are required in federally assisted rental housing, more widely known as Section 8 rental assistance.
 
The Federal Housing Authority (FHA) has extended its insurance endorsement on single-family home mortgages in forbearance through March 31, 2021.  The extension will allow struggling homeowners a little more time in hopes that the newly approved vaccines and spring weather will suppress the surging COVID-19 numbers and allow surviving small businesses to earn more revenue.
 
A Honolulu Star-Advertiser ran a front-page article on December 8th highlighting that a significant percentage of landlords failed to accept $8 million in rent that they are due from the state’s rental assistance program because they do not have a general excise tax (GET) license and have not been paying taxes on their rental income as required by law.  The state has approved $55.1 million in rental assistance through the end of November.  Therefore, almost 13% of the aide available to tenants who have lost their jobs through no fault of their own have not received any relief because their landlords do not pay their taxes.  The staff at Stott Property Management, LLC discussed the article the next day and concluded that the state would use this data to go after the very same landlords for back taxes owed.  Sure enough, a column by Christine Donnelly on December 16th reported that the Department of Taxation has started the process of identifying those landlords about their unpaid tax bill.  These articles should serve as a wakeup call for those investors that do not file and pay taxes on their Hawaii rental income to start paying those taxes because the penalties and interest are stiff.  If paying GET and state income tax incenses you, then consider selling your Hawaii investment property and investing in another state that has a lower tax burden.  Contact us if you would like to explore your options.
 
Only 22.1% of available hotel rooms were occupied in November, far below the 55% to 60% occupancy rate that most Hawaii hotels need to break even.  Constant changes to Hawaii Safe Travels program have caused some would be travelers to postpone their plans and different rules on different islands create more headaches because many visitors prefer to visit more than one island during their vacation.  Hawaii’s economic recovery is not expected to really start until the second half of 2021 when the new vaccines are widely available to the public.  The University of Hawaii Economic Research Organization (UHERO) predicts 5.9 million visitor arrivals in 2021 in its optimistic scenario and just 2.8 million visitors in its pessimistic scenario.  Much of Hawaii’s recovery depends on how rapidly the vaccine suppresses the nationwide infection rate.
 
Hawaii has been borrowing from the U.S. Treasury to the tune of $734 million and counting to cover the unemployment benefits paid out in large part due its COVID-19 pandemic restrictions on tourism and small business.  The state will owe an additional $20.8 million in interest payments on March 15th and an additional $39 million due in 2023 due to earlier loans.  These loans are on top of the $1.4 billion budget shortfall in each of the next four years and neither the administration nor the state legislature has a plan to pay it.  If the state fails to pay the interest, the already struggling Hawaii businesses will face a federal unemployment tax hike of $378 per employee.
 
Kaiali’i Kahele was sworn in as U.S. representative representing the neighbor islands and rural Oahu replacing Tulsi Gabbard who decided not to seek re-election in her pursuit of the Democratic Nomination for president.  Kahele becomes the second Native Hawaiian congressman and he used U.S. Senator Daniel Akaka’s (first Native Hawaiian congressman) Bible for his swearing-in ceremony. To learn more, please click the link below:

Kahele becomes second Native Hawaiian sworn into U.S. congress.

2020 saw the number of doctors practicing in Hawaii drop from 2,974 to 2,812.  Roughly 100 retirements and another 139 physicians moving from the state exceeded the number of new physicians arriving and has exacerbated an already serious shortage of practicing doctors.  Hawaii’s is currently short about 1,000 doctors, more than 1/3 of the current working total.

The state is shutting down Aloha Stadium at least three years before a replacement stadium will be built due to budgetary problems caused by the COVID-19 restrictions.  Rust has been an ongoing problem for years and the aging facility is facing a $3.9 million dollar deficit for this fiscal year.  A 2018 structural and safety report found severe corrosion in hundreds of places.  The closure has left the University of Hawaii Warriors football team scrambling to find another home field on the islands to meet the capacity required by the Mountain West Conference.  Oahu high schools will have to find other venues for weekend football games, concerts, and graduations.  One event will continue during the new Aloha Stadium’s construction, the Swap Meet and Marketplace.  The Swap Meet normally features more than 400 vendors and brought in about $4 million of the stadium’s $7 million budget.  The state has budgeted $350 million for the new stadium project. To read more, please click the link below:

Shutting down Aloha Stadium

The Hawaii Homes Commission passed a proposal to build a new casino in Kapolei on land set aside for Native Hawaiians on a 5-4 vote.  The proposal will not be sent to Governor David Ige for consideration.  The vote proceeded without the consideration of the trust beneficiaries that are at least 50% Hawaiian.  The controversial measure was passed because the Department of Hawaiian Home Lands (DHHL) has failed to build the necessary infrastructure for Native Hawaiians to build and move into homes for decades at current funding levels.  The rushed vote also hopes to prevent the Las Vegas casino industry to mount a campaign to defeat the measure.  DHHL estimates that it will cost at least $4.5 billion to install the infrastructure to serve the 28,000 Native Hawaiians on the wait list.  DHHL has developed just 3,300 residential lots state-wide since 1995 and the wait list continues to grow.  Governor David Ige threw ice water on the plan by stating that the social consequences would exceed the economic benefits.  He also failed to mention any plan to accelerating development of DHHL lands to eliminate the wait list.

Honolulu Mayor Rick Blangiardi was sworn in as Honolulu’s 15th mayor on Saturday, January 2nd, 2021 and five of the nine Honolulu City Council Members (Calvin Say, Esther Kiaaina, Andria Tupola, Radiant Cordero, and Augie Tulba) started their tenures for the first time.  Honolulu residents hoped that the newcomers can steer the city away from its numerous scandals that have plagued the city for the past decade when it soundly rejected candidates with extensive state and local government experience.  45% of Blangiardi’s new cabinet have significant operational experience in the private sector and that may signal a more business friendly administration. To learn more, please click the link below:

Honolulu’s 15th Mayor Rick Blangiardi

Honolulu Police Chief Susan Ballard is taking heat over some of her officer’s overtime pay according to Civil Beat with some officers making more than $200,000 per year in salary and overtime over the past three years while the Honolulu Police Department’s (HPD) crime-solving rate has declined.  HPD declined to provide overtime data for certain officers of interest even though the data is shared by other city police departments around the country.  Tommy Waters, the new chair of the City Council found it ironic that Ballard speaks about the importance of transparency yet would not release overtime data.  He will ask the council’s new budget committee chair to investigate the overtime spending.

The Honolulu Authority for Rapid Transportation (HART) did not renew CEO Anthony Robbins contract and negotiations are underway for an interim CEO to take over the troubled rail project on January 1st. HART named Kahikina as interim CEO making her the seventh leader of the organization during its tumultuous 10-year existence. She most recently managed more than $5 billion in construction contracts to upgrade the City and County of Honolulu's sewage collection and treatment facilities to comply with the Environmental Protection Agency's (EPA) degrees tied to untreated sewage discharges to the ocean going back decades. HART recently received a one-year extension to December 31, 2021 as part of U.S. appropriations bill giving for the remaining $250 million of federal funding.

Pele woke from her two-year slumber on Sunday, December 20th, as three fissures started releasing lava from the side of Halemaumau crater and started creating a new lava lake after boiling off a basin of water at the bottom of the crater.  United States Geological Survey (USGS) officials reported lava fountains as high as 165 feet and the crater lava lake reached a depth of over 600 feet.  The lava flow cannot be seen from the visitor lookouts, but people can watch spectacular red glowing clouds rise from the crater after the sun sets.  USGS officials recommend visiting the site between 3:00 am and 4:00 am if you want to avoid the large crowds that have been gathering to witness the new eruption. To read more, please click the link below:

Kilauea volcano erupts in three places, new lava lake formed.

Matson Inc., Hawaii’s largest ocean shipping company took possession of its fourth and final ship in its three-year, $1 billion, modernization program that also included improvements in its Sand Island port facility.  The 870-foot-long combination cargo container and roll-on, roll-off vessel has an enclosed garage that can house up to 500 vehicles and cargo that does not fit in standard shipping containers.  The sister ship was placed in service last January and two 850-foot-long container ships were place in service in 2018 and 2019.  The four vessels are the largest of its kind built in the United States.

The University of Hawaii (UH) Warriors football team finished their up and down season with a 28-14 victory over the University of Houston (UH) Cougars.  The UH Warriors finished the season 5-4 in coach Todd Graham’s first year.

Two Oahu tourist attractions reopened in December after a nine-month shutdown due to the Covid-19 pandemic.  The Battleship Missouri (Mighty Mo) Memorial opened on December 16th to join the other open Pearl Harbor attractions, the USS Arizona Memorial, Pearl Harbor Aviation Museum, and the USS Bowfin Submarine Museum and Park.  Diamond Head State Monument reopened on December 17th.  The park will be open on Thursday through Sunday from 6:00 am to 4:00 pm.  Mask wearing and six-foot physical distancing are required throughout the state park.

A veteran Hawaii ecologist and his team at Arizona State University’s Center for Global Discovery and Conservation Science based in Hilo tweaked a laser-guided imaging spectroscopy system, essentially a high-tech camera, to penetrate water up to 70 feet to detect chemical signatures of both live and dead coral.  Researchers started flights at the beginning of the year to map coral reefs off the coast of Hawaii’s populated islands over a period of 30 days.  The new technology was able to take detailed shots of living coral reefs up to a depth of 50 feet.  The mapping shows heavy degradation of reefs off Oahu shores and other populated coasts in Hawaii due to overfishing and two major coral bleaching events in 2015 and 2019 due to high ocean temperatures.  In some good news, the team also documented some spectacular reefs that could warrant protection and others that are good candidates for rehabilitation.  The maps are posted on the website under the tab “Coral Maps” and clicking “Hawai’i GAO Maps.”  A link is provided below:

Hawaii Coral

Hilton Hawaiian Village Waikiki Beach Resort reopened on December 15th as Hawaii’s tourism industry starts to slowly restart.  A West Virginian guest was the first to check in and was thrilled with her room upgrade featuring a stunning Diamond Head and ocean view.  Several restaurants on the hotel grounds reopened the same day.

Hawaiian Airlines is expanding its service between Hawaii and the mainland with three non-stop flights.  On March 11th, Hawaiian will fly non-stop between Honolulu and Orlando, Florida, on March 16th, Hawaiian will fly non-stop between Honolulu and Ontario, California, and on April 21st Hawaiian will fly non-stop between Honolulu and Austin, Texas.

The state of Hawaii has cancelled all World League Surf events on Oahu and Maui indefinitely due to health concerns associated with the COVID-19 pandemic.  State health officials were concerned with the large crowds that the events attract.  The Billabong Pipe Masters was completed earlier in January under a film permit where beach spectators were prohibited.

Another promising project was recently killed by Hawaii’s morass of red tape.  Honolulu Seawater Air Conditioning LLC called it quits after a sixteen-year, $25 million, effort to obtain all the regulatory approvals to begin construction.  The $275 million project was conceived in 2004 and it took 16 years for the city and state to approve a four-mile pipe that pumped 44-degree seawater from a depth of 1,775 feet to a heat exchanger cooling a closed loop chilled water system that would cool about 40 buildings in Kakaako and return the seawater to about the same surface ocean temperature.  The system was a no brainer because it cut electricity demand equivalent to 13,000 homes, cut carbon dioxide emissions equivalent to 15,000 cars, and saved the building owners money in the form of cheap cooling.  By the time the city and state approved the system, the cost to build rose to over $400 million, making the project too expensive.  This project is just the last big-ticket item that would have benefited the state of Hawaii if government could simply get out of the way.

Scientists discovered a new snail, the striped shell Oahu tree snail.  It is the first new species discovered in Hawaii in the past sixty years.  Land snails and slugs account for forty percent of the known animal extinctions since 1500.  Invasive predators and a loss of habitat have been the greatest threat to Hawaiian snails. To read more, please click the link below:

New land snail species discovered in Hawaii offers ‘gem of hope’

Kauai’s Koloa Rum is partnering with Kauai’s Lydgate Farms to create Kauai Cacao Rum, a chocolate-flavored rum sourced locally.  Roasted cacao is steeped in Koloa’s gold rum for nine to eighteen days to give the spirit a distinctive mocha flavor.  Kauai Cacao Rum joins Koloa’s lineup of six other rums; Kauai White, Kauai Gold, Kauai Dark, Kauai Reserve, Kauai Spice, Kauai Coconut, and Kauai Coffee. 

People in 16 countries read the email newsletter in December.  Those countries include the Unites States, Canada, New Zealand, Australia, Japan, South Korea, Taiwan, The Philippines, Thailand, Myanmar, Iran, Italy, Switzerland, France, Germany, and The United Kingdom.

Visit our website to see our newest short videos:  Real Estate Tip of the Day, Quick Pick Newsletter, Fun Fact Friday, Another Day in Paradise, and Holidays.  You can view the latest videos by following Stott Real Estate, Inc. on Facebook or Instagram.

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