July 2018 Email Update Oahu Real Estate
July 2018 Email Update
Here is our 07/11/2018 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 use the following link to access our most recently published quarterly newsletter:
Stott Real Estate, Inc. recently celebrated its 40th anniversary in business by continuing to sell and manage residential homes on Oahu.
Oahu’s median sales prices in June were $782,388 for single-family homes (1.6% lower than June 2017) and $420,000 for condos (5% higher than June 2017). The mixed results bear watching because the market for the more expensive single-family homes tends to lead the market for condos. Demand for single-family homes dropped for the second month in a row with the number of sales dropping 1.4% from the previous years figure. While the number of condos was 2.1% higher than last year, pending sales (properties under contract but not yet sold) fell for both single-family homes and condos. The number of pending sales for single-family homes was 12.6% lower and the number of pending sales for condos was 8.2% lower than June 2017. Median sales prices could be peaking in Oahu’s demand driven market.
The Kilauea Volcano continues to dominate the local headlines. The most recent eruption has covered 9.2 square miles of land, destroyed close to 700 homes, and created at least 260 acres of new land along 1.3 miles of the Kapoho coast. Fissure 8 has been spewing about 26,000 gallons of lava per second with fountains of 150 feet in height. Fissure 8’s cinder and spatter cone is about 130 feet at its highest point.
The change in Kilauea’s lava flow has drained the lava lake that viewers used to see from Jaggar Museum’s overlook area. Halemaumau’s crater walls have slumped inward and the crater has repeatedly sent plumes of ash thousands of feet skyward when the crater walls have collapsed. The most recent collapse caused tremors at the summit equivalent to an earthquake of 5.3 on the Richter scale. The acidic volcanic ash has covered Jaggar Museum and the viewing areas. Cracks caused by seismic activity have compromised the structure of the viewing deck and museum and park officials doubt that the current museum will open again due to the proximity of an unstable cliff.
The recent stabbing death of a Kauai landlord highlights the risk of life and limb when managing your own rental property, living on the same property, and maintaining a less than professional relationship with the tenant. The retired landlord lived in her house and rented a separate dwelling on her property. She apparently befriended the tenant and allowed the tenant to use her car. The tenant apparently stabbed her to death when she evicted him from her property after he fell behind on his rent. He allegedly killed the landlord two days before the court had ordered him to vacate the rental. Police found the landlord dead in her home from multiple stab wounds in her neck and found a set of keys and some bloody shorts in the tenant’s dwelling.
Apartment List reported that median rents for a Honolulu two-bedroom apartment fell by 3.9%, confirming what Tim Kelley has been telling his clients over the past year. Rents have peaked after reaching levels that many local residents can no longer afford. In addition to fewer available tenants from a net migration from Oahu, many remaining tenants are deciding to rent larger spaces with more roommates as a way to save money. One recently rented four-bedroom house in Kapolei received three sets of applications from four or five unrelated adults looking to pool their financial resources.
The Hawaii State Teacher’s Association reported that 411 teachers resigned and left the state in the 2016 – 2017 school year, an 84% increase since 2010, when the real estate market started to recover. Teachers are making the move even when pay is slightly less than what they earned here because the cost of housing is so much cheaper. 30% fewer local graduates during the same time period are adding to the growing teacher shortage on the islands.
New U.S. Housing and Urban Development (HUD) guidelines highlight the high cost of living on Oahu and a reason why more individuals and families have been leaving the islands versus coming. An Oahu family of four earning $93,300 is considered by HUD to be low income under the new guidelines and a single person earning $65,350 is considered low income. The HUD guidelines are based on fair market rents.
7000 Hawaii Kai, a 269-unit rental project built in Hawaii Kai two years ago, will be converted to condos and sold to owner-occupants and investors. Avalon, the developer, started delivering 120-day notice to vacate letters to tenants on month-to-month leases and is preparing the condominium documents that must be filed with the state Real Estate Commission. Current tenants will get first right of refusal and Avalon will give them 15% of the total rent paid toward the purchase of the unit. The condos will be priced between $479,000 and $750,000. Avalon plans on holding onto the project’s 56 affordable rentals.
The Rim of the Pacific international naval exercise (RIMPAC) kicked off in the beginning of July with 46 surface ships, five submarines, 18 national land forces, more than 200 aircraft and over 25,000 personnel from 25 nations. Notably absent from the exercise this year is China due to its ongoing island building and militarization of those islands in the South China Sea. RIMPAC has grown from ten participating nations in 2008 to 25 this year and close to 30 nations are expected to participate by 2020.
Patients who use medical marijuana are still struggling to navigate a legal landscape where the state has legalized medical marijuana but the federal government still considers marijuana illegal. A patient recently had her insurance payment rescinded for medical marijuana after the Honolulu Star-Advertiser contacted the insurance company and asked if the reimbursement marked a change in policy for the insurer. The same insurance company cancelled worker’s compensation policies and refunded premiums to medical marijuana dispensaries due to concerns with criminal liability. The patient plans on appealing the insurer’s decision.
A report from the Hawaii State Auditor found that the Office of the Attorney General failed to account for property obtained by forfeiture, poorly managed the forfeiture program funds, and failed to allocate about $2 million for drug prevention as required by law. Hawaii’s asset forfeiture law allows government officials to seize and destroy or sell private property without a court proceeding or in some cases, without even charging a person with a crime. In 2015, property was seized in 25% of the cases and no one was charged with a crime. In another 4% of the cases, the underlying charge was dismissed. Even though the state statute allows for the return of property or compensation for sold property, there is no known policy or procedure for it. A report last year by the Institute for Justice gave Hawaii a D+ for the program and an F for it’s accounting for how seized cash and property proceeds were spent.
The cat and mouse game between the City and County of Honolulu and the homeless continues. The city’s latest attempt to discourage certain homeless activity and prevent tents being erected on city sidewalks involves two bills. One bill will make it illegal to obstruct any sidewalk on Oahu between the hours of 6 a.m. and 10 p.m. daily if it interferes with the normal flow of pedestrian traffic. The second bill will make it illegal to lodge on city sidewalks at all hours. Lodging is defined as occupying a place temporarily to sleep or rest and to refuse to move when requested by authorities.
A Federal Transit Administration report estimates that the estimated cost for the City and County of Honolulu’s rail program may finally be understood. The latest report estimated that the total cost of the system will be about 8.29 billion (1.6% over the city’s estimate) and will be completed in 2026 (about one year later than the city’s estimate). While the bad news for taxpayers may not get much worse, it will still be the most expensive government infrastructure project per capita in the country.
The City and County of Honolulu required stores and retailers to charge at least 15 cents for each plastic or paper bag starting July 1st. The bill that passed the city council 9-0 and signed by mayor Kirk Caldwell is the latest attempt to eliminate retail plastic bags.
Kamehameha Schools has agreed to pay $5 million to settle a civil lawsuit brought by families of four former students of a teacher who is accused of secretly recording students showering in his faculty apartment. The former teacher will be tried in state criminal court for felony violation of privacy and misdemeanor sexual assault charges. The settlement comes just five months after an $80 million dollar settlement between the educational trust for Hawaiian children and 32 former students who claimed to be sexually abused by a campus psychiatrist decades ago.
Matson continues its investment in Hawaii’s shipping business by christening its newest and largest container ship, the Daniel K. Inouye. The container ship is also the largest ever built by the Philadelphia shipyard and the first of four ships to be built over the next four years. The new 850-foot long ship will also be the fastest and most fuel efficient of Matson’s fleet using dual fuel engines that can be adapted to use liquefied natural gas.
Three nuclear engineers at Pearl Harbor are expanding their microbrewery business, Beer Lab HI, by opening a second location in Waipio. The owners decided to expand after hearing that many local customers don’t always want to make the drive to Honolulu to enjoy craft beer. The brewery has released over 100 unique beers over the past two years and has previously partnered with other breweries to distribute some of its more popular creations.
Mayor Kirk Caldwell vetoed a bill passed by the city council that would have capped surcharges charged by Lyft and Uber during peak hours. In a positive sign for business and consumers, Mayor Caldwell called for less regulation of traditional taxi companies so that they could better compete with their disruptive competitors. The administration is drafting a new bill where passengers can choose the more traditional pay per mile fare system or an upfront pricing system that discloses the price charged per ride prior to the customer accepting the ride. The new bill could be a win for taxi companies, ride-hailing companies, and consumers.
The solar power industry is seeing strong demand this year as photo-voltaic (PV) systems with battery storage devices gain acceptance. The City and County of Honolulu’s Department of Planning and Permitting has issued 21% more permits to date in 2018 than in 2017. There are some concerns that the demand is outpacing the supply of the more popular batteries and that could act as a constraint in getting the systems up and running. Even though the long-term trend indicates more energy storage production, the short-term picture looks to be one of tight supply and higher prices.
Tim, Tracey, and their son Mark enjoyed another Kailua Fourth of July parade a week ago. Here are some photos of the event.
The Lanikai Pillbox Hike, a short hike to spectacular views in one of Kailua’s beachside neighborhoods, recently closed for two months to repair the concrete structures known as pillboxes. The trail went viral when President Obama hiked the trail and more than a thousand people now make the trek everyday.
Honolulu Civil Beat won first place in the Society for Features Journalism Excellence-In-Features Award for their multimedia project ‘The Last Wild Place.’ The project documents the two-week journey through the Papahanaumokuakea Marine National Monument with Wildlife Service scientists. Here is a link to the documentary.
Civil Beat Documentary
One of Tim and Tracey’s favorite Kailua restaurants closed in June. Cactus, a Latin fusion restaurant, had to close its doors due to rising commercial rents and extremely low unemployment. Cactus was unable to open for lunch on some days recently because they did not have enough chefs.