June 2022 Email Update.
The May median price for single-family homes was a record of $1,153,500 (17.9% higher than May 2021) and the median price for condos was a record $516,500 (12.8% higher than May 2021). Higher prices and higher interest rates have led to a 15.1% drop in single-family home sales and that demand has shifted to condos resulting in a 15.1% increase. Single-family home supply has increased slightly to 1.3 months of inventory and condo supply has shrunk to only 1.5 months of inventory. Summer demand looks softer than 2021 with the number of pending sales dropping for both single-family homes (17.4% reduction) and condos (14.0% reduction). Struggling homeowners and investors should seriously consider selling in the next few months if the market continues to slow.
The University of Hawaii Economic Research Organization (UHERO) updated their forecast by downgrading projected economic gains in 2022 and 2023. Asian visitors have delayed their travel plans due to recent surges in COVID-19 cases due to the delta and omicron variants. While the United States has lifted most government restrictions, significant return restrictions still exist in many Asian countries like Japan, Hawaii’s largest international market. UHERO predicts that high inflation plus a 5% decline in real income due to expiring federal transfer payments will result in struggles for some families living paycheck to paycheck. Oahu’s population losses will limit overall economic growth yet that is not likely to impact real estate prices or rents as supply remains tight. The Red Hill shaft contamination could limit new home builds if the Board of Water Supply places a moratorium on new water meters. You can see the entire report and video from the link below:
The City of Honolulu limits tenants receiving rental assistance through the City of Honolulu’s Rental and Utility Relief Program to 18 months of assistance and roughly five hundred households have reached the limit. A program that provided critical assistance when government enforced shutdowns prevented people from working, has become a crutch for some tenants. Stott Property Management, LLC has seen most tenants receiving aid act responsibly and proactively work with the rental aid organizations to stay current on their rental payments and has witnessed some tenants refuse in to contribute any rent from their personal proceeds and fall far enough behind in rent payments to require eviction. The city’s unfortunate policy of paying $2,500 towards delinquent rent and only $2,000 towards future rent has encouraged some tenants to fall several months behind in the hopes of attracting more aid and placing unnecessary pressure on landlords who must pay mortgages. Stott Property Management, LLC has returned to its pre-pandemic enforcement of payment deadlines to minimize their client’s risk of losing collectable rental income.
A KHON2 article highlighting the shrinking supply of rental housing confirms that landlords will sell when government makes renting a difficult and money losing business. It was a little shocking that the news organization failed to make any effort in finding out the causes of the shrinking rental market by interviewing landlords that were selling, property managers, or real estate agents. David Ige and the state legislature put the burden of pandemic related government shutdowns on landlords by prohibiting evictions during the first sixteen months of the pandemic and then adding extra steps to an already tenant friendly eviction process. Government officials consistently touted they were helping the situation by providing rental assistance yet failed to mention that rental assistance did not always cover the rent, and failed to allow landlords to apply for rental assistance without the cooperation of the tenants. One of Stott Property Management, LLC’s clients will remove another rental property from the market when the owner will finally be free of a non-rent-paying tenant and will sell the condo. An owner-occupant will most likely buy the property since high sales prices and rising interest rates make real estate investing on Oahu a poor option.
Hawaii’s tourism industry reported positive results for the month of April. Visitor numbers reached 96% of pre-pandemic levels and more importantly, visitor spending rose 21% compared to April 2019 totals. Average spending by U.S. West visitors reached $223 per person compared to the $171 per person averaged in April 2019 and overall spending by all U.S. visitors rose 24%. While the headline numbers look promising, the article did not break out figures by visitor spending at hotels versus visitor spending at Hawaii small businesses.
The U.S. Navy has agreed to the state Department of Health’s (DOH) emergency order to drain the Red Hill underground fuel tanks by June 30, 2022, and to close the facility by November 1 2022. The U.S. Navy will end years of tension with environmentalists who argued that the U.S. Navy was failing to operate the tanks safely and could not quickly detect fuel leaks nor prevent major fuel leaks in the future. The military quickly built the Red Hill underground fuel tanks during World War II addressing concerns that the military’s above-ground fuel tanks were vulnerable to attack. The U.S. Navy must continue cleaning up the jet fuel contaminated Red Hill shaft. Here's a quick video from KHON2:
The DOH fined the U.S. Marine Corps $240,250 for discharging insufficiently treated sewage into Kailua Bay between August 2020 and February 2022 and failing to promptly notify DOH when the discharges above the acceptable limits occurred. DOH ordered upgrades to Kaneohe Marine Corps Base wastewater treatment facility to prevent accidental releases of bacteria laden wastewater in the bay. The U.S. Marine Corps has requested a contested case hearing regarding the fines and required corrective actions while “working to improve operations and oversight, upgrade our (wastewater treatment facility) to eliminate reoccurrence of these issues, and to more efficiently treat wastewater and implement additions to the facility that will reduce the overall water consumption of the installation.” It seems obvious that wastewater treatment is not and should not be a core competency of the U.S. Marine Corps.
Rational financial decision-making continues to elude the state legislature. Legislators failed to approve the Hawaii Tourism Authority’s $64 million request for rooftop repairs for the Hawaii Convention Center. Animosity between the legislature and HTA has resulted in spending hundreds of thousands of dollars for repairing preventable water damage to a state-owned building. Additionally, the state puts future business at risk since conventions do not want to hold events in water damaged facilities. You can take a video tour by clicking the link below:
The state Department of Health (DOH) has fallen behind its revised schedule of moving all state mental health patients to the new Kaneohe facility after letting the new facility sit empty for more than a year. The DOH has moved only one-third of the patients after committing to moving all the patients to the facility by the end of May in its April briefing to state legislators. The DOH is trying to shift the blame to poor construction while failing to identify safety and health issues like using the wrong door handles, hinges, and poorly draining showers while the building sat empty over the past year. The DOH and union officials have still not agreed on building policies.
The state of Hawaii has still not settled on an acceptable form of baseline electrical power to maintain grid stability but has initially decided that burning trees was the wrong answer. The state Public Utilities Commission (PUC) rejected Honua Ola Bioenergy’s plan to produce energy by burning eucalyptus trees stating that the project’s plan to capture carbon was speculative and that operations would produce significant greenhouse gases.
The Honolulu City Council passed the recovery plan proposed by the Honolulu Authority on Rapid Transportation 6-3. The recovery plan ends the rail line in Kakaako versus the planned station at Ala Moana and eliminates a 1,600-space parking garage at Pearl Highlands. Councilmember Heidi Tsuneyoshi voted against the recovery plan because elimination of the parking garage designed to accommodate passengers from Central Oahu and the North Shore. The price tag for the parking garage was $330 million or $200,000 for each parking stall. Only the government officials and contractors can justify construction costs that exceed the cost of privately built studio apartments.
The city council passed an annual budget that includes funds to remove the Haiku Stairs, popularly known as the Stairway to Heaven. People looking for a major workout before enjoying the view may soon only have the Koko Head Stairs, popularly known as Stairmaster from Hell, as an option.
Two Mauna Kea observatories, the James Clerk Maxwell Telescope, and the Submillimeter Arrays, participated in a world-wide eight radio telescope project to create the image of the black hole, Sagittarius A*, located at the center of the Milky Way. This is the second time the two Hawaii-based telescopes helped create black hole images. Powehi was the first black hole ever photographed in 2017. Powehi, the black hole with a Hawaiian name meaning “the adorned fathomless dark creation,” is 1,000 times larger than Sagittarius A*. Here's a great video from MAUI NOW:
The University of Hawaii Rainbow Warriors volleyball team repeated as national champions by sweeping arch-rival Long Beach State in the NCAA Men’s Collegiate Volleyball Championship final Saturday, May 5, 2022. UH’s successful defense involved a sweep of North Greenville, a come from behind five-set victory against Ball State, and then the sweep of Long Beach State. The Rainbow Warriors definitively answered the question of the superior Big West team by sweeping Long Beach State in the finals of the Big West tournament and the NCAA tournament. Long Beach State won the national championship in 2018 and 2019 and UH won the national championship in 2021 and 2022. There was no 2020 champion due to the pandemic.
UH Rainbow Warrior baseball finished the season in strong fashion. Head coach Rich Hill led the Bows to its best record in the Big West over 10 years finishing 19-11 in the conference for third place. UH hired him with the hopes that he could help break the string of mediocre seasons.
UH tennis player, Andre Ilagan, became only the second UH student to participate in the NCAA Men’s Singles Championship. Ilagan is a home-grown talent that played high school tennis at Farrington High School and stayed home to play for UH. Ilagan often surprised higher ranking national tennis players who underestimated the 5’8” athlete by hitting the ball harder and more accurately than his physically larger opponents. Ilagan plans on playing one more year at UH despite graduating with a degree in finance to build on his tremendous season. He lost in the first round of the tournament, 6-3, 6-7, 6-2 to Alabama’s top ranked tennis player.
Former Campbell High School phenom Jocelyn Alo led the #1 Oklahoma Sooners to the College World Series again this year. Alo, credited with having one of the most beautiful swings in softball and baseball, holds the record for most home runs over a college career (currently 117) while batting an astonishing .497 this season as of June 1, 2022.
The Hawaii Food & Wine Festival announced its schedule of events from October 20, 2022, through November 6, 2022, that takes place on Maui, Oahu, and The Big Island over three weekends. World recognized chefs, Alan Wong, and Roy Yamaguchi, started the festival 12 years ago to highlight local talent and Hawaii’s local ingredients. Use the link below to find the event’s schedule.
Out-of-state visitors must make reservations to Diamond Head State Monument. The reservation system started on May 12, 2022, and park officials turned away approximately 40% of the people that arrived at 6:00 am resulting in a minor bottleneck at the park entrance. State residents may visit the park without a reservation and paying the park fee by showing a Hawaii driver’s license or state-issued ID. The goal is to help preserve the park and visitor experience by limiting the number of visitors every hour and spreading out the visits during the day. The city first successfully implemented the reservation system at Haunama Bay and the state hopes to replicate the park reservation system at Hawaii’s most popular sites. Visitors can make reservations fourteen days in advance by visiting the following website:
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