March 2015 E-Mail Update
Here is our 3/10/2015 E-Mail Update. It is sent after the statistics for the preceding month have been posted on the Board of Realtors Website. To be removed from the mailing list; send us an e-mail stating that. Please include your first and last name to make it easier for us to find you in our database.
The Oahu median price for single family homes in February was $648,000 (4.6% lower than February 2014) and for condos was $326,000 (9.3% lower than February 2014). The median prices slipped despite tight inventory (2.7 months of remaining inventory for single family homes and 3.2 months of remaining inventory for condos). The changes could be an aberration since the number of transactions is lower during this time of year and the mix of properties sold can have a large impact on the figures. Only time will tell if this is the beginning of a softening sellers market.
Taxpayers that took advantage of last year’s historically low interest rates and either purchased a home or refinanced should make sure that they deduct all the charges possible from their tax bill. These deductions include points paid on a mortgage, property taxes (actual and pro-rated), pre-paid interest, and previous points paid in earlier years but not deducted. Please check with your tax advisor regarding these deductions because rules are different depending on whether the mortgage was taken out as a result of a home purchase or if it was a result of refinancing an existing mortgage.
The West Coast port strikes dominated the news here in Hawaii for weeks as numerous reporters speculated on the impact a prolonged strike would have on the islands. Fortunately, the strike ended on February 20th and port operations started returning to normal. Experts estimate that it will take several months to move the backlog of containers and ships that occurred during the strike.
Malama Market is returning to Pahoa after closing the week prior to Christmas because of the approaching lava threat. Since that time, the lava flow has stalled about 400 yards short of the shopping center. The grocery store is scheduled to reopen March 18th. Residents are cautiously optimistic about the stalled lava flow and realize this drama could play out for years. Even though the front of the flow has stalled, small outbreaks remind residents that the lava continues to flow from Kilauea crater.
After eight long days of searching, rescuers were finally able to find and free a 45-foot humpback whale from hundreds of feet of heavy-gauge fishing line that had become wrapped around its tail. An onshore witness first spotted the entangled whale off the Northwest coast of the Big Island. The whale circled the Big Island for four days before crossing the channel to the south shore of Maui. An inflatable boat was used to reach the whale and kegging bouys were attached to the fishing line to slow the whale and keep it near the surface while the line was cut from its tail.
The City and County of Honolulu released a notice on February 11th stating that parking in Lanikai along the bike lane will be prohibited during Presidents Day in response to severe traffic congestion during recent holiday weekends. The city is taking these steps to ensure emergency first responders can get into and out of Lanikai in a reasonable amount of time. The effectiveness of the ban will likely be debated since one of the residents in the area commented that the ban had little effect on traffic. Many beachgoers drove into Lanikai hoping to find one of the limited parking spots and then had to leave Lanikai when they could not find a place to park. The Presidents Day parking rule may become permanent if the long weekend test is deemed effective.
Despite holding monthly meetings on the best ways to keep the Honolulu Authority for Rapid Transportation’s (HART) rail project’s costs out of hand, the third party contractor monitoring the situation has reported that it is seeing “minimal cost containment” and calls the trend alarming. Jacob’s Engineering Group, the project management oversight contractor, projects a budget shortfall of as much as $910 million. The report raises questions on whether HART has taken sufficient actions to manage the costs of the largest public works project in Hawaii’s history.
HART unsealed the first of three bids to build three substations each six months after breaking up the original bid to build nine substations when the lowest bid of $294.5 million came in about $145 million over budget. The lowest bid for the three substations came in at $78.9 million. Only time will tell if HART’s strategy to break up the bids will result in any cost savings.
According to a report in June 2014, HART needed to purchase 213 properties for the rail project with an acquisition budget of $222 million. So far, HART has acquired 34 properties totaling about $70 million.
University of Hawaii’s research on healthy aging is generating interest. The state of Hawaii has the highest percentage of healthy seniors in the nation. Bradley Wilcox, one of the world’s experts on healthy aging, left Harvard University over a decade ago to learn why Hawaii seniors are the healthiest in the nation. While genetics plays a role, foods containing certain nutrients help ward off disease. Eating the right foods like Okinawan sweet potatoes, turmeric, and certain seaweeds lessen the risk of age related diseases and might actually slow the aging process. Wilcox co-authored “The Okinawan Program” after studying Okinawans, who are the longest living people on the planet.
Hawaii’s nursing homes have been rated the best in the country according to the latest report from the Centers for Medicare and Medicaid Services. 39 percent of Hawaii’s 46 nursing homes received the highest rating of five stars, higher than the other 49 states. That is welcome news since Hawaii has the most rapidly aging population in the country.
The growing doctor shortage has prevented disabled and elderly drivers from obtaining driver’s licenses because four of the five review board seats have been vacant for the past six months. The review board has very specific requirements regarding the specialization necessary to fill a board seat which compounds the difficulty in convincing a time strapped physician to volunteer. One state legislator predictably railed against the short-staffed medical community stating that awareness needs to be raised among physicians to rectify this unfair situation instead of examining the significant hurdles that both the federal and state government have placed in the way of opening new medical practices in Hawaii.
A new concierge physician business, Aloha Physicians, has opened and hopes to help alleviate overworked emergency rooms and urgent care facilities. The co-founders decided to start the company when they had trouble finding similar work when they moved to Honolulu in 2013. The doctors will visit patients in person and serve resorts, hotels, condos, residents, convention centers, and business centers. Patients are charged on a fee-for service basis and Aloha Physicians claim that most insurance policies will reimburse the money paid for the services.
Hawaiian Electric Company (HECO) is trying to defend their proposal to credit owners of roof-top photo voltaic systems at a lower “wholesale rate” than the current “retail rate” because it claims that the current program shifts the costs of maintaining the electrical grid onto customers that don’t have rooftop systems. Some installers are urging the Public Utilities Commission (PUC) to turn down this request because it makes homeowners less likely to install environmentally friendly PV systems on their homes. We would give some credence to HECO’s argument if they did not have a monopoly position in the electricity generating and delivery market. For their argument to hold water, HECO needs to break out the charges for maintaining the grid versus the charges for producing electricity. HECO currently charges rates about 3 times higher than other utilities throughout the nation.
HECO tried to delay all permits for new rooftop solar systems in highly penetrated areas until the PUC rules on their request to lower the reimbursement rate to customers when their solar systems provide more electricity then the home needs. HECO recently announced their decision to further delay approvals in a letter to customers who have applied for rooftop solar permits. Critics cried foul over HECO’s attempt to flex their monopoly power over Oahu’s electricity grid and PUC quickly stepped in and informed HECO that they could not postpone permits unless the additional installations would compromise the integrity of the electrical grid. Over 1,500 HECO customers have waited for more than a year to receive approval for their rooftop solar systems. Some customers have waited more than 540 days for approval. A report from the Solar Foundation suggests that Hawaii lost 400 installation and project development jobs related to HECO’s permit delays.
The Hawaii Agricultural Foundation has started a branding campaign for farmers leasing land at the HAF Ag Park in Kunia with its “Grown in Kunia” labels. The foundation is trying to mirror the success that Nalo Farms had with branding local produce in order to charge higher prices. Farmers in the park grow grape tomatoes, long beans, bananas, various lettuce types, taro, pineapple, chili peppers, and sugar cane.
The Hukilau Marketplace at the Polynesian Cultural Center opened up hoping to attract drive by visitors in addition to the visitors that visit the Polynesian Cultural Center grounds. A Courtyard by Marriott hotel will open up next door in June providing the North Shore vacationers another option to Turtle Bay Resort.
In another positive sign, Embassy Suites has announced that it will open a second Hawaii hotel in Kapolei with 180 rooms. Oahu has seen a slow decline in the hotel room capacity over the past decade and the additional rooms could help provide some growth in Oahu tourism.
Irongate started construction on the second Ritz-Carlton Residences, Waikiki Beach tower on February 24th. The 246-unit, East Tower will be completed in 2017 and the developer reported that approximately 88 percent of the units have already been sold. Remaining units are priced between $998,800 and $3.5 million. The 324-unit West Tower is sold out and should be finished in early 2016.
Avalon Development Co. LLC has announced a 269-unit rental project in Hawaii Kai that it has scheduled to complete in the summer of 2016. 54 of the 269 units will be considered “affordable” with rents for 3 & 4 bedroom units between $1,475 and $2,200 per month while rents for the market-rate units will range between $2,200 and $3,700 per month. Large-scale apartment complexes catering to tenants are extremely rare on Oahu and the complexes opening will most likely have a short-term impact on the Hawaii Kai rental market. Even though there was no mention of a lottery, we imagine that one will occur for the affordable portion of the project since rents for the 3 and 4-bedroom units will be lower than most rents for 2-bedroom units in Hawaii Kai.
Target opened their new store in Kailua on March 4th. In preparation of Oahu’s plastic bag ban effective July 1, 2015, the Kailua store did not and does not offer free bags to customers. Target offered free reusable totes early on opening day and started charging customers 99 cents for the totes that evening.
Dean’s Drive Inn is moving to a larger location since business started booming after being featured on Food Network’s “Diners, Drive-Ins, and Dives,” starring Guy Fieri. Owner, Dean Mishima, bleached his hair for the show to impersonate Guy’s signature hairstyle. Now, Dean feels that he has to continue bleaching his hair so that the kids recognize him. Mishima has headed the restaurant as owner and chef for 35 years. Dean’s Drive Inn is now located at 45-270 William Henry Road in a space previously occupied by Zippy’s.
Steak connoisseurs have a new restaurant to try out in Honolulu. Teppanyaki Ginza Sumikawa opened on February 1st and offers diners the opportunity to taste grade A5 beef from Japan. Currently, only three places are able to serve Omi or Kobe grade A5 beef in the United States. Our son, Mark, who is a hamburger connoisseur, proclaimed that Wagyu beef was the finest steak he ever ate. Our daughter, Ashley, a vegan, could care less.
Long-time Hawaiian fashion and gift retailer, Hilo Hattie, filed for Chapter 11 bankruptcy for the second time in less than seven years. Hilo Hattie currently owes more than $10 million to creditors including $1.85 million in back rent to three locations in Honolulu, Maui, and Kauai.
If you need assistance buying, selling, or managing Oahu property, we want to apply for the job of assisting you.
Tim and Tracey