October 2015 E-Mail Update
Here is our 10/12/2015 e-mail update. It is sent after the statistics for the preceding month have been posted on the Board of Realtors website. We have included a link to our Q3 2015 Quarterly Newsletter. Please click here to go to the newsletter.
Oahu’s median sales price for single family homes set a new record of $730,000 in September (7.6% higher than September 2014) and for condos was $366,000 (5.5% higher than September 2014). Demand for both single family homes and condos remained robust while available inventory grew slowly. With single family homes having only 3.2 months of remaining inventory and condos having only 3.5 months of remaining inventory, Sellers maintain the upper hand in negotiations. Demand for homes should remain strong in the short-term, as the number of pending sales (properties under contract) is higher than the same period last year.
Oahu’s tourism industry received some more good news when the Waikiki Trade Center, a 22-story, mixed use building will be converted into a 230-room boutique hotel. The conversion will add hotel rooms to a market that has seen the loss of more than 5,000 rooms since 2000 and address a lack of capacity in Oahu’s market. The building is currently only 20% occupied and primarily used as office space.
Real estate investors in Kapolei will face stiff new competition in the form of Kapolei Lofts when they complete the first block of 100 rental units in October of a four-block development consisting of 499 units. Market rents in the Kapolei area will likely dip as this relatively large new supply of properties will compete for qualified tenants in the area.
Hawaii’s median cost of renting a home is the highest in the nation and 55 percent higher than the nationwide average. That data is not news to Hawaii tenants who struggle to make monthly payments, welcome additional room-mates to share the rent, or move from the islands.
The Hawaii State Supreme Court heard arguments from attorneys representing the state, the University of Hawaii, and opponents of the planned Thirty Meter Telescope project in late August. This is the latest chapter in the drawn out saga concerning an international project to build a telescope that would search for answers regarding the beginning of the universe. In a classic case of judicial overreach, the Hawaii Supreme Court will decide if the state process for approving the project was proper. In the meantime, eight more protestors have been arrested on the Big Island for breaking the state’s rule restricting access to Mauna Kea. State officials had to remove a tent abandoned by protestors from the Mauna Kea summit. It appears that the protestors have caused more damage recently in “protecting the mountain.” A well-written letter to the governor by various business organization urged the state to press forward with the telescope.
Hawaii students have been teaming up with businesses and non-profits to keep their classrooms cool since the state has failed to provide a healthy learning environment in many of Hawaii’s decrepit public schools. Newspaper articles have described several instances where public school students and teachers have succumbed to heat related illnesses during a hotter than normal August and September. In a desperate attempt to dampen the public outcry, Governor David Ige has asked for a temporary suspension of procurement rules to purchase 1,000 portable air conditioners.
The hotter than normal summer has resulted in ocean temperatures 3 to 6 degrees Fahrenheit warmer than normal and ocean biologists predict another mass bleaching event. The island chain experienced mass bleachings in 1996 and last year. Warm waters prompt coral to expel the algae that they rely on for food. The phenomenom is called bleaching because the coral lose their color when they push out the algae. Bleaching makes coral more susceptible to disease and increases the risk that they will die. 30 to 40 percent of the world’s reefs have died from bleaching events over the years. Tracey has personally seen the changes during her frequent swims in Kailua Bay.
In more positive news, the Hawaii Association for Independent Schools (HAIS), a non-profit that traditionally serves independent and private schools, is striving to expand their offerings through student, teacher, and administrator training conferences with an eye on expanding students’ global perspective when addressing issues that effect them locally. The new executive director, Robert Landau, leads the new initiative. Robert Landau has worked in the educational sector for more than two years in Switzerland, Indonesia, Czech Republic, China, Cambodia, and Singapore. HAIS will offer these new programs to Hawaii’s public and charter schools.
The University of Hawaii at Manoa’s Army Reserve Officers’ Training Corps (ROTC) program was recently recognized as the best among 30 ROTC programs on the West Coast including Alaska and Guam. The professor of military science at UH Manoa credits the award with their successful partnership with The Hawaii Army National Guard and the 25th Infantry Division at Schofield Barracks with the University of Hawaii ROTC’s success. This is the fourth time in the last 15 years that the University of Hawaii has been recognized for their success in training young leaders. The ROTC programs are reviewed based on the Cadet National Order of Merit list, cadet retention ratio, quality and performance of military training and newly commission second lieutenants. Tim Kelley graduated from Tulane University’s Navy ROTC program and credits both the ROTC program and the U.S. Navy for making him “grow up,” and developing the leadership skills that he still leverages today in running a business.
The work of a Hawaii Natural Energy Institute researcher has led to a $1.4 million research contract with an Italian intellectual property company to develop bio plastics from inexpensive feed-stocks like wood chips and domestic waste. Bio plastics have the potential to be biodegradable and could lead to more environmentally friendly packaging material.
In energy conservation news, Chelsea Group Ltd., a Hawaii energy efficiency consultant, received the regions Energy Project of the Year Award. Chelsea Group developed a program that tracks actual tons of cooling and measured efficiency in kilowatts-per-ton in real time. Engineers can use the data to balance an building’s air conditioning load and identify chillers that should be replaced. Queen’s Medical Center installed the system and realized savings of $200,000 in savings the first year from $289,000 in equipment upgrades.
Hawaii Health System Corp. (Hawaii’s state run hospitals) has selected Kaiser Permanente to run its hospitals on Maui after eight hours of deliberation. Time will tell if Kaiser can turn around the state’s financially troubled hospitals on Maui. Labor officials on Maui have filed suit to prevent private management of the state hospital system.
A state audit alleges that the Hawaii Health Connector used faulty procurement practices for wasting another 11.6 million in taxpayer money when it hired Virginia based Mansha Consulting LLC, the Connector’s second highest paid contractor. The audit alleges that Mansha Consulting LLC was awarded a contract based on a “personal recommendation” of former Hawaii Health Connector Executive Director, Coral Andrews, and failed to justify the award or determine precise fees for services.
The State of Hawaii is the first state to draft a waiver for the Affordable Care Act (Obamacare) due in part to the state’s failure in creating an on-line marketplace known as The Hawaii Health Connector. One of the requests in the waiver is the removal of the Small Business Health Options Program (SHOP) since the Hawaii Health Connector has shut down and only one insurer signed up despite numerous radio ads promoting the ease and the number of options small business owners would have using SHOP. In the end, the state simply charged those small businesses who did try to comply a fee, and then asked them to enroll directly with their insurer placing their federal tax credits at risk. The state does not currently have an approved method from the federal government to allow small businesses to file for tax credits promised by Obamacare.
In related news, the state approved a 27.3% rate hike for Hawaii Medical Service Associations (HMSA) members and a 34.4% rate hike for Kaiser Permanente members enrolled in individual plans designed by Obamacare. The rate hikes were approved due to higher than expected demand from new members, high-cost specialty drugs, and Obamacare taxes and fees.
Hawaii’s Department of Labor and Industrial Relations recently signed a three-year contract with the federal government to “protect workers from being incorrectly hired as independent contractors.” Plan on seeing your repair bills climb as the construction and home repair industry, trades that rely heavily on contract workers, comes under greater scrutiny.
Hawaii regulators have extracted an additional $1 million from the developer of the Symphony Honolulu luxury condominium tower for the developer’s use of glass that exceeded the Hawaii Community Development Authority’s (HCDA) arbitrary 50% reflectivity standard. The HCDA ruled that the condo could keep the glass even though there no data was gathered to determine if the additional glare would be a problem. The developer used the glass to improve the energy efficiency of the building.
Hawaii rate-payers learn yet again why their electric bills are three-times higher than most other states in the union. NextEra Energy Inc. and Hawaiian Electric Company have spent 21.35 million to date on consultants, advisors, and other third parties as the two publically traded companies deal with an over-zealous regulatory environment. Much of the expense is related to answering questions from the Hawaii Public Utilities Commission and other “regulatory stakeholders.” The Public Utilities Commission does not expect to make a decision on the sale until June 2016. Hawaii customers currently pay 33.54 cents per kilowatt-hour. That is tops in the nation and twice as high as Alaska, which has the 2nd highest rate.
State officials, city officials, and various non-profits met recently to discuss current steps and next steps to address the growing homeless population on Oahu. Ironically, non-profit organizations are currently focusing on Hawaii Homelands as a potential resource since Native Hawaiians make up a significant percentage of homeless individuals and families. The City of Honolulu’s long permitting process was singled out as a major hindrance to supplying sufficient housing. One can only hope that people put pressure on the city council and the mayor to remove unnecessary regulatory hurdles so that housing can be provided in a quicker, more efficient manner.
Are you a pizza fanatic? Try J.J. Dolan’s, a Downtown Honolulu pub that is famous for its pizza. The establishment has been named one of the top 100 pizzerias in the nation based on sales for the third year in a row. J.J. Dolan’s must be doing something right.
Three nuclear engineers from Pearl Harbor are opening a brewpub, Beer Lab HI, in Manoa later this year. Both Tim Kelley and George Stott were nuclear trained engineers and look forward to seeing how this trio “nukes it out.” For those not indoctrinated in the Nuclear Navy’s geekdom, “nuking it out” is another phrase for figuring it out. In an unusual twist, the brewpub will have a bring-your-own-food policy for those who would like to dine while enjoying a few cold ones.
With installation of solar panels on the roof of the Gemini Observatory on Mauna Kea, Hawaii holds claim to the highest rooftop photovoltaic system connected to the electricity grid at 13,079 feet above sea level. The second highest system is located in Switzerland.
Tim and Tracey are officially empty-nesters. Tracey recently traveled with their youngest, Mark, to help him get set up in his Santa Clara University dorm room. Mark started his freshman year last month.