October 2020 Email Update
The September median price of single-family homes was $880,000 (13.3% higher than September 2019) and of condos was $445,000 (unchanged from September 2019) as the COVID-19 pandemic continues to shape residential real estate demand. The number of single-family home sales during the month of September was 12.7% higher than last year and the number of condo sales dropped 2.1%. Record low interest rates are fueling demand. Pending sales of single-family homes are 38.3% higher than last year and pending sales of condos are 7.5% higher than last year. There is only 1.9 months of single-family home inventory due to soaring demand and 18.4% fewer new listings than last year. Condo supply continues to creep up and currently stands at 4.0 months of inventory.
The University of Hawaii Economic Research Organization (UHERO) predicts that Hawaii’s economy will not start to see sustained improvement until the summer of 2021 based on assumptions that a vaccine will become widely available the second half of 2021. The article points to Hawaii government’s failure to take advantage of a two-month period without COVID-19 cases to prepare for an eventual resurgence smothering the beginnings of an economic recovery and delaying the restart of tourism a second time. UHERO reports that employment in leisure and hospitality is under 50% of pre-pandemic levels and has had a significant impact on transportation, retail, and food service. Industries outside of tourism have experienced high single-digit percentage declines. Construction has been the only bright spot thanks to federal contracts for large military projects. UHERO states that the economy could recover quicker if rapid virus tests become widely available resulting in higher tourism numbers while a third wave of cases in fall and winter could delay the recovery until 2022.
A six-page paper written by Paul Brewbaker, one of Hawaii’s leading economists, Frank Haas, a senior marketing consultant in Hawaii, and James Mak, describes the devastation of the COVID-19 pandemic and the state and counties’ response to the tourism industry and their forecast based on comparison’s to the travel recovery after the 9/11 terrorist attacks. While air travel has been slow to recover nationwide, Hawaii’s air passenger numbers dropped 24% more in July than nationwide numbers (Hawaii – 94.4%, U.S. Domestic Travel – 70.1%). The authors point to the 14-day quarantine requirement for trans-Pacific travelers that has been in place since March and is currently set to expire on October 15, 2020 if travelers obtain a negative COVID-19 test within 72 hours of their flight. The authors pulled no punches on the poor crisis management at both the state and county levels and hope that local governments will learn from their failure. The authors point out that the nature of travel and vacations will likely change due to changing attitudes as a result of the pandemic, concerns about climate change, and pushback from residents that live in tourist destinations that want their wellbeing to be a higher priority than tourist dollars. They predict that vacation rentals will gain in popularity now that working remotely has proven to be effective and guests can work as effectively from host’s house as their own. Strict restrictions on Oahu vacation rentals are currently at odds with this predicted trend. Here is a link to the article if you would like to read it in greater depth.
A recent survey of landlords and property managers conducted by UHERO found that roughly 6% of tenants were late on rent versus 3% before the pandemic and an additional 9% of rental units are currently vacant versus 4% prior to the pandemic. The report stated that some tenants have moved in with family and friends while others have departed for the mainland to find work and a more affordable standard of living.
Governor David Ige is currently allowing the four county mayors to opt out of the state’s pre-travel testing program due to begin October 15th and keep the 14-day quarantine requirements in place. Ige turned down Kauai County’s proposal to establish a post-travel testing program (two-test option) because of concerns that it will deplete the state’s limited supply of test kits. Hawaii Island Mayor Harry Kim has decided not to participate in the state’s pre-travel testing program if a two-test option is not provided and at one point proposed a three-test option. Kim has cited the 32 deaths at Yukio State Veterans Home as the reason behind his stance even though it has been widely accepted that the virus spread and resulting deaths were a failure of the home’s management to implement basic protocols needed to protect the vulnerable population. A vacation rental manager expressed dismay by Kim’s decision stating, “the latest outbreaks here on the Big Island have been associated with the veterans center. Those should be the places that have the restrictions, not the rest of us. The emotional distress I’ve seen some of my employees under, it breaks my heart. There is much more harm happening by not even making a baby step to open the tourism industry.”
Hawaiian Airlines laid off 2501 employees or roughly one-third of its staff on Thursday, October 1, 2020 as the CARES Act Payroll Support Program (PSP) expired. The company is currently preparing for the state to allow trans-Pacific passengers to avoid the 14-day quarantine by obtaining a negative COVID-19 test within 72 hours of their flight starting October 15th. Hawaiian is partnering with Worksite Labs to set up exclusive testing sites initially near Los Angeles and San Francisco international airports and then adding additional sites near other airports during the next few months. The airlines will continue to fly its planes at 70% capacity to allow for social distancing. Hawaiian Airlines lost almost $175 million in the second quarter as revenue plunged 92%.
United Airlines will offer rapid COVID-19 tests at San Francisco International Airport the same day of travel for their San Francisco to Hawaii flights starting October 15th. GoHealth Urgent Care will administer the tests and have been working with United to offer rapid on-site testing for flight attendants since July. American Airlines will offer the test at Dallas-Fort Worth International Airport and Alaska Airlines will offer the test in Seattle.
The USS Arizona Memorial reopened on 9/28/2020 with a shorter program and at reduced capacity. The 30-minute program offers a short orientation followed by a boat ride to and from the memorial. The park is not currently showing the introductory movie prior to the boat ride out and visitors spend more time at the memorial itself. Visitors are asked to reserve tickets ahead of time online and are available at 3:00 pm the day prior to planned tour’s start date and visitors are asked to arrive no sooner than 30 minutes before their scheduled tour. There will be a limited number of tickets available for walk-ins. Visitors must wear masks and the Navy boats will operate at 50% capacity. The USS Bowfin Submarine Museum & Park, Battleship Missouri Memorial, and Pearl Harbor Aviation Museum are currently closed.
Governor David Ige announced a renter assistance program in early September that offers rent payments up to $2,000 per month from August through December for people that have lost income due to the COVID-19 pandemic. The $100 million program is funded by the CARES act and the state tapped Catholic Charities of Hawaii and the Aloha United Way to help administer the program. Eligibility details can be found at www.hihousinghelp.com and tenants seeking assistance can apply by visiting www.catholiccharitieshawaii.org or www.auw.org.
Dr. Emily Roberson returned to work on September 4th, two days after state epidemiologist Dr. Sarah Park was suspended with pay. She is tasked with building the state’s contact tracing department that has been criticized for not taking advantage of Hawaii’s low COVID-19 numbers in April and May to build the departments capacity prior to the increase in cases in June and July that quickly overwhelmed an understaffed and poorly organized group. Dr. Roberson worked as a field epidemiologist during the H1N1 flu pandemic in 2009 and the Zika outbreak in 2017. Her priority was to free up the highly trained disease investigators from mundane administrative work so that they could focus on the more complex confirmed coronavirus cases. Simple contact tracing and administrative activities could be handled by workers that could be hired and quickly trained like those that received training by the University of Hawaii. Hawaii residents hope that the team can provide timely and meaningful information that the public and officials can use to manage the ongoing pandemic effectively without having to continue to shutdown the islands’ economy.
The city council started pushing back on Mayor Kirk Caldwell’s second shutdown that began on August 27th when he extended it in mid-September despite falling COVID-19 infection numbers. The administration has argued that reducing high risk behavior requires behavior modification. Frustration boiled over when the mayor opened parks and beaches to individuals on September 8th but not families. City Councilwoman Heidi Tsuneyoshi argued that the lockdowns are going too long, and that Caldwell is ignoring the consequences to the public’s mental health and to the impact on small businesses. She stated that, “We cannot be in the business of behavior modification at this point. We are beyond the point of having conversations even about this. The businesses have been in limbo for seven months now. There are generational businesses that have closed down, and we’re sitting here hearing about behavior modification.” Lt. Governor Josh Green has also pushed the mayor to relax the restrictions in parks and beaches arguing that families with children should be allowed enjoy the parks and beaches.
Mayor Kirk Caldwell loosened Oahu’s second shutdown on September 24th allowing small gatherings of five or less in public spaces, businesses and attractions to operate at 50% capacity, and restaurants to operate at 50% capacity with tables of 5 people in the same household or less. Bars, night clubs, arcades, helicopter tours, and legal vacation rentals must remain closed. Honolulu’s current strategy can be found using the link below:
The Honolulu Authority for Rapid Transit (HART) continues to struggle with its delayed and over budget rail project and many of the wounds are self-inflicted. The latest drama occurred when the Human Resources Committee recommended that HART fire its CEO Andy Robbins after his contract expires at the end of the year. Board members voted 4-3 in favor of the recommendation, but the board needs more than four votes to pass the measure. Robbins is HART’s sixth leader in the past nine years. Mayor Kirk Caldwell injected more uncertainty when he told the Federal Transit Authority on September 25th that the City and County of Honolulu has decided to cancel the public-private partnership (P3) option to complete the project even though it is HART’s decision. One of the companies competing for the P3 contract for the final four-mile leg of the project told investors that it bid more than $2 billion when HART has only budgeted $1.4 billion for the final segment. Robbins told the HART board that the P3 procurement process was still underway the day before the mayor’s announcement.
A 9/10/2020 Civil Beat article highlighted the mayor’s spending priorities related to the federal CARES Act passed in March. Honolulu has budgeted $30 million in federal aid for the Honolulu Police Department to enforce the mayor’s emergency orders and earmarked only $25 million to help locked down residents pay for rent, utilities, and child-care. Only $2.4 million of the $25 million has been distributed because aid has been bogged down by overly onerous documentation requirements. Meanwhile the city spent over $546,000 on 45 ATVs and UTVs that officers are riding in beaches and parks to cite people violating the emergency orders. Officers have issued over 5,000 citations on September 17th and 18th for alleged violations that if found guilty of a misdemeanor can be fined up to $5,000 and spend a year in jail. Residents have complained about being cited for walking alone in empty parks and beaches that pose no threat of spreading COVID-19. Police even cited U.S. Surgeon General Jerome Adams for visiting a closed park while he was here in the state to help Hawaii ramp up its testing program. Council members have suggested budgeting funds on education and hospitals versus the $13.8 million budgeted for overtime expenses and $4.7 million in police services officer contract positions.
Scientists announced an upgrade to the W.M. Keck Observatory’s Keck II telescope using Adaptive Optics to remove blurring of astronomical images caused by atmospheric distortion. The upgrade will allow the telescope to better detect cool, hard-to-see objects in space like exoplanets, protoplanets, and young dwarf stars. The W.M. Keck Observatory consists of two telescopes with 10-meter primary mirrors and according to the website, are “the world’s most scientifically productive optical and infrared telescopes. Scientific advancement on Maunakea even though the fate of the Thirty Meter Telescope is still in limbo. The visitor gallery at the telescope facility is currently closed due to the pandemic restrictions. You can visit the website for more information about the facility.
Astronomers announced on October 1st that they discovered a giant black hole surrounded by several young protogalaxies that date near the beginning of time. A paper published in Astronomy & Astrophysics describes a campaign using the Keck II telescope, the Hubble Space Telescope, and several other of the most powerful telescopes in the world to discover and observe the black hole. In related news, one of the three scientists awarded the 2020 Nobel Prize in physics is Professor Andrea Ghez who used the Keck Observatory to advance the understanding of black holes.
It appears that the University of Hawaii (UH) football players will get to compete in an abbreviated eight-game season starting October 24th. The Warriors started conditioning drills the week of September 21st. The Warriors start off their season against Fresno State. A link to the 2020 schedule is provided below.
Conservationists will recapture the alala, Native Hawaiian crows, that were bred in captivity and successfully introduced back into the wild on the Big Island. Dozens of the birds were released into the forests of the Puu Makaala Natural Area Reserve and successfully adapted to the wild foraging, calling, and attempting to breed. The highly intelligent birds were once common on Hawaii Island, but their numbers declined to less than 100 by the 1960s due to habitat loss, invasive predators, and introduced diseases. Ironically, the alala are being captured because several have been killed by the Hawaiian Hawk, or ‘io, that has also recovered in numbers due to conservation efforts.
A dedicated, four-legged, Transportation Security Administration (TSA) team member retired after six years on the job. King, a 10-year yellow Labrador retriever walked with his handler sniffing for signs of explosives at Daniel K. Inouye International Airport for the last time on September 14th, 2020. King traveled to support high-profile events including a presidential inauguration, Super Bowl 50 and the 2018 NCAA Final Four. He received a cake and tennis ball drop during his retirement ceremony. He will spend his retirement swimming at the beach, sleeping on the couch, and eating.
Another Labrador retriever, 1 ½ year old Zadoc, was recently hired full time as a facility dog at Shriner’s Hospitals for Children – Honolulu. His new position in the pediatric specialty hospital is Chief of Snuggles (COS).
The Koolau Golf Club closed permanently on September 30th. The current operator and lessee of the course negotiated an agreement with First Presbyterian Church of Honolulu, the owner, to terminate the lease early. First Presbyterian Church is working with a consulting firm to come up with a long-term vision for the 246-acre property. The church holds services there and rents out the Koolau Ballrooms and Conference Center but is not currently hosting events due to the pandemic restrictions. Golf has been in decline for years and the COVID-19 pandemic was the final straw.
The owners of Real Gastropub had placed their brewing system in storage when they closed their restaurant, bar, and Bent Tail Brewery permanently in June. They apparently abandoned hope of brewing beer again anytime soon when they put their state-of-the-art brewing system up for auction on September 9th. The owners had invested $284,000 into the system when the owners opened the location in March 2019.