October 2022 Email Update

The September median sales price for single-family homes was $1,100,000 (4.8% higher than September 2021) and for condos was $502,500 (5.1% higher than September 2021).  Rapidly rising mortgage rates are dampening demand.  There were 34.4% fewer single-family homes sold in September compared to September 2021 and 19.3% fewer condos.  The higher interest caused sellers to hesitate with 26.2% fewer single-family home listings and 18.6% fewer condo sales compared to the same month last year.  Inventory is creeping up in the slowing market with 43.9% more single-family homes available and 10.8% more condos available.  There is 1.9 months of single-family home inventory and 2.0 months of condos.

The S & P CoreLogic Case-Shiller National Home Price Index showed the first drop in average home prices across the nation since January 2019, indicating that the pandemic-fueled home price surge has peaked.  The index reflects a three-month rolling average with a two-month delay and experts expect continued average price reductions over the coming months.  The July average of $389,500 is 0.3% lower than June yet 15.8% higher than July 2021.  While Sellers should expect lower prices than this Spring, Buyers should expect to pay more for a house than last year and higher monthly mortgage payments.  The average mortgage rate jumped from 6.29% to 6.70% during the week ending September 30^th as turmoil in the bond market drove up interest rates, and Bank of Hawaii is offering fixed mortgage rates of 6.375% the week ending September 30^th.  Expensive areas like San Francisco and Seattle experienced monthly price drops of 3.5% and 3.1% respectively and Oahu Sellers should expect the same.

Median asking rents, a leading indicator, have peaked according to three rental property companies in July.  CoStar Group reported a 0.1% drop in the September median rent, Rent.com showed a 2.8% drop in September median rent for one-bedroom apartments, and Realtor.com showed a modest drop in September median rent.  While asking rents are falling, tenants signing one-year leases will still pay monthly rent increases of 7.1% since most leases renew every twelve to 24 months.  Median rents have increased nationally 23% since August 2020.  Economists expect monthly rents to continue drifting lower as rents typically decrease in the winter months and fewer tenants are renewing leases and doubling up to save money in this inflationary environment.  During Tim’s monthly calculations of market rents, he noticed the monthly rents on new leases were roughly 10% lower than monthly rents in the spring.

Developers may get some well-deserved relief as top city planning and permitting officials resign citing differences in philosophy with Mayor Rick Blangiardi.  The Honolulu Star-Advertiser did not state the philosophical differences, but developers hope that the changes the mayor is pushing results in less micromanagement by overworked, critically understaffed, staff members.

The U.S. Navy has shortened the timeline to drain the Red Hill Fuel Tanks by 5 months after receiving pressure from the state and environmental groups to speed up the process.  The Navy has committed to shortening the repair timeline by two months and the defueling phase by three months.  The project reported that it expects to remove 1 million gallons of fuel from the tanks by July 2024 versus the initial report of completing the project by the end of 2024.  The Navy just admitted that hundreds of water samples taken in the first few weeks of the crisis were never tested for fuel contamination despite urging military residents to call a hotline if they thought their water was contaminated.  The Navy dumped the samples one month after collection resulting in valuable lost time to identifying the contaminants and finding the source of the leak.

The Federal Transit Authority (FTA) approved the Honolulu Authority for Rapid Transportation’s (HART’s) shortened route for the remaining $744 million in funding.  The FTA released $125 million of that funding and will release an additional $250 million of funding when HART awards the contract for the final leg of the construction.  HART must award the contract for Kakaako’s Civic Center station by 2024.

The city reopened the Rental and Utility Relief Program will opened October 3, 2022, to distribute the remaining $35 million of $225 million in pandemic-related federal funds.  The program will distribute monthly payments of up to $2,500 for eligible households.

The City and County of Honolulu finally condemned a Waikiki apartment building after acquiring the property for $3.04 million.  The city will refurbish the facility to create affordable senior housing.

David Ige has returned to form by scrapping the latest plan for Aloha Stadium in favor of a government run facility.  True to form, Governor Ige has stated that a government run facility is superior to a private partnership.  Given the state’s failure to build large projects on time and within budget, no one currently knows when the project will start and finish and how expensive it will be for taxpayers.  Two senior stadium officials are questioning the move since it will simply cause further delays.  One official was quoted by the Honolulu Star-Advertiser stating, “I don’t know what his plan is, but I can tell you that we are so far along in our procurement that we are ready to move and proceed, and we have been for quite some time.  We’ve been waiting for that green light.  So, I think my concern is any change at this point will cause a delay or will cause us to have to start over, and that’s what I would hate to see is to start this process over and kick this project out even further.”  The official also disputes that $350 million will be sufficient to cover the costs of the stadium’s build since it is based on a 2017 estimate.  The stadium was once projected to be built by 2023 and that has now been pushed back to at least 2027.  Maybe Ige can save money by having HART manage the project and both the rail system and stadium can be delayed indefinitely.  The University of Hawaii was clairvoyant in starting construction on the Warriors expanded on campus facility.

Demand at the Hawaii Food Bank is increasing as more families struggle to keep up with inflation.  A reduction in government help, a drop in donations, and supply chain issues have crimped supply as the holiday season approaches.  The Hawaii Food Bank currently helps about 120,000 people per month and those numbers will likely increase through the end of the year.

The Navy has towed the USS Bowfin to dry dock for six weeks of maintenance, repairs, and a new coat of paint.  The submarine was christened on December 7^th, 1942, and earned the nickname, the Pearl Harbor Avenger.  The submarine has been a mainstay of Pearl Harbor tours.

New drone footage shows increasingly desperate homeowners erecting illegal coast hardening structures to keep their homes from falling onto the beach as the state struggles to develop a long-term solution.  One homeowner recently constructed a moss rock retaining wall along the beach and covered it with a lanai.  Another homeowner is constructing a cement retaining wall fronting the same beach.  The Department of Permitting and Planning has not responded to requests for comment.

Oceanit, a local tech company, has partnered with Hawaii Gas to pilot a pipe surface treatment to remove the risk of hydrogen embrittlement failure and to decrease operating costs.  Moving hydrogen through existing high-pressure systems has risks.  Hawaii Gas operates at lower pressures and is the only utility to blend hydrogen with natural gas in the United States.  In addition to creating a barrier to hydrogen penetration, the treatment provides an ultra-slick surface that minimizes drag.  The United States has over 3 million miles of pipeline and the use of hydrogen could further reduce the carbonization of fossil fuels.

The Environmental Protection Agency (EPA) urges relocation of the Thirty Meter Telescope (TMT) to a different location and suggests a smaller facility.  The EPA comments state that local indigenous people are most negatively impacted by the project even though the project yields net economic benefits to the Big Island and the state.  TMT opponents were both surprised and pleased by the report.

Bellows Air Force Base is erecting fencing along the perimeter of the base as required by the federal government’s anti-terrorism efforts.  The contractors are trying to keep the fence on the Bellow’s side of the ridge, but the terrain does require fencing on some parts of the ridgeline.

Maui has taken the rare common-sense approach of allowing the homeless to sleep in their cars at a county lot versus being forced to trudge around the island and sleep in homeless camps.  The step should save the county millions while providing a safer alternative to rest.

Seabird fallout season has begun on Hawaii and the Hawaii Wildlife Center is again asking residents to drop off grounded fledglings to centers like Kailua’s Feather and Fur Animal Hospital and other vets on the Leeward Side and North Shore.  Young seabirds leave their burrows out to sea guided by moonlight, and many become disoriented by urban lights and circle around them until they land exhausted or collide with structures.  The grounded fledglings are vulnerable to predators, starvation, or getting hit by cars.  Hundreds of seabirds are downed each year in need of rescue.  560 seabirds were rescued last year with a 96% release rate.  Here is a link to Hawaii Wildlife Center’s website.

For more than 40 years, Hawaiian botanists have risked life and limb to find endangered plants and collect cuttings, flowers, or seeds.  The ordeal involves rappelling down cliff faces of 1,000 feet, hanging from helicopters, or hiking for days to remote locations.  Botanists can now rely on drones equipped with a fishing pole like appendage to collect the material necessary to replenish the endangered plants.

Tim and Tracey’s cat, Snowflake, passed away last year and Buddy has reached a ripe old age of 13 and sleeps most of the day.  The silver lining is that a Kolea has adopted Tim and Tracey’s front yard as part of its territory.  Here is a link to a video of the Kolea hunting for bugs.