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September 2017 E-Mail Update

Here is our 09/08/2017 e-mail update. It is sent after the statistics for the preceding month have been posted on the Board of Realtors website. You can find previous newsletters by visiting

The median sales price in August for single-family homes was $786,250 (5.2% higher than August, 2016) and for condos was $419,000 (5.3% higher than August, 2016). Both numbers were slightly lower than Oahu’s all-time highs for sales prices. While demand grew for both, demand for condos in August soared 19.5% higher than August of 2016. Supply continues to remain extremely tight. There are currently only 2.5 months of remaining inventory for single-family homes and only 2.8 months of remaining inventory for condos.

The Hawaii tourism industry continues to set records in 2017. July was the 14th straight month of arrival and spending gains with arrivals climbing 7% and spending climbing 10% over last year’s numbers. The numbers continue to climb despite Hawaii economists’ predictions that the lack of hotel inventory would start impeding growth. The alternative accommodations industry, also known as vacation rentals (legal or otherwise) has helped fulfill the demand by tourists. Some in the state legislature are calling to divert some of the funds to promote Hawaii tourism to fix infrastructure, like state trails and parks, currently under strain from the record numbers.

The state of Hawaii received more good news in low crime counts. Reported crimes in the state of Hawaii have fallen to the lowest rate since 1975. All four counties have been reporting lower crime figures compared to previous years. Officials credit both the community and police for the lower figures.

Both of the first dispensaries to open on Oahu and Maui ran out of their initial stock of marijuana products within four days due to tremendous pent up demand. The dispensaries have complained about the state’s slow certification process in approving testing labs while the state tries to pin the blame on the only approved testing lab. The state has yet to certify a lab to test derivative products like oils, tinctures, and lotions for patients that do not want to smoke. Dispensaries are not allowed to sell edibles like cookies, brownies, or candy. Demand for medical marijuana products would even be higher if the state did not have a significant backlog of patients waiting on their medical marijuana cards. The manager overseeing the states registry program recently resigned and the state is scrambling to find a replacement in addition to two additional staff members.

The Honolulu Authority for Rapid Transportation’s (HART) rail project continues to cause major drama as state officials recently passed a package of tax increases to fund the estimated $10 billion project. House finance chairwoman, Silvia Luke, and House Speaker Scott Saiki have been highly critical of Mayor Kirk Caldwell’s handling of the project resulting in a second round of tax increases in the past two years. House and Senate negotiators have agreed to extend the 0.5% General Excise Tax (GET) Surcharge and raise the Transient Accommodations Tax (TAT) by one percentage point for more than a decade. Neighbor island lawmakers are protesting the TAT (also called the hotel room tax) increase arguing that Oahu should completely fund the project and that neighbor island hotel tax revenue should not be used. Just prior to the opening of the special session on Monday, August 28th, two outspoken critics of the proposed funding measures were removed from their positions on the House Finance Committee. The bill barely passed the Senate Ways and Means Committee on a six to five vote and then passed the Senate by a vote of 16 to 9. The bill passed the House 31-15 on Friday and Governor David Ige signed it on Tuesday. The bill extends the Oahu’s GET surcharge another three years (expires 12/31/30), raises the state TAT one percent for thirteen years (expires 12/31/30), and is expected to generate $2.37 billion for the rail project.

A Honolulu auditor reported that the City and County of Honolulu has no mechanisms in place to detect fraud should it occur at HART. While the auditor could not find definitive evidence of fraud, “red flags” were present suggesting the possibility. The auditor found that “internal controls were so weak that if fraud, waste, or abuse were to occur, HART and other officials would not have detected it, could not prevent it, and could not have taken corrective action.” The auditor would have recommended a forensic audit or investigation by prosecutors or police if former HART Executive Dan Grabauskas was still in charge. The City Council has called for an audit to examine the economy and efficiency of the rail project and current HART officials have committed to conducting a forensic audit if evidence of wrongdoing is uncovered. The audit should take about 18 months.

An audit of the City and County of Honolulu’s bulky-trash program found excessive sick leave, overtime, and leave without pay by city employees. In a one-year period between July 2015 and July 2016, 102 employees took 2,227 days of sick leave and 153 employees were paid $1.7 million in overtime (over $11,000 per employee). The audit also found abuse by the public who used the service to remove items that should have been recycled or disposed of using normal trash services. The audit was prompted by a large number of complaints about the bulky-item pickup service by the public.

Honolulu City Council members voted to defer action on requiring more than 350 residential condo buildings to be retrofitted with sprinkler systems in the next five years. Bill 69, introduced on behalf of Mayor Kirk Caldwell days after the Marco Polo fire that killed three, has been deferred until council members can obtain more information. The Honolulu City Fire Chief expects an updated draft report on changes to the city’s fire code within the next month. The proposed bill has already received loud protests from condominium owners who fear that they could be forced to pay tens of thousands of dollars to finance the sprinkler retrofit. While not everyone opposes the need for the bill, many contend that the five-year time frame is far too short a period of time to finish retrofitting 358 buildings.

Mayor Kirk Caldwell has asked Governor David Ige to issue an emergency proclamation to expedite the permitting process associated with replacing two high volume pressurized sewage pipes that have been weakened by corrosion. The sewer mains serve residential neighborhoods in Kapolei and Ko Olina hotels. The two underground sewer mains have experienced six breaks in the last four years resulting in hundreds of thousands of gallons of untreated wastewater spilling on the ground. The concrete cylindrical pipes were put into service in 1988 and 1990 and were designed to handle Kapolei’s growth and last much longer into the future. City officials want to replace the pipes as quickly as possible for fear that heavy rains could cause a major spill that would impact neighborhoods and potentially reach the ocean.

The Howard Hughes Corp., developer of the 60-acre Ward Village, has begun a $20 million renovation of Kewalo Boat Harbor. The renovation includes upgrading the harbor’s water, fire, and electrical infrastructure, installing security cameras and gates, adding Wi-Fi, building new docks, a new marine fueling facility, and improved landscaping. The developer will remodel the city’s lifeguard response station, and the harbor’s restrooms.

Kahala Hotel has dropped its request to expand its nonexclusive easement on public shoreline to increase its outdoor wedding services and provide guest entertainment including torch lighting ceremonies and outrigger canoe rides. The Kahala Hotel received stiff resistance to their plans during recent neighborhood board meetings. Public beach access remains a jealously guarded right by Hawaii residents.

Kaimana, the Hawaiian monk seal pup born on Waikiki beach, was moved to an undisclosed location on Oahu the day after the pup’s mother fed her for the last time and left. A team from the National Oceanic and Atmospheric Association (NOAA) captured Kaimana in a ropelike hammock on an August Saturday and drove her away in a pickup truck to her new home. The team tagged Kaimana and vaccinated her before releasing her at her new home in the wild. Kaimana can live off her fat reserves for a few weeks as she learns to hunt food.

Erosion of Waikiki beach has accelerated since the state removed two concrete erosion barriers because they were falling apart. The erosion has gotten to the point where the water is turning brown and tourists have noticed. Officials are considering a sandbag barrier to minimize future erosion.

Kualoa Ranch, located on the Windward Side of Oahu, recently made TripAdvisor’s “Top 25 Trendiest U.S. Attractions.” The ranch sells ATV, zip line, and horseback riding tours in addition to giving frequent agriculture tours. The ranch raises crops, cattle, and shrimp, which it sells to local restaurants, online, and to visitors in the ranch’s gift shop. Value added products like Kauloa Ranches dried lilikoi-infused apple banana generate six to eight times more revenue for the farmer than just selling the raw crop. Kualoa Ranch hopes to build on its success to re-establish local food production in Hawaii.

Bikeshare Hawaii has added another ten stations to its bike rental operation. Bikeshare Hawaii reported that its program records between 1,800 and 2,100 trips per day. The automated stations allow bikers to rent 30-minute one-way trips in Downtown Honolulu, Kakaako, and Waikiki.

Iconic Hawaii retailer, Hilo Hattie, is returning to the Big Island after emerging from bankruptcy last year. The company closed four of its seven stores in 2015 and refocused its efforts into made-in-Hawaii merchandise.

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