September 2015 E-Mail Update
Here is our 9/10/2015 e-mail update. It is sent after the statistics for the preceding month have been posted on the Board of Realtors website.
The median sales price on Oahu continues to hover near all-time highs as supply remains relatively constrained. The August median price was $699,000 for single family homes (7.5% higher than August 2014) and $354,000 for condos (1.1% higher than August 2014). There is currently 3.4 months of remaining inventory for both single family homes and condos while demand remains strong. Oahu’s relatively unaffordable housing costs appear to be keeping a lid on stronger home price gains.
El Nino, a warming of the Pacific Ocean, has generated a wet summer and busy hurricane season. An extremely wet August led to nine sewage plant spills resulting in the closure of Waikiki beach in late August. High surf generated by several hurricanes in the Pacific resulted in the cancellation of the 2015 Waikiki Roughwater Swim. This was the last ocean swim of the summer for Tracey, who recently completed the 7-mile North Shore series, a series of four races ranging from 1 mile to 2.3 miles. Tracey shared her disappointment with over 1,300 swimmers. Some flew in from countries as far away as Australia to complete in this yearly event.
This summer has been unseasonable hot and sticky, reminding Tim Kelley of his summer days in New Orleans versus the mild summers typical of Hawaii. The hot and humid conditions have resulted in a flood of orders to repair, replace, or install air conditioning systems and the companies that provide those services have been overwhelmed. Stott Property Management has had to wait several weeks just to receive estimates and service for their rental properties. One tenant had to reschedule an appointment and now must wait two more weeks to have the repair completed. We have received information from a variety of sources that parts and systems are not available on Oahu and people must wait for new inventory to be shipped in.
Visitor spending in July grew 4% to a monthly record of $1.42 billion and a visitor increase of 5.6% to over 816,000. The year-to-date numbers are 4.2% higher than 2014 with visitor spending growing 3.6%. The largest visitor increases are coming from the U.S. West Coast with all markets, foreign and domestic, logging gains.
Construction has taken off in 2015 with a 37% increase in building permits issued. The surge in demand is giving contractors the luxury of selecting the most lucrative jobs and resulting in longer waits for repairs ranging from simple home maintenance to major home remodels. One contractor recently informed us that customers will wait up to a year to tear down an existing home and build new.
The soaring construction demand and resulting double digit year-over-year increase in construction costs resulted in the cancellation of the 150-room Marriot Residence Inn project slated for Kapolei. The developer is no longer under contract to buy the 3.5 acre site.
Blue Planet Energy Systems LLC has designed a system to help homeowners get completely off the electrical grid. The company has created the Blue Ion, a self-contained energy storage package that combines Sony’s lithium ion battery technology with Blue Planet Energy’s architecture and software. Sales officially began August 1, 2015. Each system is customized to meet the needs of a particular home. Founder, Henk Rogers, celebrated his first year in his Honolulu home off the grid back in July.
The Navy’s Waikele Gulch Bunkers used to store 56,000 tons of explosives until the ammunition was removed in 1993. Hawaii developer, Peter Savio, has been leasing the bunkers as industrial warehouse space for the past decade and recently put the property up for sale as industrial condominiums. Most of the current tenants are buying the bunkers and the project is nearly sold out.
Energy and electricity continue to make the news as the state adds additional electrical capacity via renewable energy. A biomass electricity plant on the Big Island has a 2016 scheduled completion date. The refurbished sugar mill power plant will supply about 10% of the Big Island’s electricity when it comes on-line.
Governor David Ige appears to be more concerned with reaching a dubious goal of 100% renewable energy than Hawaii’s high cost of electricity. The governor opposes importing Liquid Natural Gas because it could distract electricity providers from reaching a 100% renewable energy goal by 2045. Natural gas prices have dropped more than half resulting in major cost savings to consumers using natural gas for their energy needs and prices should remain low due to the enormous supplies being generated by U.S. companies using hydraulic fracking technology. In order to reach this goal, major technological hurdles will have to be overcome while the state will still generate electricity from burning trash and wood products whose carbon footprints are still a source of debate.
Governor David Ige signed a bill into law which made Hawaii the first state in the nation to adopt a 100 percent renewable energy portfolio standard back in May.
It appears that the one good thing that the Honolulu Authority for Rapid Transportation (HART) effectively coordinates is lobbying state officials for more taxpayer funding. Months before the $910 million budget shortfall was announced to the public, Mayor Kirk Caldwell and HART officials were actively coordinating with union officials and pro-construction activists to communicate the need for a General Excise Tax extension to state representatives. It is a shame that similar efforts are not apparently being made to contain costs or come up with more efficient means to address traffic problems.
Several homeless advocate outreach programs are helping the homeless in Kakaako camps as the state continues to struggle with Hawaii’s growing homeless problem. Church groups bring clothes, food, and personal care products, state public health nurses offer health care, and non-profit organizations help homeless adults get birth certificates, drivers licenses, and social security cards so they can start seeking employment. Critics believe all the outreach efforts only encourage homelessness.
The homeless problem is not isolated to Kakaako. The Star Advertiser ran another article on the same day documenting Waipahu High School’s and Middle School’s struggles with cleaning up after the homeless defecating on sidewalks in front of classrooms, dealing with fires near campus, and dealing with homeless sleeping in front of classrooms with students present. The problem is becoming such an issue, that The Honolulu Star Advertiser has now dedicated a web page to the issue: http://www.staradvertiser.com/homeless/
The Federal Communications Commission has interrupted monthly subsidy payments to Sandwich Isles Communications, Inc. as a result of founder Albert Hee’s criminal tax evasion convictions. Records show that Sandwich Isles Communications received monthly subsidy payments of $1.36 million through May 2015. From those proceeds, Albert Hee cited business expenses of over $700,000 for college tuition and living expenses for his children, $92,000 for massages, over $120,000 in credit card charges, over $700,000 in wages for his children who did little or no work for the company, and almost $600,000 in wages for his wife who did no work for the company. It appears that another federal taxpayer subsidy program has failed to identify and prevent fraudulent activity that occurred over decades.
Hawaii senior citizens receive some breaks in their cost of living when it comes to health care. Health care for a Hawaii retiree is among the least expensive in the country according to health care cost projections software designer HealthView Services. The data was compiled from 50 million health care cases to project the costs in each state.
Everyone knows that pigs can’t fly. However, here in Hawaii, pigs can apparently surf. Waikiki’s premier ocean sports festival, Duke’s OceanFest, will include the “Going to the Dogs SurFur Competition.” More than a dozen dogs and a pig are expected to compete for the best ride, the best tandem wave, and the best-dressed surfing pet.
Change continues to occur in downtown Kailua much to the dismay of Tracey. Macy’s has announced that it will close its downtown Kailua store in early 2016. The department store was first built in 1946 as a Liberty House store which Macy’s purchased in the 1990’s. George, Mary Lou, and Tracey will now be able to give directions by saying that you can pull into the parking lot where Macy’s used to be … much to the chagrin of Tim.
Castle Medical Center will open a new clinic in the Laie Shopping Center early in 2016. The clinic will be run by Dr. Marc Shlacter, who operated his own clinic, “The Country Doctor,” a few doors down for the past four decades. Castle’s goal is to provide room for specialists to provide much needed services to North Shore residents on a part-time basis.
Queen’s Medical Center is planning to expand services in West Oahu one year after reopening the Leeward Oahu’s only acute-care facility. The hospital’s 80 beds are nearly full and the emergency room sees approximately 140 people per day. Initial expansion plans include hiring five new physicians to meet demand.
The redevelopment of Kauai’s iconic Coco Palms is one step closer to getting underway. The developer just received the necessary permits to start demolishing the existing structures. One of the issues that surfaced was the lack of capacity at Kauai’s landfill. As a result, much of the debris will be shipped to Oahu. The resort is scheduled to open in 2017 and will be operated by Hyatt Hotels Corp.