September 2021 Email Update
The August median sales price for single-family homes was $1,050,000 (25.1% higher than August 2020) and for condos was $500,000 (16.3% higher than August 2020), both records. Prices continue to soar as demand remains very strong with little available supply. 14.9% more single-family homes and 65% more condos sold last month than the previous August and 16.6% more single-family homes and 54.6% more condos are currently under contract. The supply of both single-family homes and condos has shrunk dramatically. There are 22% fewer single-family homes and 32% fewer condos available compared to the same time last year. Home prices are likely to continue increasing above August’s current records.
The home exemption filing deadline for the City and County of Honolulu is September 30th for next year’s property taxes. The home exemption is particularly important for owner occupants due to recent changes that charge property owners that don’t have an exemption higher property tax rates. You can file a homeowner’s exemption by using the link below.
Stott Real Estate, Inc. recently sold a residential property containing four buildings and five units on a lot zoned commercial in the Wilhelmina neighborhood. We highlight this transaction since it also involved nine related owners spanning two generations and several years of planning. The family hired Stott Property Management, LLC in 2014 to manage the family property with the goal of increasing rental income while bridging the disagreements in the family regarding priorities. Stott Property Management, LLC required the family to designate one individual to communicate family decisions and four of the units were rented at the time it was listed for sale. All but one family owner wanted to sell for quite some time. The family decided to wait until the elder heir passed before starting the sale process. The elder heir had previously lived on the property and it was a mutual decision to wait. The goal was to sell before future generations inherited ownership and the number of owners grew past ten. The same person who worked with Stott Property Management, LLC worked with Tracey for years to lay the groundwork, to obtain a survey and resolve issues discovered by the survey, collect trust documents, and collect signed power of attorney documents from each owner. The process involved numerous family meetings to reach the point that Tracey could list the property for sale. Tracey and the staff had to navigate the constantly changing city and state COVID-19 social distancing requirements in preparing the property to sell and to show the property to prospective buyers. The sale took nine months due to the non-conforming use of the commercially zoned property and several would-be buyers cancelled contracts during the due diligence process. Ultimately a buyer closed on the transaction in April 2021. Some of the owners cashed out and will pay capital gains taxes while others deferred their capital gains taxes by completing a 1031 Exchange. The successful conclusion highlights the advantages of working directly with small highly focused company and the challenges of managing and selling a property that has been passed to several heirs. Property owners should carefully consider estate planning and family dynamics before deciding to pass on real estate to their heirs. The number of heirs can expand with each successive generation. Family members residing on the property can further complicate matters. A link to the Michael Yap’s seller testimonial is provided below.
The delta variant of COVID-19 has caused infections to surge in Hawaii like many other parts of the country. A recent distraction involved a group protesting outside Lt. Governor Josh Green’s condo and demanding the state leave them alone while Green accused them of being selfish. Hospital beds are filling up with sick residents and both Queen’s and Straub Hospital announced they ran out of intensive care beds during the week of August 16th. 500 out-of-state healthcare professionals started arriving the same week to help treat the surge in hospitalized patients. The Honolulu Star Advertiser published several articles during the week of August 23rd reporting exhaustion in nurses and emergency medical service (EMS) personnel from having to cope with the surge in COVID-19 patients in addition to other health emergencies like heart attacks, strokes, etc. The Honolulu morgue is currently using one of three emergency trailers parked at the site to handle an increase in deaths and the state is struggling with an emerging medical oxygen shortage. The governor signed an executive order on September 1st providing healthcare facilities immunity from rationing care as the state’s healthcare system struggles with capacity constraints. The articles mirror reports in the continental U.S. as the country struggles to contain the Delta variant. The Governor urged both tourists and residents to avoid non-essential travel through the end of October on August 23rd. University of Hawaii’s Economic Research Organization’s Executive Director Carl Bonham would not predict the outcome of Ige’s press conference which will likely be covered nationwide since visitors were already choosing not to come during one of Hawaii’s seasonal visitor slow periods. The governor warned tourists that their visit would likely be less enjoyable due to restrictions imposed on indoor gatherings at restaurants and bars. Ige did not rule out reinstating travel restrictions if the infection numbers don’t subside.
Visitors apparently heard Governor Ige’s request and visitor numbers decreased significantly during the month of August. Daily visitor counts were only 6% lower than the same period in 2019 and the daily counts shrunk to 35% lower compared to pre-pandemic numbers by the end of the month. As a result, the visitor industry expects a new round of job cuts as expanded unemployment benefits expire.
Mayor Rick Blangiardi imposed restrictions on gatherings to ten individuals indoors and 25 individuals outdoors on August 24th and the state reimposed the 50% capacity constraint for restaurants, bars, and gyms. On August 30th, the mayor announced the Safe Access Oahu program that requires patrons of bars, restaurants, movie theatres, and gyms to show proof of a COVID-19 vaccination or a negative test taken within 48 hours. People may show a picture of their COVID-19 vaccination card on their phone as proof. The new program mirrors similar programs in Israel and other parts of the globe that put the burden of isolation on the unvaccinated versus the general population. The two-month Safe Access Oahu initiative begins September 13th.
Many large in-person events have been cancelled in response to the pandemic surge in August and September. Some of the casualties include the 76th anniversary of the end of World War II on the Mighty Mo, Kapiolani Community College’s (KCC) Farmers Market (8/28, 9/4, 9/11, 9/18), the Ironman Triathlon on the Big Island, and the last leg of the North Shore Swim Series.
The state unemployment office announced that it will not reopen as planned on September 7th due to rising infections statewide on the day that people could start scheduling appointments. The state Department of Labor and Industrial Relations (DLIR) argued that most case claim issues could be handled remotely as well as in person. A dubious statement since DLIR has left many needy people with unresolved cases over the past sixteen months.
The Daniel K Inouye International Airport opened its new $270 million concourse on Friday, August 27th. The Mauka Concourse can receive 11 aircraft and should help alleviate current gate issues during peak air traffic time between 10:00 am and 3:00 pm. Hawaiian Airlines will be the first carrier to use the gates. Here's a link to some pictures of the new building:
A two-week exercise by the U.S. Navy and Marine Corps demonstrated the fleet’s ability to coordinate strike from various platforms across 17 time zones. In one scenario, a new unmanned truck missile launcher fired two missiles to strike a decommissioned frigate over 100 nautical miles away while two Marine Corps F/A 18 attack aircraft fired two Harpoon missiles at the same frigate. All four missiles, which did not have warheads, struck the frigate. U.S. Marines landed on Kauai using hovercraft and MV-22 tilt-rotor Ospreys to quickly deploy Marines who set up camouflaged scout teams to identify passing enemy ships. The exercise concluded on August 16th and is part of the Navy and Marine Corps strategy to counter China’s threat to clear transit of the South China Sea. 25,000 sailors and Marines on platforms including aircraft carriers, submarines, sea-launched aircraft, and troop carriers participated. To learn more please click the link below:
Oahu landlords should start creating contingency plans if they are currently renting shorter term rentals in residential communities. The Honolulu City Council is considering legislation that will change the definition of a short-term rental from a lease less than 30 days to a lease less than six months. Additionally, the city is looking at only providing short-term licenses in the resort communities of Waikiki, Kuilima, and Ko Olina. The reasoning behind the changes is the desire to provide more residential rentals. However, this measure if passed, will likely fail to produce the desired result because the state is also making long-term rentals a riskier proposition with the changes in Hawaii’s eviction laws and Honolulu Department of Permitting and Planning’s failure to enforce and execute the latest changes in short-term rental regulation. More homes will likely become empty second homes or be sold to owner occupants that can afford to buy their home if the bill passes.
The Hawaii Carpenters Apprenticeship and Training Fund opened a new training facility in Kapolei to offer millwright training in Hawaii for the first time in addition to expanding training in carpentry and drywall. Millwrights install and maintain equipment like compressors, pumps, conveyers and monorails used in commercial industry. People previously had to fly to the mainland to receive the necessary training.
WalletHub recently ranked Hawaii Community Colleges the #1 community college system in the nation. The study used a weighted average of nineteen indicators of cost and quality to rank individual community colleges and over-all performance of each state’s system. The WalletHub article can be accessed using the link below:
A recently released study reported that the population density and diversity of reef fish decreased after Hanauma Bay Nature Preserve was reopened to the public at 25% of the former visitor numbers. The research team noted that three types of reef fish, brown surgeonfish, convict tang, and chubs have become the dominant species in Keyhole, a shallow section of the bay with a sandy bottom and they noticed an increase in diversity in the Channel sector of the bay that has more reef crevices and holes. The water in the bay was about 56% clearer when closed compared to 2018 and remained about 12% clearer when 25% of visitors returned. Tim and Tracey notice similar trends when they swim Kailua Bay, Lanikai, and Waimanalo Bay. There are few fish close to shore in the sandy areas popular with beachgoers and significantly more types of reef fish and in greater numbers by shallow reefs and rocky areas farther away from shore. It would be logical to expect that Honolulu will continue to restrict the number of visitors in Hanauma Bay Nature Preserve based on this information. Here's a link to Hanauma Bay Biological Carrying Capacity Survey 2020/21 Annual Report:
The state Department of Natural Resources and a turtle conservation group have increased the frequency of patrols on the North Shore’s Laniakea Beach, also known as turtle beach, to clamp down on people breaking the law by harassing Hawaii green sea turtles, honu. Illegal activities recently witnessed and filmed involve touching, grabbing, or feeding honu.
The U.S. Geological Survey’s Hawaiian Volcano Observatory raised its alert status from “advisory” to “watch” after a swarm of over 250 earthquakes around Kiluaea’s summit occurred the afternoon of August 23rd. The 2019 eruption occurred the last time that the observatory issued a watch alert status. The earthquakes accompanied changes in the volcano’s ground deformation measured by tilt meters suggesting that magma is entering 0.6 to 1.2 miles beneath the southern portion of Kiluaea’s caldera.
A Honolulu Little League team qualified for the Little League World Series in Williamsport, PA. The “HNL Boys” are the third Hawaii team in a row to qualify for the prestigious tournament. The HNL Boys finished 3rd this year with a 4-1 record in Williamsport. They lost to the eventual champion Michigan in the semi-finals after first beating Michigan three days earlier. The twelve-year old all-stars showed poise and grace throughout the tournament and were awarded the sportsmanship award. A 2018 Honolulu team won the title in 2018, a Central Maui team finished third in the U.S. Division in 2019, and the tournament was cancelled last year due to the pandemic. Could spam musubi become the new breakfast of champions?
Kolea (Pacific Golden Plover) have completed their non-stop 3,000-mile flight from their arctic breeding grounds and staked out their territory for the next eight months. Here is picture of a Kolea that calls the grounds of our office complex home.