Despite all signs that a disaster is on the horizon for the housing market in Maui, the Maui County Council are diverting affordable housing funds to an ill-conceived affordable rental project. While recognizing that something must be done to provide families with affordable housing, the Council and county administration are essentially ignoring the signs of a massive foreclosure crisis and are doing little toward helping families get into new homes.
The Realtors Association of Maui is clear in predicting an onslaught of foreclosures like never seen before in Maui. Currently, Maui has the highest foreclosure rate in Hawaii which also overshadows the national average and experts in real estate warn that these terrifying trends will likely continue for another year or more. There are 444 pending foreclosures in the next quarter alone, not to mention the hundreds of homeowners who have already experienced foreclosure.
Perhaps one of the overlooked consequences of foreclosure is the effect of empty homes. Without question, the loss of a home is plenty devastating for the family involved but the effects of vacant homes on neighborhoods is equally devastating. Property values in said neighborhoods can drop by as much as 40 or 50 per cent which also means a loss of revenue for the county. Unfortunately, instead of using their resources to deal with this issue, the county looks to be assigning funds to solve the problem of affordable rentals. Real estate experts worry that the problem of affordable rentals is here to stay while the county still has some time to tackle the issue of foreclosures.
The council has fast-tracked the allocation of$ 2.75 million toward the development of a 28-unit rental facility. While the Real Estate Association of Maui typically supports projects that bring about affordable rentals, they see a number of problems with this current project. For example, the construction price runs to $464,285 per unit at a building in Wailuku. In addition, DBR Development LLC, the winning bidder for the project, is a California company while several qualified local firms were bypassed. Finally, the excess of rentals on the market now suggest that rental prices will drop naturally and investments should be directed toward the foreclosure crisis.
However, the main concern is not the cost, construction, or appropriateness of the project but the fact that these units will not be ready for tenants for 3 years. On the other hand, the problem with foreclosures is very much in the present. Some nonprofit organizations are taking matters into their own hands. Na Hale O Maui is planning to buy several foreclosed homes for around $350,000 and then sell them to low income Maui Families for around $200,000. Moreover, these homes would be sold with restrictions of further increases in price meaning that they will continue to be affordable in the long term. In consequence, families who are currently renting would move into their new home leaving more rental properties unoccupied. Na Hale would be able to finance 30 homes using county funds leading to further stability in our dubious real estate market.
With all the evidence under consideration, the Real Estate Association of Maui seems clear in its recommendations. The impending foreclosures in Maui are guaranteed to bring stress to families throughout the island as well as having a direct negative impact on the economy and county revenues. As property values continue to fall, the county and local government could face its own serious financial problems causing budget deficits and likely future layoffs. On the other hand, investing in foreclosed homes and creating affordable options for buyers will bring the kind of stability to the market that can have a positive impact on the economy as well. The Na Hale project brings opportunity in the face of disaster.
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Are you looking for a brand new luxury home in an exclusive gated Golf Course Community in South Maui? Look no further!
For a limited time, the next 5 buyers will receive a $200,000 discount off the List Price at Hokulani Golf Villas. With prices starting at $989K, this works out to a discount of approximately 20%.
Call us for a personal viewing, or check out this Video Tour of the project as well as Virtual Tours for the following 3 models: House 1, House 2, and House 3. There are no better values for homes of this quality in this type of setting.
One out of every 5 new pending sales on Maui is an REO (Bank Owned) property. Because this is a such an important segment of the market, we are now including newly listed REO’s as well as price reductions on existing listings that occurred since our last publication.
As a heads up, we just listed an REO home at 122 Honuhula Place in North Kihei last week. This five year old, 2136 sq. ft. 3 bedroom 2.5 bath home with attached 1 bedroom ohana, has central a/c, granite counters in kitchen and bathrooms, Jacuzzi Tub, wood laminate flooring, and more. At $506,900, we expect it will sell very quickly. Click here for more details.
Mahalo Nui Loa,
The Smith Team
P.S. For a complete list of REO’s and Short Sales, please subscribe to our Weekly Newsletter.
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The Maui Planning Commission held an open meeting for West Maui residents at the Lahaina Civic Center in order to discuss the current Maui Island Plan. Essentially, two developments were the topic of discussion: the anticipated new town at Olowalu and the Maui Land & Pineapple’s staff-housing project at Pulelehua. Indeed, these projects have been the topic of hot debate as some residents are concerned about the size of the projects. Unlike other projects which have received little attention, like the development of Wainee and Kaanapali 2020, hundreds of residents came out to Lahaina to discuss the possible addition of 5 to 6 thousand new homes in West Maui over the next 2 decades.
While the projects are designed to keep up with population growth, many West Maui natives are concerned about excess development as the island may not be a sustainable locale for such expansion. The Maui Island Plan, as it is commonly known, may tax existing infrastructure making highways, beaches, parks, and schools overburdened. Currently, many of these infrastructure issues are already causing a stir as some classes are required to meet in make-shift buildings and even now traffic is a major concern of residents. Protesters to the development argue that the addition of 6,000 new homes would be far too much for the community to handle. Commissioners are being asked to consider the impact of this development on jobs, traffic, schools, and other community resources.
Other residents are looking for protection in their own communities. For example, Honolua home owners do not want more development in their area and are asking for the urban-growth border to end at Kaanapali making a distinct division between developed and undeveloped areas. The marine environment seems to be one of the leading factors with regards to this development. As it stands, certain areas of Honolua are under a great deal of stress and urbanization needs to be limited in order to protect marine life. Meanwhile, representatives from the Maui Pineapple Co. argue that Honolua is a fertile agricultural area that can support a number of diversified crops. Protecting agricultural lands also appears to be a major issue in this debate.
A few testifiers support growth in Kaanapali 2020 as well as the expansion of Wainee in future developments. These projects have continued with participation from the community and developers and would provide much needed low-income housing in areas rich with good schools, parks, jobs, and infrastructure. However, development at Olowalu continues to be one of the most highly debated in the planning process. The project is displaced from existing jobs and located along a very busy highway. As such, infrastructure would clearly need to be further developed to support residence. Residents fear that development will exacerbate problems that are already arising and appear to benefit property owners and developers without considering the effects on residents. In fact, Maui Tomorrow evaluated many proposed projects with regards to location, infrastructure, and affordable housing and the Olowalu project received some of the lowest grades. It is argued that due to a lack of affordable housing and a location that is far from jobs this project will cause far too much stress in the area.
However some residents are supporting the project. Housing and employment would certainly come to the area and some people are frustrated that the Maui Planning Commission is not listening to their needs. Various planners and residents of Olowalu village have long supported the project as they look forward to the employment opportunities that will certainly follow development. The general Plan Advisory Committee has recommended building 1,500 new homes on an area covering roughly 300 acres of Olowalu but the Planning Department appears only willing to allow for the development of a small area, a few businesses, and about 100 new homes.
Like Olowalu, development in Pulelehua has also been the topic of hot debate. County planners were hoping for a development project assigning 280 acres for building about 1,150 new homes while the General Plan Advisory Committee prefers a smaller project allowing 116 acres for 696 new homes. Some buyers have been disturbed by the amount of time it is taking for this project to gain approval. Many developers and residents alike feel this project is long overdue. The need for affordable housing in the area seems to warrant development. Moreover, the infrastructure is much better in the area. The development is near existing jobs which would reduce the amount of commuting and could possibly improve some poor traffic areas. Also, developers have been discouraged from making their case. While the Maui Planning Commission organized a meeting specifically for developers to present their ideas, they also asked developers to avoid future Planning Commission meetings.
The Maui Planning Commission will continue toward a final decision in the matters of Olowalu and Pulelehua developments but it seems both sides of the issue are not confident that their concerns have been heard.
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- Aug
- 13
Predicting the Market Bottom
There is still controversy about whether or not the latest real estate market data is signalling a bottom to the market.
The naysayers point to the increasing delinquency rate on Alt A and Prime Loans as an indication that we will see a new wave of foreclosures and further declines in prices.
Those who feel the market has already bottomed or soon will, point to the increased sales and drop in inventory.
Who is right? We wish we had a crystal ball and could tell you for certain where prices will be in a year or two from now. Unfortunately, our crystal ball is rather cloudy at this time.
What we can tell you is that timing market bottoms is nearly impossible to do. In some cases, prices have already dropped by 50% or more. Are you willing to risk waiting in the hopes that you’ll be able to get another 10 or 15% in savings?
Look ahead 5 to 10 years from now, and ask yourself where prices will be. When you put it into perspective, you will probably feel, as we do, that the risks of missing the boat are far greater than the downside risk at this time.
Mahalo Nui Loa,
Ken Smith R (S)
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U.S. new home sales posted their biggest monthly gain in eight years in June (Up 11% from May), suggesting the housing market may be starting to recover from its worst slump since the Great Depression of the 1930s. Despite the large increase, sales levels are still much lower than a year ago and prices are still declining in most areas of the Country. Read more.
One of the factors leading to the increase in sales is the “Homebuyer’s Tax Credit” of up to $8000. If you or your spouse have not owned a home within the last 3 years, you may be eligible for this credit provided you meet certain income requirements and the home will be occupied as your principal residence. You must close on your purchase by December 1, 2009 in order to be eligible for this tax credit, so time is running is out. Read more.
In addition to the Homebuyer’s Tax Credit, foreclosures are also a major factor stimulating sales. Here is a list of the 80 bank owned (REO’s) properties that are currently for sale on Maui. We will soon be listing a home and cottage in Pukalani, a large 5 bedroom home in Kihei, and a 2 bedroom condo at Southpointe. Call or e-mail us for more details.
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- Jul
- 15
Debt Storm Sweeps Maui
Maui has recently been swept by a storm of debt that has left a high rate of foreclosures and bankruptcies in its wake. Although Maui County was previously thriving and enjoying a time of prosperity, the global recession has finally hit the Hawaiian Islands and is clearly beginning to take its toll. One of the most telling signs of the effect that the recession has had on Maui is the sky rocketing rate of foreclosures that are affecting more and more Maui County residents of all socioeconomic classes.
While less than 100 properties in Maui County were going through foreclosure this time last year, there are currently more than 350 properties in that state. In addition to this growing list, properties are also staying in foreclosure for longer periods of time. The reason behind this startling increase in foreclosures is that homeowners are simply no longer able to make their mortgage payments.
Widespread layoffs, a tourism downturn and the collapse of the building boom have all contributed to the financial troubles of homeowners and the depressed real estate market. It’s therefore easy to understand why the number of bankruptcies is also on the rise in Maui County. In fact, for many homeowners foreclosure and bankruptcy go together, with many families now owing an amount on their property that is higher than the actual value of the property.
While the elevated number of foreclosures caused by the high unemployment rate is, perhaps, an expected symptom of the economic recession, it unfortunately serves to depress real estate prices even further. Another concern with Maui County’s real estate market has to do with the fact that as homes are remaining in foreclosure longer, they are also going unmaintained longer. The result of this is that the state of the properties degrades, making them far more expensive to restore in the future.
While there has been the occasional upscale home foreclosure in Maui County, these problems are mostly affecting working families who live in single-family homes with values of between $400,000 and $700,000. Also, the most highly affected area in Maui County has been North Kihei, although areas such as Wailuku, Kahului and Lahaina have also seen their fair share of single-family home foreclosures as well.
As the number of homeowners facing foreclosure and bankruptcy continues to rise, there is one positive trend to note. Unlike in the past, lenders are far more willing to negotiate debt payments. By allowing for renegotiated mortgages or modified payment schedules, lenders are being more flexible and are making it more viable for families and homeowners to avoid bankruptcy.
However, it is still unmistakably clear that the recession that has swept the global economy has now caught up to Maui County and is wreaking havoc on homeowners and businesses alike. And while rising foreclosure rates are just one sign of the fury of the current downpour of debt, they indicate that Maui will still have to weather the storm a little longer before relief appears on the horizon.
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Market trends are starting to suggest that the end of poor real estate woes may be here or at the very least the worst is over. In Oahu, home sales shoed a marked improvement in June increasing 9.5% compared to a year ago. These latest statistics from the Honolulu Board of Realtors are certainly providing some hope that sales will continue to increase.
This June saw 254 sales whereas a year ago that figure was only 232. While the median home price has dropped, approximately 9 per cent to $569,000 from June 2008 there has been a slight rise from the median home price in June. These figures are promising for detached house sales but condo sales are still lagging. In fact, condo sales fell 17.3 per cent from June 2008 despite the fact that the median condo price is also down more than 5 per cent from last year. Month to month comparisons of condo and home sales as well as their median prices suggest slight improvement from May but it is still too early to tell if the trends will continue.
Real estate experts are cautious to be overly optimistic but are hoping that these improvements are a sign of good things to come. Others argue that what we’re seeing is a seasonal effect rather than an improving real estate market. Many people tend to buy and sell during the summer months so most realtors expect to be busier this time of year. Still, homes were also selling faster in June of 2009. The number of days on the market for condos and homes in June was 45, which is the lowest this figure has reached in over a year. Compared to January when most homes remained on the market for more than 70 days, there has been noticeable progress.
Sellers are still reticent to put their homes on the market which shouldn’t come as a surprise. With housing prices down considerably over the last year many sellers are waiting for a return to profitable times. This June there was approximately 1,700 single-family homes for sale which is considerably lower than the 2,080 homes available last June. Likewise, the inventory of condos is considerably lower than in June 2008. In fact, the number of available condos dropped 11.4 per cent from 2,687 last year to 2,381. Clearly, sellers are taking a “wait and see” approach and are not keen to sell when they have other options.
Home buyers, on the other hand, might be encouraged by the historically low interest rates. Mortgage rates are around 5 per cent, or lower, for 15 or 30 year fixed term mortgages. This combination of lower rates and lower prices may be at least partially responsible for more sales. Whether the market has bottomed out is yet to be determined but optimistic realtors feel as though the worst is over.
Overall total sales in 2009 have been much lower than in the first six months of 2008. In fact, 21.7 per cent fewer homes have been sold throughout Honolulu this year than last and condo sales are still suffering. Indeed, total sales volume has also dropped significantly from $1.97 billion last year to $1.23 billion this year which represents a 37.8 per cent fall.
Sellers in the metro, East Oahu, and Diamond Head areas were able to receive higher than median prices in June while those on the Leeward Coast were bringing in some of the lowest prices. In fact, more evidence of the difficult times faced by real estate agents is seen in the fact that board membership in Oahu is also down, by 10 per cent. Across the state, this figure is an even more staggering 21 per cent drop. It seems as though part-time agents have given up on the industry while full-time professionals are hanging tough. Real estate offices are closing at unprecedented rates despite improving sales volume over the last quarter. The real story has yet to unfold and determining whether this is a seasonal spike or not will come down to sales figures throughout the fall and winter.
With foreclosures driving housing prices down and mortgage rates being the best in years it is still possible for the market to continue on an upward trend. Agents throughout Honolulu are seeing more balance and may be coming out of the red. Cautious optimism seems to be the popular approach but some experts are predicting the bottom toward the middle of 2011.
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- Jun
- 12
Top 100 Hawaii Realtors
In today’s tough economic times, it’s not easy to be a top producer, particularly in the real estate industry. This is true for all regions of the country, including Hawaii. Buyers are being more cautious and careful with their money, not wanting to overpay for properties and not wanting to make a wrong move. Moreover, there are fewer residential buyers currently looking for property in Hawaii while there are still more than 18,000 working real estate professionals in the state. However, despite all of the current difficulties, the top agents in Hawaii are managing to stay busy and are continuing to further the success of their real estate businesses.
According to Shara Enay’s article Being the Best in the Worst of Times: 5 Tips from Hawaii’s Top Realtors, there are five main skills and strategies that Hawaii’s most successful real estate agents all possess and utilize every day. The first invaluable skill that is shared by all of Hawaii’s top 100 realtors is the ability to play well and interact well with others, including clients and other real estate professionals. As Hawaii’s top-ranked realtor, Patricia Choi, is well aware, it’s important to be a good listener and to never bad-mouth fellow agents. By being enjoyable to work with, real estate agents build a solid reputation among both clients and other professionals, a reputation that will ultimately speak for itself.
Secondly, all of Hawaii’s best realtors understand that building strong relationships is absolutely invaluable. A significant percentage of most realtors’ business comes from repeat clients and referrals. This means that solid relationships can be a major source of a realtor’s revenue. Of course, top real estate agents like Hawaii’s number four ranked Sachiyo Braden understand that building and nurturing such relationships can take time, but it’s definitely worth the effort in the long run. For Braden, who deals primarily with clients from Japan, honesty, compassion and ensuring that all of her clients’ needs are met have been absolutely essential to establishing the relationships that have made her business so successful.
As Shara Enay notes in her article, Hawaii’s highest ranked realtors also put in the time and effort to build their brand. Establishing a successful real estate business takes hours of tedious work and exceptional organization. This means that persistence, solid communication skills and attention to detail are all essential. Of course, these same skills and attributes are also helpful with regards to the next important asset for top realtors, which is market knowledge. Ken Smith, who is the number three ranked realtor in Maui and the fifteenth ranked realtor in all of Hawaii, understands just how important it is for an agent to know their particular market. For Smith, knowing all the details about the Maui real estate market has allowed him to make the most of every listing and to provide his clients with the very best service possible.
Last but not least, all of Hawaii’s real estate power producers have aggressively marketed to their particular niche. Oahu-based Tracy Allen, who is Hawaii’s fifth-ranked agent by sales volume, knows that it’s extremely important to take the time to carefully prepare listings and to present them in the way that will be best received in the particular target market. Choosing the right media for advertisements and making the right impression through presentation are both absolutely crucial.
While the above skills and strategies are always important for realtors in Hawaii and all other parts of the country, they are even more important during the current slow economic times. By using their knowledge and abilities to the fullest and by dedicating extra time and effort to their clients and listings, Hawaii’s top 100 realtors have persevered through a slow real estate market and a bad economic situation to come out on top and to be the very best in difficult times.
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Not surprisingly, the majority of real estate figures throughout the Maui area are down in the first quarter of 2009. However, some investors are keen to point out that some areas actually showed higher sales figures suggesting that hope is on the horizon. The last two months for Maui real estate have been the worst in the last two years but with some pockets of increased sales figures might indicate that the downturn has reached its lowest point and figures will start improving.
Trends are a bit early to read and many cautious real estate experts are advising that at least 3 or 4 months of real estate sales data needs to be collected before any definitive statements can be made. As far as overall sales numbers are concerned, the first quarter of 2009 showed a marked decline. Declining statistics were also seen in average and median sales prices and dollars generated. Minor improvements on these first quarter trends may or may not be merely an anomaly.
The following are more specific statistics:
- Compared to the first quarter of 2008, 50 percent fewer single-family homes were sold. This represents a drop from 228 sales in 2008 to 113 sales in 2009.
- Single-family home sales averages also dropped from about $910,000 to $805,000 which is an 11% dip.
- Median single-family home sales prices also dropped 11% from around $603,000 to $538,000.
- Finally, the total dollars generated on single-family homes came down a staggering 56% from $207.5 million in 2008 to $91 million in 2009
- Comparatively, figures for condominium sales faced similar drops.
- The total number of condos sold fell sharply. In 2008, 276 sales were finalized in the first quarter but only 148 this year.
- Average condo prices took a larger dip than housing prices going from $940,000 in 2008 to around $721,000 this year. This represents a 23% decline.
- Similarly, median sales prices tumbled 22% from $587,000 to $456,000.
- And finally, the total dollars generated through condo sales fell nearly 60% from about $260 million to $106 million.
Still, there appears to be a glimmer of hope. Some regional figures fared much better than the averages throughout Maui suggesting that things may be looking up in the near future. Central Maui, for example, was the most active region for sales of single-family dwellings. In this location, average housing prices actually increased a modest 5% despite a drop in the number of transactions. While 103 first quarter single-family house sales were tallied in 2008, only 47 were completed in 2009. Another example of modest increases in average housing prices is Kihei. Sales activity did drop 13%, from 36 sales last year to 23 for the first quarter this year; average sales prices actually increased an impressive 9%. This means the average single-family home increased from nearly $650,000 to over $700,000.
Resort areas like Lahaina and Wailea-Makena also had improved figures with regard to median price of single-family homes. In Lahaina, median sales prices raised a very impressive 57% and average sales prices went up around 20%. Similarly, Wailea-Makena benefitted from a 26% rise in both median and average sales prices.
As far as condo owners are concerned, positive growth for condo sales was much less likely. Still, in Kaanapali condo prices were 27% higher this year than last and median prices were up 22%. In fact, the sales of Kaanapali condos also showed positive growth compared to a year ago with 37 condos sold in the first quarter this year compared to 12 last year.
Nonetheless, now is the perfect time to buy! Housing and condo prices are at the lowest point they’ve been in years and it’s not likely that prices will drop much more. The market is tightening up and there are fewer available properties as home owners are reluctant to sell in the current market.
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A ruling by the U.S. Supreme Court gave both sides of the ceded lands dispute some good news. On Tuesday, March 31st the Supreme Court ruled the congressional resolution that apologized for the ousting of the Hawaiian monarch in 1863 did not strip the state of property rights with regard to 1.2 million acres of former crown lands. The unanimous ruling overturned the Hawaii Supreme Court’s previous ruling that used the 1993 Congressional Apology Resolution to prevent the sale of land passed on to Hawaii when it joined the Union and became the 50th state.
This new ruling by the U.S. Supreme Court prevents the OHA from relying on the 1993 Resolution in further court proceedings. Since a resolution is not a law, it comes as little surprise that the U.S. Supreme Court overturned the previous ruling by the Hawaiian Supreme Court. The success of the OHA in selling land should not be dependent on the 1993 Apology Resolution as there are a number of state laws, resolutions, and legal precedents that lend support to its position. Moreover, before the final decision is made by the Supreme Court, ceded land parcels can still be sold off by the state, although this is unlikely. Ceded land sales and transfers would be inadvisable politically as the current state’s Republican government hopes to replace Gov. Linda Lingle with Lt. Gov. James Aiona.
Nonetheless, current state Attorney General Mark Bennett, who lead the appeal of the Hawaiian Supreme Court’s 2008 decision, feels that the U.S. Supreme Court has given the state control over ceded lands. Because the U.S. Supreme Court’s decision ultimately mandates that the Apology Resolution has no effect over the rights of the State of Hawaii, the land that was originally in absolute fee by the United States should now be under the control of the state. The U.S. Supreme Court’s decision clearly supports the argument that there is no implication in the Apology Resolution that Hawaii does not have sovereign right to control its own land. The Republican Party has consistently maintained that the state executive branch has total power to sell or transfer ceded lands according to the 1995 State Admissions Act.
In 2008, the Hawaii Supreme Court created an injunction opposing the sale or transfer of ceded land which constitutes more than a fourth of the land on the islands. This equates to several billion dollars worth of real estate. However, the U.S. Supreme Court’s decision changes nothing of the original arguments. Ultimately, they deemed the Hawaii decision as inaccurate and therefore the argument returns to square one. Both sides of the issue will revisit their original arguments, this time ignoring the Apology resolution. Some believe it will still be possible to halt the sale of ceded lands through legislation pending in the Capitol. Therefore, according to the Supreme Court, the State must still decide the fate of this issue.
Clearly, Native Hawaiians look to protect what they feel is their land. Some government representatives feel that there is a financial responsibility to these Native Hawaiians and that ceded lands should not be sold until these people have been fairly compensated. There is even the possibility that ceded lands be relinquished to family land claims as many would argue that the lands were stolen.
Still, both sides of this issue have solid arguments. According to some, the Admission Act recognizes the legality of the sale and transfer of these lands as does state law and the Hawaiian Constitution. In opposition of this position is the Akaka Bill. This bill has been before congress for nearly nine years and supporters feel there is a hope for this bill to be passed due to endorsement of President Barack Obama. The most current version of the Akaka Bill, presented to Congress on February 4th, seeks to create a process by which Native Hawaiians can gain self-governance, recognizes Native Hawaiians as the indigenous people of Hawaii, and strengthens the trust relationship between Native Hawaiians and a governing body within the U.S. government. However, the bill does not call for a suspension on ceded land sales and transfers and this would have to be an amendment to this or another bill. For example, Senate Bill 1677 calls for two-thirds approval from the Legislature with regards to transactions involving ceded lands. This bill provides an excellent opportunity to legislate the transfer, by sale or otherwise, of ceded lands. Essentially, this bill would ensure that Hawaii, its citizens and government, have final say over transactions involving these lands. Future legislation could also be developed to ensure the protection of ceded lands.
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