Hawaii Real Estate Daily

It might be hard to persuade anyone that there is a national housing meltdown when the Multiple Listing Service offers deals on Maui like this:

“Two bedroom, 1 bath older home on a small lot that is zoned industrial - access to property is by footpath only. Being sold as-is - fixer upper. $200,000.”

The aggregate statistics for the third-quarter of 2008 released by the Realtors Association of Maui on Thursday also do not portray a cratering housing market.

True, the number of transactions for the first nine months of the year is down by about one quarter, but prices received for houses and condominiums that do sell are holding up.

For single-family houses, the median price this year is $594,500. That is down $44,000 from last year, but is only a 7 percent decline, compared to hard-hit areas of the Mainland where prices are down 15 percent, 20 percent and in some neighborhoods much more.

Average prices for single-family properties are down by the same percentage, but since Maui’s average was so high last year, $945,000, the fall as measured in dollars is $70,000, down to $876,615.

Condos averaged $783,000 last year and are up 21 percent to $947,000 this year, but thousands of Maui condos are not in the million-dollar class.

The biggest concentration of middle-class condos is in Kihei, where the average is up 9 percent this year to $493,000.

The median for condo units, the point where half sold for more, half for less, is up 7 percent, to $570,000 countywide, although only 5 percent to $415,000 in Kihei.

The most expensive condos are in Wailea-Makena, averaging $2,184,013 this year, which is up an impressive 37 percent, but that may reflect the late recording of sales contracts that were inked for new construction years ago.

Still, there is little sign that the South Maui luxury condo market is swooning. The number closing this year is 160, only 16 fewer than in the first three quarters of 2007.

As a resort, Wailea is an outlier, commanding room rates almost a third higher than any other luxury resort in the state. It may be an outlier in luxury condominiums as well.

The average condo sales price in Kaanapali this year is off 18 percent to $1,164,364, and the average in Kapalua is down 30 percent to $1,070,794.

In Kaanapali, the number of closings has fallen from 45 to 33, and at Kapalua from 27 to 17.

Lanai is also a market unto itself, where there were only two transactions, but for nearly $2 million on average.

Although prices received are waffling around what sellers received last year (which was down from 2006), the smaller number of transactions means the aggregate value of the turnovers is well down.

The total of condo transactions this year (672 closings compared with 916 at this point last year) is down by $80 million to $637 million.

The number of single-family closings is down from 893 a year ago to 706, and the aggregate transactions are off $226 million to $619 million.

Notice that the number of single-family closings topped the number of condo closings. That is a dramatic change from any year before 2006. when the number of condo sales was often nearly double the number of single-family sales.

The number of days on market is also down sharply from last year. In 2007, it ranged between 74 and 131 for single-family and between 73 and 115 days for condos.

This year, the wait has been between 57 and 95 days for house sellers, 48 and 95 days for condo sellers.

Terry Tolman, the chief staff executive of the association, said that the drop in days on market shows that “properties priced right will sell in a reasonable time frame.”

He also noted that the number of active listings “has grown considerably in the last 12 months,” though the rise has leveled off recently.

Active condo listings this month are up to 1,600, compared with 1,283 in October 2007. Active single-family listings are 1,114, up from 1,016 a year before.

Tolman said median prices in September were down across the board, which might be because buyers are now not able to qualify for as much or because sellers are willing to accept lower offers.

Credits: Maui News

Coldwell Banker Pacific Properties is planning to reduce current asking prices on home listings starting Friday as part of a first-ever, nationwide event designed to stimulate the real estate market.

Nearly 100 homes, which represent about 15 percent of Coldwell Banker Pacific Properties’ listings on Oahu, will be reduced from 5 to 20 percent from Friday to Oct. 19.

The move is part of an initiative to jumpstart the local and national real estate market.

Oahu’s home sales slumped last month, according to statistics from the Honolulu Board of Realtors, even as median prices dropped to $590,000, its lowest point in 31/2 years.

“We felt this was perfect timing,” said Chason Ishii, president of Coldwell Banker Pacific Properties. “It’s our hope that the Coldwell Banker 10 Day Sales Event will move buyers off the sidelines and into the market.”

Ishii said due to higher inventory, historic low interest rates and declining list prices, this is a great time to buy a home on Oahu. First-time homebuyers also have the added incentive of a $7,500 tax credit due to recent legislation.

Oahu homes participating cover a broad range of neighborhoods and property types.

For instance, a two-story Wilhelmina Rise home, previously listed at $1.1 million, will participate in the event at a price of $990,000. A 4-bedroom Makakilo home, previously listed at $635,000, will participate in the event at a price of $604,000.

In total, the estimated list price reductions will amount to more than $4 million, Coldwell Banker estimates.

During the local sales event, participating agents will also collect donations for the Institute for Human Services, a nonprofit that runs homeless shelters and programs.

In a recent survey of 3,379 Coldwell Banker real estate professionals across the nation, 56 percent said listing prices in their market remain above where they need to be to attract qualified buyers.

The survey also found: 77 percent agreed the majority of sellers in their market still have unrealistic expectations regarding the initial listing price for their homes; 79 percent agreed appropriately priced homes in their market are attracting more buyers and moving more quickly; 76 percent feel that a 10 percent or less reduction in listing prices in their area is all it will take to help push these homes over the “tipping point” to a sale.

Credits: Star Bulletin

Foreclosures hit another record high in August: 304,000 homes were in default and 91,000 families lost their houses.

More than 770,000 homes have been repossessed by lenders since August 2007, when the credit crunch took hold.

The report from RealtyTrac, an online marketer of foreclosures properties, is the latest in string of bad news for housing.

Foreclosure filings of all kinds, including notices of defaults, notices of auctions and bank repossessions, grew 12% in August over July, and 27% compared with August 2007.

The 27% jump over last August represents a more modest year-over-year increase than in previous months, but that’s only because the housing crisis was already underway in August 2007, which saw a big spike in foreclosures.

“In August 2008 the total number of U.S. properties that received foreclosure filings, as well as the national foreclosure rate, were both the highest we’ve seen in any month since we began issuing our report in January 2005,” RealtyTrac CEO James Saccacio said in a statement.

Fannie Mae (FNM, Fortune 500) chief economist Doug Duncan isn’t surprised by the swelling numbers. “It’s been my view for a long time that foreclosures won’t peak until the last three months of 2008,” he said.

And now that the nation in a recessionary economy, with job losses exceeding 400,000 a month, Duncan speculates that the foreclosure crisis may be drawn out even longer.

“We’ve been saying that the foreclosure trend has not yet peaked,” said Doug Robinson, a spokesman for the foreclosure prevention organization NeighborWorks America. “Before it was a subprime problem,” he said. “Now, it’s everybody’s problem.”
Putting filings on hold

The August figures would have been worse, had it not been for new legislation passed in several states, including Maryland and Massachusetts, designed to make lenders wait before filing notices of default.

In Massachusetts, for example, a 90-day waiting period went into effect on May 1. Every Massachusetts homeowner now has to be notified of their lenders’s intention to file a notice of default against them, and they get a 90 day window during which they can attempt to bring their payments up to date. Lenders are prohibited from filing a first notice of default until after that period.

The impact has been immediate. RealtyTrac recorded no new notices of initial default for the state during August. That helped drive down total foreclosure filings in the state by more than 46% compared with last year.

Other states didn’t fare as well. Nevada once again had the highest rate of filings in the nation. One of every 91 households, or 11,706 families, received a foreclosure notice of some kind during the month, and more than 4,000 others lost their homes.

More than 101,000 Californians received foreclosure notices, which comes to about one in every 130 households, while more than 33,000 people there lost their homes. Arizona had the third-highest rate with one out of every 182 households in default.

All of these states saw tremendous home price run-ups during the boom, which meant that many buyers had to use exotic, risky loans in order to be able to afford a home. These mortgages include subprime, hybrid adjustable rate mortgages (ARMs) that feature two or three years of low introductory rates before the loans reset to higher, often unaffordable levels and cause borrowers to default.

In some of the other hard hit states, such as Michigan (which had one filing for every 332 households) and Ohio (one filing per 444 households), which never saw a housing boom, delinquencies are being driven by fundamental economic woes like unemployment, rather than pricey real estate.

Eight of the top 10 worst performing metro areas were in California. Stockton, in the Central Valley, had the highest rate in the nation with one in every 50 households receiving a foreclosure filing during the month.

“You go up and down the central part of [California] and that’s where you’re seeing the carnage,” said Rick Sharga, RealtyTrac’s director of marketing. Home sales are actually up in many of these cities, the prices have dropped, often precipitously. “What’s selling is the bank owned properties,” he said.

Credits: CNN Money

Mayor Charmaine Tavares expressed outrage Wednesday over what she called Molokai Properties Ltd.’s “cavalier attitude” toward the people of Molokai in its actions on its utility systems.

Tavares was reacting to a Molokai Properties letter sent Monday to the state Public Utilities Commission advising that the company will continue to operate its three utilities “and hereby revoke and rescind all prior notices of intent to terminate operations.”

“It appears that Molokai Properties may have created an artificial emergency in order to receive an emergency rate increase from the PUC,” Tavares said.

“All the while, the company’s customers have been made to live with the anxiety the company caused when it announced that it would abandon their customers and leave over a thousand people without water and sewer services.”

The Molokai Properties letter to the PUC, signed by company Chief Executive Peter Nicholas, said that interim water rate increases approved by the PUC last month will allow the utilities to continue to operate through March 1, even factoring in reduced consumption by customers cutting back because of the massive rate hikes. The rates amounted to a 121 percent increase on one system and a 40 percent hike on the other.

But Nicholas’ letter said only that the utilities “will remain operational for the period of the temporary rate increase,” and does not indicate what MPL will do after the six-month interim rate hikes expire. The PUC had ordered MPL to prepare a rate request if it has not found another operator for the utilities.

MPL in April notified the state that it would shut down its two water utilities and a wastewater operation servicing residents and businesses in Kualapuu, Maunaloa and Kaluakoi. At the time, the company claimed that it was suffering continuing losses and MPL would no longer subsidize the utility operations.

In response, Gov. Linda Lingle and the state Department of Health ordered Maui County to take over the Molokai utilities. Tavares protested that county rate payers should not be held responsible for mismanagement of a private company.

In a statement Wednesday, the mayor noted that the county incurred considerable costs to defend itself against the state’s orders and to prepare for an emergency if MPL had followed through on its shutdown threat.

She said the county will continue to pursue a declaratory order in 2nd Circuit Court holding Molokai Properties responsible for maintaining the utility services for developments on its lands. The suit is based on documents signed by Molokai Properties, Molokai Ranch and other predecessor landowners involved in developing the ranch lands.

“The company has taken a cavalier attitude and has toyed with the people of Molokai’s emotions,” Tavares said. “Their pattern of irresponsible behavior gives us no reassurance. The apprehension and insecurity they caused for the impacted families, businesses and employees, is inexcusable.”

Credits: Maui News

The Pacific Ocean is more expansive than the Atlantic, has better waves for surfing and has more temperate weather patterns.

It also costs a whole lot more to live there.

La Jolla, Santa Monica, and Santa Barbara, all in California, topped our list of the nation’s most expensive waterfront-property markets. In these places, even a modest-sized bungalow or apartment means shelling out $1.85 million, $1.65 million or $1.6 million, respectively.

Of course, that doesn’t mean the Atlantic side of the country is cheap. A similar-sized house in Key West, Fla.? $818,239. And that’s in a state where prices elsewhere seem to know no bottom. A two-bedroom in Boston, perhaps in the Back Bay or near the harbor? $1.5 million.

Behind The Numbers
Our data comes from Coldwell Banker’s annual Housing Price Comparison Index, released today, which compares properties in the country’s 315 largest property markets for a property that measures 2,200 square feet. Because of Coldwell Banker’s cutoff, some smaller resort communities, like Miami Beach or Amagansett, N.Y., we not considered, despite the towns’ waterfront mega-mansions.

In some markets, like La Jolla, Newport Beach, Calif., or Palos Verdes, Calif., 2,200 square feet buys a small house–or, more likely, a condo. And while one million dollars is expensive, 5,000- or 6,000-square-foot homes in these neighborhoods can cost into the tens of millions.

One reason waterfront properties are so expensive has to do with the quality of the homes; they are usually built for an up-market buyer and designed by top architects. Wallace Neff’s distinctive, oft-imitated California-Mediterranean style defines the southern California coast. Frank Lloyd Wright’s early works–like his sandstone Fallingwater near Mill Run, Pa.–are oriented around water. And the exposed and weathered timber stylings of William Turnbull roll up Northern California’s rocky coast. A renowned architect plus a desirable location makes for high asking prices.

But waterfront price premiums aren’t limited to the coasts or to properties by legendary architects. Whether it’s lakeside property in the northern states or riverfront in the Midwest, there’s bound to be a markup. Sioux City, Iowa, residents pay a median $133,459 for the privilege of the Missouri River–almost triple the state-wide median of $51,600, according to the National Association of Realtors.

Head to Hawaii, and you’ll be hard pressed to find property lacking the necessary elevation or proximity to the beach for ocean views. Not surprisingly, it has some of the most expensive waterfront properties outside of California. Kihei, Maui, costs $934,950 at the median level.

If you could live anywhere, which area would you chose? Weigh in. Post your thoughts in the Reader Comments section below.

New York may be one of the few exceptions to the waterfront value bump. In the city, high rollers want views of Central Park, and not because of the Jacqueline Kennedy Onassis Reservoir. Price records are smashed at 15 Central Park West and the Plaza–in apartments with their backs to the Hudson and East Rivers.

In fact, some of the most inexpensive premium real estate in Manhattan can be found in Battery Park City and the Financial District. Apartments there have views of both rivers and the Upper New York Bay, yet the city government finds itself giving away property tax abatements in order to get people to move there.

While the title of “most desirable waterfront” may give La Jolla residents something to crow about, they’re lucky the list didn’t include international cities. A view of the Persian Gulf from Dubai runs $2.45 million at the median, 33% higher than prices in the San Diego suburb. A rare occasion when oil and water do indeed mix.

Credits: Forbes

Water crisis group gets vocal

Members of the Hui Ho’opakele ‘Aina, the local water crisis group, were on Oahu last Thursday to protest the water rates approved by the Public Utilities Commission (PUC).

About 19 people traveled from Molokai to Honolulu to visit the PUC, Governor Linda Lingle’s office, the Ombudsman, and the Department of Commerce and Consumer Affairs calling for a new public hearing for the recently approved water rate increases for the West End.

The PUC initiated the rate increase after Molokai Properties Limited told the state it could not afford to operate water and sewer utilities and threatened to shut down its utility companies as of Aug. 31. MPL agreed to continue water service on a temporary basis after the 178 percent increase was approved.

“Our community deserves a fair hearing,” said activist Water Ritte to the group on the night before the protest. Ritte called the PUC hearing unprecedented, illegal and incomplete because ratepayers were not allowed to formally intervene in the proceedings.

A letter was prepared for each government agency stressing these concerns and the need to readdress the rate increase through a new public hearing.

The group held a press conference before traveling to each public agency with the goal of sharing the story of Molokai’s water struggle with the rest of the state.

Ritte said over 30 people attended the press conference.

“I thought it went very well, very civil,” said Ritte after the event. He also said the group made it very clear that a new hearing should be held.

Ritte said he was slightly disappointed with the amount of news coverage of the protest after the fact, saying other breaking news took over. However, he said it was still a worthwhile effort.

“It helped the cause because people are beginning to see what is going on,” said Ritte.

And to the people who criticize his efforts, Ritte said he does not let them bother him or deter him from acting.
The water crisis group continues to plan other initiatives. A trip to Maui to visit the Maui County Council and push for eminent domain is being organized for a tentative date of Sept. 11.

Credits: Molokai Times

One of Waikiki’s largest hotel owners says its wants to build the tourist district’s first new hotel in more than 20 years, the Honolulu Advertiser reports.

Kyo-ya Hotels and Resorts LP, which owns the historic Westin Moana Surfrider Hotel and other properties, is proposing to demolish an eight-story annex to the Moana and replace it with a 24-story hotel.

The new structure, which would be on the Diamond Head side of the Moana, Waikiki’s oldest hotel, would have 200 rooms, 25 condominiums and an upscale restaurant, the newspaper reports.

Kyo-ya is planning about $1 billion in renovations to its Waikiki properties. Major renovations are underway at the Royal Hawaiian and Sheraton Waikiki hotels. And the company is proposing to demolish most of the Sheraton Kaiulani Hotel and replace it with a new hotel that will cater to business and convention travelers.

Credits: Pacific Magazine