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January 1, 2006 - Newsletter for the Maui Market
Don't forget; if you currently own a property and would like to be notified when there is a new listing in your particular complex, we can set you up to automatically receive the new listings via email. The service is also available for those interested in purchasing a condominium, home, land or other property. If you provide me with your first and last name, your email address, and the condo complex you wish to be notified of, we can program the system to notify you as new listings become available.
At the beginning of December, 2004, there were 186 condominiums for sale in the West Maui area and the total value was $156,629,640.00. At the beginning of January, 2005 there were 202 condominiums for sale in the West Maui area and the total value was $181,300,850.00 which translates in to a 9% increase in the number of condominium units listed for sale and 15.75% increase in total value. At the beginning of February, 2005 there were 213 condominiums for sale in the West Maui area and the total value was $192,803,740.00. At the beginning of March, 2005 there were 191 condominiums for sale in the West Maui area and the total value was $175,106,140.00. At the beginning of April, 2005 there were 176 condominiums for sale in the West Maui area and the total value was $166,628,680.00. At the beginning of May, 2005 there were 176 condominiums for sale in the West Maui area and the total value was $166,079,990.00. At the beginning of June, 2005 there were 164 condominiums for sale in the West Maui area and the total value was $161,629,240.00. At the beginning of July, 2005 there were 165 condominiums for sale in the West Maui area and the total value was $159,356,997.00. At the beginning of August, 2005 there were 166 condominiums for sale in the West Maui area and the total value was $154,446,497.00. At the beginning of September, 2005 there were 176 condominiums for sale in the West Maui area and the total value was $163,215,390.00. At the beginning of October, 2005 there were 177 condominiums for sale in the West Maui and the total value was $168,464,220.00. At the beginning of November, 2005 there were 199 condominiums for sale in the West Maui area and the total value was $188,377,265.00. At the beginning of December, 2005 there were 231 condominiums for sale in the West Maui area and the total value was $222,669,115.00. At the beginning of January, 2006 there are 226 condominiums for sale in the West Maui area and the total value is $226,520,200.00. The condominium for sale inventory since June, 2005 has been as low as 166 and is back up to 226 for January 1, 2006. For sale inventory continues to increase.
The total condominium sales for West Maui during the month of December, 2004 was 47 and the total value was $21,974,500.00 during the month of January, 2005 total condominium sales for West Maui was 30 and the total value was $18,658,400.00; during the month of February, 2005 total condominium sales for West Maui was 64 and the total value was $32,380,771.00; during the month of March, 2005 total condominium sales for West Maui was 62 and the total value was $36,995,304.00; for the month of April, 2005 total condominium sales for West Maui was 69 and the total value was $37,681,957.00; for the month of May, 2005 total condominium sales for West Maui was 59 and the total value was $33,964,000.00; for the month of June, 2005 total condominium sales for West Maui was 59 and the total value was $34,565,250.00; for the month of July, 2005 total condominium sales for West Maui was 73 and the total value was $43,969,186.00; for the month of August, 2005 the total condominium sales for West Maui was 40 and the total value was $21,749,104.00; for the month of September, 2005 total condominium sales for West Maui was 51 and the total value was $36,318,521.00; for the month of October, 2005 total condominium sales for West Maui was 32 and the total value was $18,973,291.00; for the month of November, 2005 total condominium sales for West Maui was 38 and the total value was $28,453,380.60 ; and for the month of December, 2005 total condominium sales for West Maui was 43 and the total value was $25,171,967. . The total condominium sales for August were 40; September was 51; October was 32; November was 38 and December up to 43.
For previous condo sale details go to our web site, www.JamesBFoster.com and click on Condo Sales. The year to date ending November 30, 2005 average price for a home on Maui is $943,110.00 which is up 29% from a year ago for the same time period ending October 31, 2004 and the year to date ending November 30, 2005 average price for a condo on Maui is $548,353.00 which is up 25% from a year ago for the same time period according to the Realtor Association of Maui statistics.
We have gone in to the MLS data base and pulled information for 2000 through 2005. In 2000 there were 654 condominiums sold in the West Maui area for a total value of $209,064,010; in 2001 there were 605 condominiums sold in the West Maui area for a total value of $271,681,337; in 2002 there were 730 condominiums sold in the West Maui area for a total value of $240,178,915; In 2003 there were 737 condominiums sold in the West Maui area for a total value of $319,748,466; In 2004 there were 698 condominiums sold in the West Maui area for a total value of $374,342,467. Up through December 31, 2005 we have 672 condominium sales in the West Maui area at an approximate value of $402,340,315.00. At the end of December, 2004 there were 698 condos sold in W. Maui for a value of $374,342,467.00 . The total number of condos sold in 2005 is less than 2004 but the dollar volume increased 7.5%.
Mortgage Rates for January 3, 2006 are: 30 Year Fixed 6.22%; 15 Year Fixed 5.76%; and 1 Year Adjustable 5.15%
If you would like to view the most current sales statistics for Maui or West Maui Condominiums, you can go to my web site www.JamesBFoster.com and click on Condo Sales in the upper left corner of the home page. I also post a Vacation Rental Management Report for your viewing by clicking on that tab in the upper left corner of my web site. If there are any specific condominium complexes that you wish to be notified by email when a condominium becomes available for sale, send me an email as I check the MLS data about four times daily and if a new listing comes on the market I immediately notify any clients who have requested that information. Many owners also like to track what the units are selling for in the building where they own which they can do from my site.
The Maui real estate market, booming in 2003 and 2004 is cooling off a bit in 2005. The number of days on market has increased slightly for single family and condominiums and spiked for land during October. There have been some transactions that have fallen out of escrow because of appraisals not coming in at contract price and we are seeing more price reductions. It will be interesting to see how the market responds during the first quarter of 2006. The price per square foot for condominiums on the market and listed for sale in the RAM MLS ranges from $445.88 per square foot to a high of $2,631.58 per square foot. The total condominium sales in the West Maui area during 2005 were 672 at $402,340,514.00. The total value at the list price was $416,441,478.00 and so the sold units were on average sold at 96.6% of listed price. Of the 672 units sold with Land Tenure identified in the listing, 75.3% were Fee Simple and 24.5% were Leasehold. The units that had been remodeled or upgraded sold within a much shorter time than those that had not. If you are considering upgrading or remodeling your unit and need assistance or suggestions as to how to proceed or reliable information in that regard please call me at 1-888-661-7994. Constructing, remodeling or upgrading in the Maui market can be a very stressful and difficult task.
In the National real estate market, seasonal factors certainly are contributing to slower sales, but some of the slowdown is due to prices moving beyond the reach of buyers. The Office of Federal Housing Enterprise Oversight reported that by the third quarter home prices nationwide had jumped 12 percent this year. NAR says its affordability index is at its lowest level in 14 years.
Interest rates are making homes even more expensive. Just as low mortgage rates buoyed the housing market for years, higher rates are now sinking sales. Freddie Mac reported recently that fixed interest rates on 30-year mortgages dipped for two weeks down to 6.26 percent, but they are more than a full percentage point above the four-decade low of 5.21 percent set in mid-2003.
The Federal Reserve pushed benchmark interest rates up for a 13th time in December with two more rate hikes expected in January and March as the Fed tries to slow the economy to keep inflation in check.
It's too early to tell just how a pullback by investors will affect the broader housing market, but their impact on the housing boom has been considerable. Investors accounted for 9.6% of mortgages used to purchase homes in the first nine months of this year, up from 6.7% in 2002. The real estate investor share began to drop in the third quarter.
There seems to be a softening in investor demand which could accentuate any slowdown in home sales. David Berson, chief economist at mortgage giant Fannie Mae estimates that home sales will fall 10.4% over the next two years, largely because of a decline in investor and second-home purchases. He also believes that without the recent surge in these purchases, home sales would have been 7.3% lower in each of the past two years. That estimate assumes that investment properties and second homes account for 10% of total sales. Another concern is that investors will be quicker to sell if prices soften, accentuating any downturn, particularly in areas where speculation has been most prevalent. Even if investors don't make an immediate exit from the real estate market, more investor-owned properties are likely to return to the market over the next few years.
The real estate appreciation rate should remain in the 6-8 percent range. Those who have been used to the double-digit price growth seen in parts of states such as Florida, California and Nevada can expect the appreciation rate to adjust and could be down in the appreciation range of 5 to 7 percent. The market is going to slow down with ten to thirty percent fewer homes being sold in 2006. Much depends on how rapidly rates rise and the investors and second home purchasers assess the market and respond.
The Carthaginian II that was moored in the Lahaina Harbor and ceremoniously scuttled to the accompaniment of cannon fire has gone to its final resting place in 95 feet of water off Puamana. There it will serve as an artificial reef and the operation was coordinated and paid for by Atlantis Submarines Maui.
The first Carthaginian was a replica of a whaling supply vessel that in the 1966 movie " Hawaii," based on the James Michener novel. The Lahaina Restoration Foundation purchased the wooden boat, but it sank in 1972 on its way to Oahu for dry dock. A second ship was purchased, which had been a cement carrier built in Germany during 1920. This vessel was rechristened as the Carthaginian II and came to Lahaina in 1973. After seven years it had been rigged and has appeared as a part of the Lahaina Harbor landscape.
The Carthaginian II will now serve as an artificial reef. Atlantis Submarines Maui spent approximately $350,000 on the Carthaginian project, including preparation of environmental studies.
The Royal Lahaina is to start hotel renovations in late March, 2006 and complete by December, 2006. Phase II is the $300,000,000.00 master plan of the entire 27 acre resort in stages. Once completed there will be 125 whole ownership units of two, three and four bedroom units ranging in size from 2,400 square feet to 3,500 square feet.
The Honua Kai project at Kaanapali in one day sold all 318 suites available in the first phase of Honua Kai, generating $425,000,000.00 in sales. Priced ranged from approximately $550,000 to $4,500,000 in Phase One of the 700 Unit, 40 acre development. They are expecting a construction start in the first quarter 2006 and completion in 2008.
In Lahaina Plans for a $3,300,000.00 sewer line project there is a new 10-inch force-main and 12-inch gravity line along Front Street. Motorists have been impacted by traffic congestion as a result of the construction and the county is trying to come up with some alternatives to improve traffic flow during construction.
The 2006 Mercedes Championships will be in process at Kapalua from January 2 nd through January 8 th on Kapalua’s Plantation Course. Competing in the tournament will be an elite field of champion golfers.
Real Estate, Tax and Estate Planning Tips
Here are 2006 Indexed Estate Planning Amounts the Internal Revenue Service has released via Revenue Procedure 2005-70 containing the 2006 inflation adjustments. The 2006 estate planning amounts will be as follows:
- The annual exclusion amount increases to $12,000.
- The estate tax exemption amount increases to $2,000,000.
- The lifetime gift tax exemption amount stays at $1,000,000.
- The top gift, estate and generation skipping transfer tax ("GST") rate is 46%.
- The GST tax exemption increases to $2,000,000.
- The gift tax exclusion for gifts to non-citizen spouse is increased to $120,000.
- The maximum valuation decrease pursuant to Section 2032A special valuation election is increased to $900,000.
- The maximum value of the business interest used to determine the
"2-percent portion" of the deferred estate tax for Section 6166 is increased to $1,200,000.
- Recipients of gifts from certain foreign persons may have to report these gifts if the aggregate value of gifts received in a taxable year exceeds $12,760.
Installment Sales – The advantages of an installment sale with real estate are: fast close; creation of a type of annuity for the seller; future property taxes paid by buyer; buyer responsible for all future maintenance; Seller collects negotiated interest rate instead of depositing sales proceeds in a bank at a lower rate; and can be utilized if property needs repairs and does not qualify for VA or FHA financing and spreads capital gains tax over the period of the payments received. For more details to www.IRS.gov
Recapturing Depreciation – In 1997 the maximum capital gain tax rate dropped form 28% to 20% and now typically 15%. However, if depreciation was previously taken, that amount is taxed at 25%. You can coordinate with your accountant to determine how this might impact you upon a sale. If you have been depreciating a property and sell there will be recapture unless you do a tax deferred exchange. For more details to www.IRS.gov
In past newsletters, I have mentioned that the easiest way to minimize the tax impact when selling is to do a tax deferred exchange. If you have questions about tax deferred exchanges visit www.ixg1031.com. They provide free consulting and we have worked with them on many tax deferred exchanges. If you are considering selling your property in Hawaii, a tax deferred exchange will exempt you from the 5% HARPTA withholding and also the Federal Capital Gains Tax. Planning in advance for the disposition or acquisition of assets is always a wise decision. Another invaluable tool for sellers in doing a tax deferred exchange is having the option of using tenant-in-common (TICs) for qualifying for replacement properties. Many property owners who currently own underperforming assets can sell those assets, taking advantage of tax deferred exchanges, and turn an underperforming asset such as land into an income producing asset. Call me or send me an email if you would like additional information.
For those of you who enjoy or use the internet on a regular basis or use your computer frequently, here are some interesting web sites you may want to visit.
http://www.auctionsniper.com - Have you ever been “sniped” at an eBay auction? You sit there looking at your high bid on an auction just seconds before closing, confident that you are the winner. Then from nowhere a bid comes just one dollar over yours to win the object of your desire. The bid winner may have been resting deep in slumber but employing the easy, lighting fast and automated features of this interesting site. A quick set up automates the process of placing your eBay bid in the closing seconds of any eBay bidding auction, substantially increasing your chance of winning. The cost is modest and you can try it before subscribing.
http://www.dropload.com - If you have been looking for ways to quickly send some of those huge picture files but are getting stumped when your email provider blocks the big files, you can simply upload any file (up to 100 megabytes with this system. Then insert your recipient’s e-address and in a few seconds the recipient will receive a link and can download the file anytime during the next 7 days. There is no cost for the service.
http://www.motivationalquotes.com - Need some positive input to start your day or a snappy retort? Working on a speech and need a great quote? At this site you can find a huge keyword searchable collection of motivational and inspirational quotes, prayers, and positive affirmations. You can also check these out by specific topics or by name. There is no cost for this service.
http://www.shamelessrestaurants.com - Go here for the “inside scoop” on restaurants in New York, San Francisco, Los Angeles, Chicago, Portland, Boston, Philadelphia, Miami, Toronto or Montreal with more on the way. This informative and sometimes humorous place provides a forum for restaurant employees to vent their employment grievances and the worst practices of employers.
Kindest Regards,
Jim Foster
Chase 'N Rainbows Real Estate, Inc.
P.O. Box 10398
Lahaina , HI 96761
Toll Free 888-661-7994
Direct Line 808-661-7994
Cell 808-870-5858
Fax 808-667-2957
Real Estate for Sale www.jamesbfoster.com
Vacation Rental www.chasenrainbows.com
Email jim@jamesbfoster.com
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