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February, 2007 - Newsletter for the Maui Market
Don't forget! We provide a free Automatic E-mail Notification Service that goes out to specific recipients when ever a new listing becomes available for a particular condominium complex. Each of these notifications includes a link to view the brand new listings in the MLS. We DO NOT SHARE YOUR EMAIL ADDRESS or your contact information with anyone. To subscribe to our Automatic E-mail Notification Service, please send Won an email at Won@JamesBFoster.com with your first and last name, your email address, and the condo complex you wish to be notified of.
Property for Sale in New Developments in West Maui
A new condominium villas development - These Villas will be located in eight separate buildings on the twenty four acre site of the old Royal Lahaina Resort; the first resort developed at Kaanapali Beach and will consist of two bedroom units from 2,482 square feet up to four bedroom units with 4,807 square feet. If you would like more information please contact Jim at 1-888-661-7994 or send an email to Jim@JamesBFoster.com
A new condominium development – Located in Lahaina and consisting of two bedroom and three bedroom condominiums across the street from the Cannery Mall and Lahaina Gateway. Sizes range from 1,239 square feet to 1,321 square feet for the three bedroom units up to 1,820 square feet with a home office 10’-6” X 11’. The two bedrooms are approximately 1,201 to 1,231. This is in the pre-construction stage and for sales information you can call Jim at 1-888-661-7994.
A New Land Development - 28 fee simple ocean view agricultural-zoned lots set on 450 acres of West Maui's historic lands. The 28 lots offered for sale are from 2.79 acres to 13.27 acres and range in price from $1,125,000 to $1,395,000. Two water meters and underground utilities to each lot. CC&R's do not allow any further subdivision. Just 20 minutes to Kihei/Wailea, Kahului and Kaanapali. Directly across the street from Ukumehame Beach Park and famous "Thousand Peaks" surfing beach. Access by appointment only. See attached "Associated Project Documents". Two water meters and underground utilities to each lot. The CC&R's do not allow any further subdivision. The land offers residents some of the most breathtaking views imaginable - dramatic mountains and valleys to the East, and 180 degree ocean views to the West overlooking the islands of Lana'i and Kaho'olawe. With preservation lands to the North and South, you can rest assured that your privacy and views will be protected forever. Directly across the street, and well within strolling distance, you'll find Ukumehame Beach Park and world-famous "Thousand Peaks" surf break. For sales information you can call Jim at 1-888-661-7994.
Honua Kai - Located on the last stretch of beachfront in Ka'anapali, Honua Kai is the first whole ownership condominium resort to be built on the beach in over 20 years. Amenities include three spectacular pools, a boutique spa, underground parking with valet for owners and the recently announced Duke's Maui restaurant. Currently available is a one bedroom for $760,000 with 615 s.f.; 2 two bedrooms at $1,650,000 with 1,230 s.f. and one at $1,950,000 with 1,315 s.f.; and 3 three bedrooms at $2,100,000 with 1,610 s.f., $3,850,000 with 2,230 s.f. and $5,600,000 with 2,715. s.f.
For sales information you can call Jim at 1-888-661-7994.
The West Maui real estate market continues to transition from a Seller’s market to a Buyer’s market. The current inventory of West Maui condominiums for sale is now at 431 and seemed to peak at 435 on January 22nd and has gone up and down since. Properties are requiring more time to sell and Buyers have a much larger inventory of properties for sale to choose from. The peak season is upon us and we are now seeing an increase in showings with more visitors on island. The properties for sale during the peak season receive more showings generally as they attract prospective buyers on island during this period of time.
In the West Maui real estate market, 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; August, 2005 there were 166 condominiums for sale with total value of $154,446,497.00; September, 2005 there were 176 condominiums for sale total with value of $163,215,390.00; October, 2005 there were 177 condominiums for sale with total value of $168,464,220.00; November, 2005 there were 199 condominiums for sale with the total value of $188,377,265.00; December, 2005 there were 231 condominiums for sale with the total value of $222,669,115.00; January, 2006 there were 226 condominiums for sale with the total value of $226,520,200.00; February, 2006 there were 280 condominiums for sale with the total value of $281,793,835.00; March, 2006 there were 297 condominiums for sale with the total value of $286,082,559.00; April, 2006 there were 350 condominiums for sale with the total value of $317,599,199.00; May, 2006 there were 354 condominiums for sale with the total value of $321,932,077.00; June, 2006 there were 362 condominiums for sale with the total value of $333,616,070.00; July, 2006 there were 392 condominiums for sale with the total value of $346,937,598.00; August, 2006 there were 393 condominiums for with the total value of $344,119,142.00; September, 2006 there were 413 condominiums for sale with the total value of $369,322,455.00; October, 2006 there were 408 condominiums for sale with the total value of $366,608,574.00; November, 2006 there were 407 condominiums for sale in the West Maui area with the total value of $357,086,324,00; December, 2006 there were 428 condominiums for sale with the total value of $361,399,109.00; January, 2007 there were 410 condominiums for sale with the total value of $372,238,031.00; and at the beginning of February, 2007 there are 431 condominiums for sale in the West Maui area with the total value of $393,681,669.00. The condominium for sale inventory since July, 2005 has been as low as 165 and is up to 431 for February 1, 2007. The “for sale” inventory on West Maui continues to increase.
As of January 2007, the total condominium sales for West Maui during the month of August, 2005 were 52 and the total value was $31,852,104.00; for the month of September, 2005 total condominium sales were 58 and the total value was $39,539,021.00; for October, 2005 total condominium sales were 38 and the total value was $23,503,291.00; for November, 2005 total condominium sales were 48 and the total value was $35,051,564.00; for December, 2005 total condominium sales were 47 and the total value was $26,101,467; for January, 2006 total condominium sales were 42 and the total value was $28,574,643.00; for February, 2006 total condominium sales were 48 and the total value was $32,995,078.00; for March, 2006 total condominium sales were 40 and the total value was $32,199,584.00; for April, 2006 total condominium sales were 43 and the total value was $41,898,525.00; for May, 2006 condominium sales were 51 and the total value was $39,644,886.00; for June, 2006 condominium sales were 40 and the total value was $ 32,533,500.00; for July, 2006 total condominium sales were 30 and total value was $26,212,000.00; for August, 2006 total condominium sales were 28 and the total value was $31,885,500.00; for September, 2006 total condominium sales were 30 and the total value was $24,770,000.00; for October, 2006 total condominium sales were 29 and the total value was $23,359,299.00; for November, 2006 total condominium sales were 22 and the total value was $13,414,600.00; for December, 2006 total condominium sales were 30 and the total value was $23,169,999.00; and for the month of January, 2007 as of 2/1/07 in the MLS data, total condominium sales were 37 and the total value was $33,091,000.00. The total condominium sales for August, 2005 was 52; September, 2005 was 58; October, 2005 was 38; November, 2005 was 48; December, 2005 was 47; January, 2006 was 42; February, 2006 was 48; March, 2006 was 40; April, 2006 was 43; May, 2006 was 51; June, 2006 was 40; July, 2006 was 30; August, 2006 was 28; September, 2006 was 30; October, 2006 was 29; November, 2006 was 20; December, 2006 was 30; and January, 2007 was 37. Remember, the contract was written 60 to 90 days or more prior to closing so if the high was May, 2006 the contract was likely between January and March.
For previous condo sale details, go to our web site, www.JamesBFoster.com and click on Condo Sales. For the time period of 1/1/2006 to 12/31/2006 the average price for a home on Maui was $941,434.00 which is up 2% from a year ago for the time period of 1/1/05 to 12/31/05 when the average price was $924,347.00. For the same time period the average price for a Fee Simple condo on Maui was $795,393.00 which is up 40% from a year ago for the same time period when the average price was $567,233.00 according to the RAM (Realtor Assoc. of Maui) statistics.
We have gone in to the MLS database and pulled information for 2000 through 2007. In 2000 - 654 condominiums sold in the West Maui area for a total value of $209,064,010; in 2001 - 605 condominiums sold for a total value of $271,681,337; in 2002 - 730 condominiums sold for a total value of $240,178,915; in 2003 - 737 condominiums sold for a total value of $319,748,466; In 2004 - 700 condominiums sold for a total value of $375,033,467; and in 2005 - 682 condominiums for a total value of $408,582,315. At the end of 2006 - 435 condominiums sold in the West Maui area listed on the MLS for a total value of $351,782,614. The number of sales in 2006 was approximately 64% of 2005 and dollar volume for 2006 was 86% of 2005 for data entered in to the RAM MLS.
Mortgage Rates week of 2/5/07 – from Town Island Mortgage, LLC – Hse/Condo: 5.875% 30yr fixed 2.0 pts (6.13 APR); 6.125% 30yr fixed 1.0 pt (6.25 APR); 6.375% 30yr fixed No Points (6.45 APR). No Docs: 6.25% 30yr fixed 1.0 pt (6.38 APR); No MI 90%: 6.375% 30yr fixed 1.0 Pt (6.5 APR); No MI Interest Only 95%: 6.875% 7yr ARM 1.0 pt (7.00 APR) $1M: 6.5% 30yr fixed No Points (6.58% APR); No Income, 100%, & Stated Land loans (Pts incl. origination)
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 or go to http://www.JamesBFoster.com/condosales.php. If there are any specific condominium complexes that you wish to be notified by email when a condominium unit becomes available for sale, send Won an email at Won@JamesBFoster.com with your first and last name, your email address, and the condo complex you wish to be notified of and an Automatic Email Notification will be sent to you with a link to view the details of the listings through the Maui MLS. We DO NOT SHARE YOUR EMAIL ADDRESS or your contact information with anyone.
Some recent news about what is going on in Maui.
Holiday Weather – 2006 was average for rainfall but 2007 is shaping up to be drier than usual because of El Nino conditions. This generally makes for happy tourists who enjoy the sun and dry weather.
Medical Facilities on Maui – Currently, HHSC and Mululani are opening talks on meeting Maui health care. Dr. Kwon is skeptical about HHSC and Maui Memorial’s willingness to work with a partner to expand services and facilities. Dr. Kwon says his Malulani Health Systems would consider building a 350-bed hospital for Maui, with Maui Memorial converted into a long-term care facility that is also needed. The citizen’s action group PUSSH and supporters want the Certificate of Need (CON) process currently required in Hawaii modified or abolished to allow new medical facilities to be constructed on Maui. The new web site for PUSSH supporting Malulani is www.maui-PUSSH.org Please visit the web site and send your letter and emails supporting the new hospital, Malulani and requesting the elimination of the CON.
Lahainaluna High School - The Lahainaluna High School Foundation Athletic Committee is working to bring a sports stadium to the West Side community.
Spearheaded by Mark Tillman, the committee began the effort to bring a bona fide athletic facility to Lahainaluna in May 2006. The hope is to create a sports complex for football, soccer, and track and field, as well as for school and community activities such as graduation, concerts and special events to the campus on the current Athletic Field site. The stadium would be similar to King Kekaulike High School’s facility with approved lighting and bleacher seating for 3,000. It would face out toward Lanai with a panoramic sunset view of Lahaina Town and the other islands beyond.
2007 Mercedes-Benz Championship – Vijay Singh won the Mercedes-Benz golf title. The 43 year old golfer shot a final round of 3-under 70 for a 14-under total and a two shot victory.
Maui Land & Pineapple (MLP) - Plans have been submitted to develop in Lipoa Point – Honolua Bay to the Maui County General Plan Advisory Board. The intention is to develop a 40 home complex and have it included in the county’s updated General Plan.
First Homes at Leiali’I almost ready for families – Construction of homes in this subdivision started in March, 2006 on this 104 home subdivision is almost ready to occupy. Located just south of the Civic Center and Post Office it is the first-ever Dept. of Hawaiian Home Lands in West Maui for Native Hawiians. The development was stalled for many years as a result of litigation.
Royal Lahaina Villas – If you are interested in receiving additional information on pricing and details for the Royal Lahaina Villas to be developed on the 27 acre site of the Royal Lahaina Hotel at Kaanapali send us an email at Jim@JamesBFoster.com or call on our toll free number 1-888-661-7994. There will be two, three and four bedroom units in eight different buildings. Prices are not available as of this date for the units which range from 2482 square to 4807 square feet.
Morgan Stanley is buying the Grand Wailea – Hilton will remain the manager and the new owner will be CNL Hotel & Resorts Inc., the nation’s second-largest hotel real estate investment trust.
The Ritz-Carlton at Kapalua – Closing of the hotel four about six months will occur at the beginning of July for a $95 million renovation. One wing with 250 guest rooms, will be rebuilt as 166 suites. Originally a 548-room resort will end up the same size but with only 466 keys. The new suites will be sold as condominium hotel rooms. The suites then will be taken back and operated as guest rental rooms 90% of the time. The resort will not lose all its overnight rooms. The Villas will remain in operation. The Ritz-Carlton was one of the first luxury resorts on Maui to have an even more luxurious hotel within the hotel, the Ritz-Carlton Club. The hotel is scheduled to reopen December 15, 2007.
New Maui Mayor Charmaine Tavares – At her recent inauguration she emphasized unity and moving together as stewards of Maui County.
Two New Freshman at the Legislature –Joe Bertram III (also affiliated with PUSSH for the new hospital) and Angus McKelvey and their two top issues are traffic and a second hospital. With community support they will be able to make a difference.
Governor Lingle maps out Hawaii Growth – She recently announced her plan to transform Hawaii’s economy by increasing reliance on technology with programs ranging from high-tech academies to a regional competition in building robots.
Real Estate & Financial Planning Tips
) Vacation Homes Less than fourteen days of annual rental - You can deduct only mortgage interest, property taxes, and any uninsured casualty loss cost. But other expenses such as insurance and repairs are not deductible. If you rent your second home up to 14 days per year, you don't have to report that rental income to the IRS. However, if you rent to tenants for greater than 14 days annually, then the second home will fall into one of the following categories.
2) Annual person use exceeding fourteen days or ten percent of the rental days (if rented over 14 days in 2006) - In this category of heavy personal use and modest rental time, second-home owners must report their rental income on Schedule E of their tax returns, along with applicable expenses. But in this category any resulting tax loss when rental expenses exceed, rent collected cannot be deducted against ordinary income from other sources, such as job salary. However, unused losses are "suspended" for future tax deduction benefits so it pays to keep track of such losses. The correct order for deducting second or vacation home expenses in this category is mortgage interest, property taxes, uninsured casualty loss expenses, operating expenses such as insurance and repairs, and depreciation for the rental period. However, when the mortgage interest, property taxes, and uninsured casualty loss expenses exceed the rental income, they become itemized deductions on Schedule A.
3.) Annual Personal Use Below 15 Days or ten percent of the rental days - This is the most desirable tax category for a second home. The reason is there is no limit to your tax loss deductions against your ordinary taxable income, (except for the $25,000 annual passive loss limit explained below). Rental income and deductible expenses are reported on Schedule E of your tax returns. If you occupied your second home for 10 days in 2006 and you rented it for four months. Because your personal use time is below 15 days per year and under 10 percent of the rental days, you can deduct up to $25,000 of qualifying expense losses, including depreciation, against your ordinary income. The Internal Revenue Code 183 says you must show a rental activity at least three of every five years in this category.
4.) No Personal Use Time - If you didn't personally use your second home during 2006, other than a few days while making repairs, and it was rented or available for rent the entire year, then your second home falls into this rental property category. The tax result is that all your income and expenses, including depreciation, are reported on Schedule E of your tax returns. Virtually every applicable expense is deductible on Schedule E, such as mortgage interest, property taxes, insurance, homeowner association fees, utilities you paid, repairs, and depreciation. Additionally, you can deduct reasonable "ordinary and necessary" travel expenses to inspect (but not occupy) your rental property, even if it is in Hawaii. In this category, you are very likely to have a "tax loss," primarily due to the non-cash rental depreciation deduction. However, even if you select the tenants and collect the rents, rentals are a considered "passive activity" tax wise. If your 2006 adjusted gross income is $100,000 or less, you can deduct up to $25,000 tax loss from your rental passive activity. But any rental tax loss exceeding $25,000 must be "suspended" for use in a future year, or when you sell the property to offset capital gains. Should you qualify as a "real estate professional," such as a full-time sales agent, then the $25,000 passive activity loss limit does not apply. To deduct "passive activity" rental property losses against your ordinary income, subject to the limits explained above, you must have "materially participated" in managing your second home. This means you must own at least a 10 percent interest in the property and others cannot manage it in a "rental pool." Without material participation, your rental tax loss is not deductible from ordinary taxable income and it must be "suspended" or saved for use in a future tax year.
Summary: A possible tax benefit, when you are thinking about selling your second or vacation home, is to move in to convert it to your full-time principal residence for at least 24 of the last 60 months before its sale. Then up to $250,000 principal-residence-sale capital gains will be tax-free (up to $500,000 for a qualified married couple filing joint tax returns in the year of sale). Full details are available from your tax adviser.
Tax Deferred Exchanges & Replacement Property – If you are holding title to your property with others as joint tenants you cannot do a tax deferred exchange. To qualify you must hold title as tenants in common in order to complete a tax deferred exchange under IRC Section 1031. If you have a gain of $1M upon sale, this could potentially save you $225,000 in taxes
For sellers of property participating in a tax deferred exchange, locating a suitable replacement property can often be a difficult obstacle to successfully completing the exchange which can save sellers thousands of dollars in tax savings, some time hundreds of thousands.
To facilitate the tax deferred exchange process for our clients we have placed our securities licenses with Welton Street Investments, LLC. Welton Street is the leading NASD Member Broker/Dealer formed exclusively to work with commercial real estate professionals offering TIC investments as 1031 exchange options and direct investments. Welton Street works with quality TIC real estate sponsors, providing access to a broad and deep array of institutional quality TIC investment properties providing due diligence, research & securities compliance. Welton Street utilizes three key areas of due diligence before real estate sponsors and TIC investment replacement properties are selected and presented for investor consideration: 1) Audit and Analysis of the Real Estate Sponsor; 2) Analysis of TIC Program Structure & Fees; and 3) Analysis & Underwriting of Replacement Properties.
If you are contemplating selling highly appreciated real estate during 2007 and would like for us to provide an analysis of how to best structure your transaction please call us at 1-888-661-7994 or send us and email at Jim@JamesBFoster.com
If you have not reviewed the standard real estate contract used in Hawaii I can email you a blank copy to review at your leisure, just send me an email and I will send it as an ADOBE pdf attachment. For future sellers and buyers of real estate some of the questions you need to ask yourself and be familiar with are: 1) What do I need to know about my real estate purchase contract, called a DROA in Hawaii? 2) Why are there contingencies in the DROA and why are they important? 3) What information is required to open an escrow to complete a sale? 4) Why should my deposit check be held by escrow and not the seller? 5) What does the closing agent do with the deposit? 5) What papers need to be prepared and signed by both the buyer and the seller? 6) How will the real estate loan be processed if it is not an all cash transaction? 7) Which of the costs and fees of the transaction are negotiable and when should I start negotiating them? 8) What is title insurance and why is it necessary in the real estate transaction? 9) Why does it matter how I take title to the property? 10) What problems might arise during the closing process to prevent the sale or closing from taking place? 11) How can I be certain that the papers I will be signing are correct? 12) Who makes the decision regarding the closing date? 13) Can I change the way I hold title after the closing occurs? 14) What happens if my closing has to be cancelled?
I recently had two clients who needed to add people on title and it was done with a Quit Claim Deed and the cost was under $200.00. It is a fairly simple process and is typically used when a father and mother want to add a son or daughter or others to the title or transferring ownership from a married couple to a living trust or etc. We can coordinate that for you if you need assistance with it.
Useful Internet Sites:
http://www.thelaptoplock.com/ The theft of laptop computers can create devastating results if your personal information can be accessed by the thieves and your financial data accesses. The Laptop Lock beta service allows you to protect that data. If your laptop is stolen you log in to your account and mark the computer status as stolen. Once your stolen laptop connects to the Internet, the actions you have set up will execute and you can remotely encrypt or delete pre-selected files, display a message or execute custom instructions (such as sounding an alarm). When the stolen computer connects to the internet, the connection information can also be traced and used to help recover the laptop. Even though this service is in beta the developers claim it is production grade software.
http://www.defeasewithease.com/ If you have an investment property for sale and have a loan that needs to be paid this might be just for you if you need to provide the lender with replacement collateral sufficient to pay off the debt and maintain the yield on the current loan. This is called “defeasing” the loan. There is a “Defeasance Calculator” at the site which will help you estimate the total cost to defease your loan. The total cost includes the cost to purchase the defeasance collateral (the government securities) and the transaction costs.
http://answers.yahoo.com/ Have a question you would like to have an answer for? The service is free and all you have to do is sign up.
http://www.Pandora.com/ If you love music, use this site to enjoy the type of music you identify – exactly as you ordered it. No downloads – no cost – just a little advertising.
Type in the name of one of your favorite songs or artists, a “station” appears that plays songs that are musically similar to the song title or artist you provided. This site is one of the best! Try it!
http://www.Komando.com/ This is a great site for staying current on new technology, new software and internet issues.
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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