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July, 2006 - Newsletter for the Maui 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 in the West Maui area and the total value was $333,616,070.00; and at the beginning of July, 2006 there are 392 condominiums for sale in the West Maui area and the total value is $ 346,937,598.00. The condominium for sale inventory since July, 2005 has been as low as 165 and is up to 392 for July 1, 2006. The “for sale” inventory continues to increase.
As of July 2006, 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; and for the month of June, 2006 as of 7/1/06 in the MLS data, total condominium sales were 35 and the total value was $29,202,000.00 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 and June, 2006 was 35.
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 5/31/2006 the average price for a home on Maui was $989,818.00 which is up 1% from a year ago for the time period of 1/1/05 to 5/31/05 when the average price was $975,398.00. For the same time period the average price for a Fee Simple condo on Maui was $767,912.00 which is up 54% from a year ago for the same time period when the average price was $497,486.00 according to the RAM statistics.
We have gone in to the MLS database and pulled information for 2000 through 2005. 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 $408,582,315.00. To date for 2006 (January thru June) 259 condominiums have sold for a total value of $204,514,716.00.
Mortgage Rates as of 6/26/06 from Central Pacific Home Loans – Hse/Condo: 6.375% 30yr fixed 2.0 pts ( 6.6 APR); 6.625% 30yr fixed 1.0 pt ( 6.75 APR); 7.00% 30yr fixed No Pts (7.4 APR). No Docs: 7 .125% 30yr fixed No P ts ( 6.17 APR). Hse/Condo: 6.25% 15yr fixed 1.0 Pt ( 6.41 APR) Condotel: 6.75% 30yr fixed 1.0 p t ( 6.88 APR) FHA: 6.50% 30yr fixed No Pts (6.52 APR).
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. 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.
Some recent news about what is going on in Maui.
Home Sales Slow Statewide – To date, the home sales on Maui are less than 2005 but may pick up this summer. The increased inventory of homes for sale will be a strong factor in moderating prices. We are also seeing the market slow on the other islands, Oahu, Hawaii and Kauai.
Maui County Budget for 2007 – Would you like to see how the politicians have decided to spend the $467,500,000? Go to the Maui County Web site at www.co.mau.hi.us You can also see a listing of county fees and charges for services and the new ordinance on real property exemptions. Maui County now has a staff of 2,419. Joanne Johnson, the West Maui Councilperson has worked very hard on behalf of the West Maui community and the 2007 Maui County Budget includes significant funding for West Maui and with continued communication the allocation for West Maui in the 2008 Maui County Budget can be increased.
Sunshine Law Vote to be reviewed – Residents and tourists alike are very concerned about the proposed future growth and new developments. Some tourists are commenting about not returning because they have been caught up in hour to two hour traffic snarls into Lahaina from the Kahului Airport. The Maui General Plan Advisory Committee earlier this month requested via a fractious vote for county lawmakers not to approve any new, large developments before the General Plan has been completed. This vote may be ruled invalid. Currently the GPAC – General Plan Advisory Committee is off to a slow start because of legal questions raised. Hopefully this will be resolved within the next one to two months.
Vacation Rental Bill to be reviewed – The Planning Commission on Maui, Lanai and Molokai will review a proposal the transient vacation rental ordinance for the bed-and-breakfast concept into the agricultural and rural zoning districts.
Maui County has approved 17,138 homes not yet built – Of this number 4,720 are in the West Maui area. For West Maui there is 14,187 Proposed Residential Units and the total for the county are 24,413. Committed Residential is designated in a community plan and may have special management area and related discretionary approvals. Proposed Residential Units are on lands that may be under discussion but are not on a community plan. Many of these approvals have been granted by officials unaware of whether there is or is not adequate infrastructure in place to accommodate new growth.
Input for Maui Planners – For information on the future growth plans for Maui go to www.focusmauinui.com or www.medb.org. At the web site for Focus Maui one can provide input as to the future plans for Maui and provide new suggestions and ideas.
Super Ferry Discussions – Governor Lingle is being drawn in to the controversy surrounding the Super and being asked to delay ferry operations. The Super Ferry, DOT and Young Bros. Ltd are holding a series of public meetings to discuss impacts. It appears that the Super Ferry will become a reality because as part of an agreement signed by the state officials, taxpayers would pay Super Ferry $18,000 per day if infrastructure is not in place by the company’s start date.
MMMC has new wing’s grand opening – Work on Maui Memorial Medical Center’s new $42 million north wing is almost complete with 15% of the construction remaining. There will be a grand opening of the facility August 26 th.
Wind Farm starts generating electricity – The Kaheawa Wind Power’s $70 million wind farm that sits above Maalaea Harbor began feeding electricity into Maui Electric Co.’s grid on the evening of June 22 nd. Approximately 244,000 barrels of petroleum will not be necessary as a result of the electricity expected to be generated. Another project announced on June 30 th is a $200 million wind farm at Ulupalakua Ranch that could supply an additional 40 megawatts of electricity. The Auwahi wind farm is receiving financial backing by Shell Oil and could make wind the source of up to a quarter or more of Maui’s electricity at times.
DOT and the Lahaina Bypass – Traffic congestion continues to be a serious problem and the Governor’s Office, DOT and Maui County Officials need to understand the seriousness of the situation. No definitive dates for the Lahaina Bypass to proceed.
Traffic Impact Fees on Maui – All residents and commuters to West Maui should be actively involved in communicating with the Maui County Council Members and convey the absolute necessity of traffic impact fees for all of Maui County and opposition to any new development unless traffic impact fees are paid in advance of development permits. The current infrastructure is woefully inadequate to cope with the developments already planned for West Maui.
Medical Facilities on Maui – There is a Friday, July 7 - Tri Isle Sub-area Health Planning Council 9:00am, Baldwin High School, Room 14, Lecture Hall, Multi-Purpose Bldg., 1650 Kaahumanu Ave., Wailuku to allow for testimony relative to the approval of the Certificate of Need (CON). If you are in the area and can attend, your support is needed. For details on the proposed West Maui Hospital go to www.WestMauiHospital.org and for details on the proposed South Maui Hospital go to www.malulani.org Unfortunately, Maui is not the place to be if an individual has any serious health problems. As in any state, there is a Certificate of Need (CON) process that has to be followed for additions to existing hospitals, new hospitals, surgery centers and so forth. It is often a costly and bureaucratic maze and too often politics are a key factor in the approval and issuance of the CON. We need both facilities on Maui and the message needs to be sent to our lawmakers and officials to allow both facilities to proceed. All Maui residents and tourists will greatly benefit if the Certificates of Need are approved.
Real Estate Tips
Probate – Probate, if not planned for can consume 22% of small estates and varying percentages for larger estates in legal fees, court costs and other required consultants necessary to complete the probate process. If a property owner has real estate holdings in more than one state it may be necessary to retain a probate attorney in each state. When Howard Hughes died, Nevada and California fought over which state had jurisdiction to conduct probate proceedings and years were required before the estate was settled consuming millions in legal fees before it was completed.
The best approach is to consult with your accountant, attorney, and financial planner and jointly work with an estate planner or estate planning attorney to determine if a trust, such as a Living Trust might be the best mechanism for your future financial plans.
Living Trusts – Utilizing this method you can generally avoid probate costs and delays; disputes over which state has probate jurisdiction; provide care of an elderly parent or disabled child; it is easy to amend or revoke prior to you becoming incapacitated; keep after-death asset distribution costs and delays to a minimum; keep control of your assets out of court jurisdiction even if you become incapacitated; keep your estate affairs private while living and after death; eliminate or reduce estate taxes for large estates for husbands and wives; if concerned about for how heirs will manage their inheritance, you can provide for delayed distribution; and facilitate funds being distributed quickly to your spouse or heirs.
Other Trusts – You should also discuss with your consultant the Private Annuity Trust or Charitable Remainder Trust which might be preferable for your particular situation.
Minimize Future Capital Gains
Tenants in common - After one tenant in common dies, their property share passes to whomever they named in their will to receive it. The heir will receive a new stepped-up basis on the inherited portion of the property. Unlike Joint Tenancy with right of survivorship, for tenants in common, the property has to be named in the deceased will to receive the tenant in common interest. A revocable living trust could be used by a tenant in common holder to avoid the interest being probated.
Joint Tenancy with Right of Survivorship - This can be used to automatically transfer property interest at death in most states and avoid probate.
Tenancy by the Entireties – This is a special form of joint tenancy with right of survivorship between husband and wife within certain states and Hawaii is one of those. It requires the signatures of both spouses to convey title held by this method
Principal Residence $250,000 and $500,000 tax exemption for a qualified married couple - The Internal Revenue Code Section 121 now entitles principal residence sellers to a $250,000 tax exemption (up to $500,000 for a qualified married couple filing a joint tax return in the year of home sale). To qualify, the principal residence of the seller(s) must have owned and occupied as their primary dwelling an “aggregate” 24 of the 60 months before its sale. For a married couple, the title to the principal residence can be held in the name of one spouse alone, or in the name of both spouses, but both spouses must meet the 24 out of last 60 month occupancy test to qualify for the full $500,000 exemption. It is usually best to have title held in the names of both spouses so a surviving spouse can get the stepped-up basis inheritance benefits.
IRC Section 1031 Tax Deferred Exchange - A properly structured tax deferred exchange will exempt you from the 5% HARPTA withholding in Hawaii 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.
Roth IRA – This is a method to create tax-free income during realty ownership without capital gains tax when selling a property. You invest in real estate within your Roth IRA. If you have a regular IRA, or another retirement plan such as a 401(k) or 403(b), you can often “rollover” those assets, paying the tax, into your Roth IRA where you can buy investment real estate within your tax-free Roth IRA. The Roth IRA must be set up to be self-directed with a trustee who allows real estate investments.
Private Annuity Trust - This is an estate planning device which requires the assistance of an experienced trust attorney. The basic idea is to create a private annuity trust which will be funded with assets, such as appreciated real estate, which is then exchanged tax-deferred for a private annuity contract to pay income to the investor. If you don’t need immediate income, the annuity income can be deferred to age seventy and a half. No tax will be due until income is received and in addition to the income advantage, a private annuity trust reduces the investor’s taxable estate and no tax is due upon transfer of the property into the trust because the tax is deferred, similar to an installment sale.
Charitable Remainder Trusts – This is another method of deferring and eliminating capital gains tax and supporting a favorite worthwhile charity. Not all charities have established procedures to accept real estate donations that provide lifetime use and/or income to the donor. Many large universities and major charitable organizations, such as the Salvation Army and the American Cancer Society, welcome charitable remainder trust donations. A potential disadvantage is that the CRT is an irrevocable trust. Once the asset is donated, the donor can’t revoke the donation due to changed personal circumstances.
Useful Internet Sites:
http://earth.google.com/ Using Google Earth you can “fly” to just about any place on this earth and zoom down to tree top level and not only see the houses and other structures, but now you can see them in 3D. Google has combined satellite imagery, maps and the power of Google Search to put the world's geographic information at your fingertips.
http://www.youtube.com/ Once you purchase your digital cam this is the place to upload, tag and share your creations. There are over 50 million videos viewed a day here.
While there you can subscribe to member videos, save favorites, and create playlists. You can also use this resource to share your own video/audio message by linking to it from your e-mail or web site. Basic service is free.
http://www.tadalist.com/ If you need some help keeping track of all the things you need to get done and create lists, check this out. What makes this very useful is that you can collaborate and share your lists with others. This free on-line program also allows you to subscribe your lists using RSS feeds so you're always right up to date. You can also collaborate on-line including an easy to use “WriteBoard” program.
http://www.sightspeed.com/ Sightspeed is offering services that will help rush us into the on-line video age. They have made outgoing and incoming audio/ video calling and conferencing as easy as clicking on the built in address book. If you have a web cam the basic service is free.
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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