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September, 2006 - Newsletter for the Maui Market
The current real estate market appears to have peaked and is at the top of its current cycle and is expect to slow down. The consensus also seems to be that Mortgage rates are not projected to go any higher than 6.5% to 7% in the next two years.
The prognosticators are not predicting anything outrageous. Mortgage rates during August, pushed past the 6% mark for the first time in several months, however no one seems to forecast rates higher than 7%. A gradual run up in rates could be good for housing because it will give incomes a chance to catch up to hyper-inflated house prices.
For the speculators who thought the appreciation would go on forever, it appears the days of double-digit increases are behind us for the immediate future as the real estate market adjusts. For the next year to two years for appreciation rates, the best owners can probably hope for is an appreciation rate of 3% to 5%.
Rather than prices crashing, the odds are better that they will simply slow down and stop rising so fast.
In the 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 in the West Maui area and the total value was $333,616,070.00; July, 2006 there were 392 condominiums for sale in the West Maui area and the total value is $346,937,598.00; August, 2006 there were 393 condominiums for sale in the West Maui area and the total value was $344,119,142.00; and at the beginning of September, 2006 there are 413 condominiums for sale in the West Maui area and the total value is $ 369,322,455.00 . The condominium for sale inventory since July, 2005 has been as low as 165 and is up to 413 for September 1, 2006. The “for sale” inventory continues to increase.
As of August 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; 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; and for the month of August, 2006 as of 9/1/06 in the MLS data, total condominium sales were 27 and the total value was $31 ,375,500.00. 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; and August, 2006 was 27.
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 6/30/2006 the average price for a home on Maui was $1,001,310.00 which is up 1% from a year ago for the time period of 1/1/05 to 6/30/05 when the average price was $995,282.00. For the same time period the average price for a Fee Simple condo on Maui was $781,829.00 which is up 53% from a year ago for the same time period when the average price was $510,284.00 according to the RAM statistics.
We have gone in to the MLS database and pulled information for 2000 through 2006. 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 August) 321 condominiums have sold for a total value of $265,433,716.00.
Mortgage Rates as of 9/5/06 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); 6.50% 30yr fixed No Points ( 6.57 APR). No Docs: 6.2 5% 30yr fixed 1.0 P t ( 6.38 APR); Hse/Condo: 5 .75% 15yr fixed 1.0 Pt (5 .89 APR); $1M Loan 6.375% 30yr fixed 1.0 Pt (6.50% APR); No Down 80/20 6.50%, 30yr fixed 1st 1.0 Pt. (6.63 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. 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.
On Friday, September 1 st – A wildfire, intensified by winds, blackened more than 1,800 acres, shutting down Honoapiilani Highway between Maalaea and Olowalu for most of the day and into the night. Forestry workers and about 75 firefighters and four helicopters were working to try to control the fire that forced Maalaea Harbor Village shops and makai homes to be evacuated Friday afternoon. Friday afternoon, the Hawaii Air National Guard joined the firefighting effort with two helicopters.
Medical Facilities on Maui – Dr. David Sakamoto, administrator at the State Health Planning and Development Agency, will make the final decision by the end of September, 2006. If you have an opinion regarding the issuance of the Certificate of Need (CON) send an email to Dr. David Sakamoto at SHPDA@DOH.Hawaii.Gov and let him know prior to September 30, 2006. The facility that Dr. Sakamoto will make the decision for the CON can be viewed on the website at www.Malulani.org For this facility there are no tax dollars required and the entire cost is coming from private funds, we are hoping the Certificate of Need will be approved so construction can start in 2007.
Traffic on the Honoapiilani Highway, DOT and the Lahaina Bypass – DOT has placed an advertisement for submission of proposals for Phase 1A of the Honoapiilani Highway realignment project, also known as the “Lahaina Mini-Bypass.” Phase-1A of the project will be a two-lane road running from Lahainaluna Road to the future Keawe Street Extension, to be done by Maui County. The mini-bypass is expected to alleviate traffic congestion and improve circulation in the Lahaina and Lahainaluna areas, DOT reported. The state will evaluate interested design-build teams and narrow the list down to the top three. A design-build contract award is expected by the end of the year. When DOT opened bids for the mini-bypass project in early 2005, a bid protest forced the cancellation of the process.
Young Brothers will have to give up space at Pier 2 to the Superferry – As a result thought it could no longer handle pallet-size loads shipped outside of containers and would withdraw from the business but that freight consolidators could pick up the traffic. Small businesses and farmers, who import and export amounts too small to justify a shipping container themselves, depend on the less-than-container load shipping. This caused a public uproar but now Young Brothers and three state departments devised a major reconfiguration of the harbor to resolve the problem. Young Brothers was able to accomplish something “legislators, the governor and the mayors have not gotten the Department of Transportation to do” – being open about its plans. Young Brothers will get other space at the congested harbor. This means it won’t have to suspend less-than-container load shipments into Maui, at least not until the island’s continued growth eats up the space the state will be buying.
Council again reviewing price controls for affordable housing – Maui County Council members are considering a plan to ensure more housing for working residents by imposing price controls on 80 percent of the homes built in new developments, a steep increase over the 30 percent requirement that had been discussed until recently.
Tax Relief for homeowners – Maui County Council committee recommended establishing a $300,000 homeowner’s exemption providing tax relief in the 2007 budget as the new standard for the county. The Budget and Finance Committee voted 7-0 August 15 th to recommend keeping the exemption at $300,000 indefinitely. The measure is expected to go before the full council for the first of two votes on Sept. 1 st. In approving the higher home exemption in the 2007 budget, the council eliminated the age
Real Estate Tips
The real estate market is accelerating as it transitions from a Seller’s Market to a Buyer’s Market. Inventories are increasing, properties are requiring longer periods of time for marketing and we are seeing an increased number of price reductions. The market is current like a gyroscope temporarily searching to make it stable again. On Maui we are moving out of the slow months and traffic will pick up as we move towards the peak season with more buyers looking at vacation rental condominiums and second homes.
Selling in this type of changing market requires a realistic approach. Historically, the properties that are correctly priced, well staged and in excellent condition are the ones which sell first. If a property is listed for sale and offers are not being received, then try to envision what a prospective buyer will see when they view the property for the first time. Price reductions work if done in big steps, especially if it brings the listing price below a new $50,000 or $100,000 search-engine threshold. Keep in mind, too, that one home in three homes today are sold on the Internet. Make sure the house you have posted in the local MLS and Realtor.com has a floor plan, really good quality photos, a virtual tour which is user friendly and clear, positive information on your home.
Tips if you want to accelerate the marketing time for your property: 1) Remove or cancel the listing for the required time and then have it entered in to the MLS as a new listing. ; 2) Price your house at 5 percent less than the last sale in your neighborhood; 3) Offer a "One Day Only" sale; 4) Offer financial incentives – a) prepay house taxes for two years; b) prepay the mortgage for two years; c) offer to pay for closing costs; d) offer broker commission bonus; 5) Consider creative incentives; 6) Make the right first impression.
Did you know there is a State of Hawaii Form N-15? This is a form N-15 is and Individual Income Tax Return provided by the Department of Taxation and is supposed to be filled out and submitted by Nonresidents and Part Year Residents. http://www.hawaii.gov/tax/a1_1alphalist.htm#nLabel This is an item to be discussed with your CPA and possibly a CPA licensed in Hawaii regarding compliance. Many who own vacation rental condominiums file for their Genera Excise Tax (GET) and Transient Accommodations Tax (TAT).
Appraisal costs are going up in Hawaii. Effective January 1, 2008 a Certified Residential Appraiser (CRA) will have basic education requirements of 150 hours (currently 90 hours), an Associate Degree (Community College) and 2,500 hours of experience accumulated over a 24 month period. The last five years having an appraisal completed on Maui in a short time frame has been a challenge and once the new requirement become effective it will become more difficult than it currently is with the new, more stringent requirements.
Useful Internet Sites:
http://i.i.com.com/cnwk.1d/i/tr/downloads/home/windows_xp_keyboard_shortcuts.pdf Check out the 55 top Windows Hot Keys. Hot keys or keyboard shortcuts are a set of keys that, when pressed simultaneously, perform a predefined task. Performing the same task with your mouse usually requires more effort and takes longer. For example press the “Windows + F” keys and the “Search for Files” window opens. Print this out. Until you learn these magic keys to the point they become automatic.
http://www.podzinger.com/ This is a great site to find audio and video reports on the Web. A Podcast search engine that takes web audio searching to the next level. Instead of simply searching in Podcast directories by categories, you can search the spoken words inside the Podcast in order to find exactly what you are looking for.
http://www.churchsigngenerator.com/index_1.php Here’s a fun place. Every time you go by one of those signs in front of churches (the ones with moveable letters) we know you want to rearrange the letters to broadcast your own message to everyone who goes by! A personalized church sign with your text will be generated for you! Save it, send it to a friend, put on your website, or use it however you like.
http://www.usersmanualguide.com/ At this site you will find hundreds of user manuals and guides for a myriad of types of equipment such as mobile phones, fax machines, cameras, monitors, software, televisions and DVD players We all do it – we store the user manual when we get a new appliance, TV or other household or office gadget and two years later when needed it is nowhere to be found. Find your make and model, click and download the manual. The price is right --there is no cost to you for these manuals.
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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