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October, 2007 - Newsletter for the Maui Market
Aloha! Here is your eNewsletter for the Maui Market from Jim Foster
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Make sure you check out the Useful Internet Sites at the end of this newsletter which includes some valuable information.
Don't forget! We provide a free Automatic E-mail Notification Service that goes out to recipients whenever a new listing becomes available for a particular condominium complex. Each of these notifications includes a link to view the details of the brand new listing 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 condominium property you wish to be notified of.
Another service we provide is the Condominium Real Estate Market eUpdates which is sent out periodically to inform potential buyers and owners of specific condominium properties about the real estate market activities at those properties. This service is provided exclusively for those who own a condominium property or who are interested in a particular condominium complex on West Maui. If you would like to subscribe to the Condominium Real Estate Market eUpdates for a particular complex or to get a list of all condominium properties that are included in the eUpdates, email Won at Won@JamesBFoster.com.
Maui real estate inventory is recently becoming much more available and affordable. Maui has begun to follow the Mainland patterns and the market continues to slow. The period of rapidly accelerating values in the Real Estate Market is over for now. There has been a correction and the over inflated priced properties do not sell. The challenge now is a good loan. There are still potential Buyers for second homes and vacation rental condominiums but the pricing has to be “Current Market Values”.
On Maui, sales of single family residences are up 15% for the year as compared to sales through August 2006. Total dollar volume is also up 9%. The medium home price has been forced down to $640,000 compared to $725,000 a year ago. Condo sales are weaker with the number of sales down 10% from a year ago and dollar volume down 12% but August sales were up about 7% from a year ago.
In August there were 200 sales of single family homes, condos and land. This is very steady from the previous year. We expect the real estate market will continue to decline this next year, but only slightly, in Medium price, total dollar volume and total units sold.
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 468 and seemed to peak at 491 on April 18th and has gone down since. Properties are requiring more time to sell and Buyers have a much larger inventory of properties for sale to choose from. If you’re curious about current trends in Maui real estate and where the market is headed, the answer is - it depends on Location - it depends on if it is condominium or single-family residential - it depends on whether you look at volume, average or median prices. The current Maui real estate market looks steady with minor variations.
Condominiums for Sale - 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 - 166 condominiums with the total value of $154,446,497.00; September, 2005 - 176 condominiums with the total value of $163,215,390.00; October, 2005 - 177 condominiums with the total value of $168,464,220.00; November, 2005 - 199 condominiums with the total value of $188,377,265.00; December, 2005 - 231 condominiums with the total value of $222,669,115.00; January, 2006 - 226 condominiums with the total value of $226,520,200.00; February, 2006 - 280 condominiums with the total value of $281,793,835.00; March, 2006 - 297 condominiums with the total value of $286,082,559.00; April, 2006 - 350 condominiums with the total value of $317,599,199.00; May, 2006 - 354 condominiums with the total value of $321,932,077.00; June, 2006 - 362 condominiums with the total value of $333,616,070.00; July, 2006 - 392 condominiums with the total value of $346,937,598.00; August, 2006 - 393 condominiums with the total value of $344,119,142.00; September, 2006 - 413 condominiums with the total value of $369,322,455.00; October, 2006 - 408 condominiums with the total value of $366,608,574.00; November, 2006 - 407 condominiums with the total value of $357,086,324,00; December, 2006 - 428 condominiums with the total value of $361,399,109.00; January, 2007 - 410 condominiums with the total value of $372,238,031.00; February, 2007 - 431 condominiums with the total value of $393,681,669.00; March, 2007 - 458 condominiums with the total value of $420,941,268.00; April, 2007 - 479 condominiums with the total value of $429,708,159.00; May, 2007 - 472 condominiums with the total value of $424,095,260.00; June, 2007 - 455 condominiums with the total value of $415,187,129.00; July, 2007, there were 475 condominiums with the total value of $432,797,008.00; August, 2007, there were 469 condominiums with the total value of $420,479,301.00; September, 2007, there were 474 condominiums with the total value of $430,914,408.00; and at the beginning of October, 2007 there are 471 condominiums for sale in the West Maui area with the total value of $423,631,002.00. The condominium for sale inventory since July, 2005 has been as low as 165 and is up to 471 for October 3, 2007. The “for sale” inventory on West Maui continues to increase.
Condominium Sales in 2006 - The total condominium sales for West Maui during the month of January, 2006 there were 42 sales and the total value was $28,574,643.00; for February, 2006 there were 48 sales and the total value was $32,995,078.00; for March, 2006 there were 40 sales and the total value was $32,199,584.00; for April, 2006 there were 43 sales and the total value was $41,898,525.00; for May, 2006 there were 51 sales and the total value was $39,644,886.00; for June, 2006 there were 40 sales and the total value was $32,533,500.00; for July, 2006 there were 30 sales and total value was $26,212,000.00; for August, 2006 there were 28 sales and the total value was $31,885,500.00; for September, 2006 there were 30 sales and the total value was $24,770,000.00; for October, 2006 there were 29 sales and the total value was $23,359,299.00; for November, 2006 there were 22 sales and the total value was $13,414,600.00; for December, 2006 there were 30 sales and the total value was $23,169,999.00. For 2006, the monthly average sales were 36 sales per month with the average sales value of $29,221,468.00 per month.
Condominium Sales in 2007 - The total condominium sales for West Maui during the month of January, 2007 there were 37 sales and the total value was $33,091,000.00; for February, 2007 there were 26 sales and the total value was $16,330,000.00; for March, 2007 there were 32 sales and the total value was $24,121,000.00; for April, 2007 there were 27 sales and the total value was $16,766,000.00; for May, 2007 there were 28 sales and the total value was $30,774,929.00; for June, 2007 there were 28 sales and the total value was $18,917,000.00; for July, 2007 there were 21 sales and the total value was $13,314,200.00; for August, 2007 there were 32 sales and the total value was $33,258,999.00; and for the month of September, 2007 as of 10/3/07 in the MLS data, there were 23 sales and the total value was $24,701,900.00. The monthly average sales were 28 sales per month with the average sales value of $23,475,003.00 per month.
The total condominium sales for August, 2005 was 52; September, 2005 - 58; October, 2005 - 38; November, 2005 - 48; December, 2005 - 47; January, 2006 - 42; February, 2006 - 48; March, 2006 - 40; April, 2006 - 43; May, 2006 - 51; June, 2006 - 40; July, 2006 - 30; August, 2006 - 28; September, 2006 - 30; October, 2006 - 29; November, 2006 - 20; December, 2006 - 30; January, 2007 - 37; February, 2007 - 26; March, 2007 - 32; April, 2007 - 27; May, 2007 - 28; June, 2007 - 28; July, 2007 - 21; August, 2007 - 32; and September, 2007 was 23.
For previous condo sale details, go to our web site, www.JamesBFoster.com and click on Condo Sales. For the time period of 1/1/2007 to 8/31/2007 the average price for a home on Maui was $951,027.00 which is down 5% for the time period of 1/1/06 to 8/31/06 when the average price was $1,002,830.00. For the same time period the average price for a Fee Simple condo on Maui was $794,271.00 which is down 3% for the same time period when the average price was $814,687.00 according to the RAM (Realtor Assoc. of Maui) statistics. Condo sales in Wailea/Makena, Kapalua and Kaanapali impacting the Fee Simple Condo average price.
We have gone in to the MLS database and pulled information for 2000 through 2007. In 2000 - 654 condominium units sold in the West Maui area for a total value of $209,064,010; in 2001 - 605 condominium units 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; in 2005 - 682 condominiums for a total value of $408,582,315; in 2006 - 435 condominiums for a total value of $351,782,614. In 2007, from 1/1/07 to 10/3/07 - 256 condominium units sold in the West Maui area for a total value of $212,866,028.
Mortgage Rates for week of October 1, 2007 - from Town Island Mortgage, LLC -
Rates: Houses & Condos Full docs: 6.00% 30yr fixed 2.0 pts (6.23 APR); 6.25% 30yr fixed 1.0 pt (6.38 APR); 6.50% 30yr fixed No Points (6.59 APR); No Docs: 6.25% 30yr fixed 1.0 pt (6.38 APR); 6.00% 15yr fixed 1.0 pt (6.17 APR); Interest Only: 6.75% 30yr fixed 1.0 pt (6.88 APR); and To $1M: 6.625% 30yr fixed No Points (6.71 APR). No Income & Stated Land loans, too (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 www.JamesBFoster.com/condosales.php.
Some recent news about what is going on in Maui.
Weather - As we progress in to October, the weather continues to be fantastic and has been around 86 degrees during the day and cooling off to 71 degrees in the evening. Today, it is 86 degrees, sunny with light trade winds. For the next few days a few scattered showers and a bit more clouds. Lucky to be on Maui, come visit and enjoy!
Maui Economy may be cooling - Maui’s population has grown 32.6 percent in the last 15 years. Unemployment on Maui has been about 2.1% and has been responsible for restricting Maui business expansion. Tourist spending grew nearly 11 percent in 2006 and total tourist outlay is still ahead of 2005. On Maui, there has been a substantial increase in development of time shares and condominiums and virtually no hotel development. Two hotels, the Kapalua Bay and the Renaissance Wailea Beach are being converted to smaller facilities. The Royal Lahaina was partly rebuilt and converted, and there are many new time-share developments such as the Marriott Ocean Club, Kaanapali Ocean Resort and Honua Kai as the largest. Housing prices have softened. Median prices have gone down but average prices are holding steady, with the possibility that the highest priced houses are staying high and may go higher. Housing builders have enough business to keep them busy for several years. The Maui economic picture is somewhat more downbeat in 2007 and 2008 than in recent times. Just remember, any economic cycle inevitably contains periods of cooling down. Maui’s infrastructure desperately needs to catch up and slowly rising income may help bring affordability back to our housing sector so the slow down also has it’s upside.
Restrooms at Lahaina Harbor - If you have ever been waiting for an excursion at Lahaina Harbor and needed a restroom you will be glad to know there is a new restroom open at Lahaina Harbor. The state Department of Land and Natural Resources (DLNR) has completed construction of a new comfort station at Lahaina Small Boat Harbor, which is open for public use. The new restroom provides five sinks and twelve toilets on the women’s side; and four sinks, two urinals and four toilets on the men’s side.
Kapalua Coastal Trail receives SMA permit - Maui Land & Pineapple Co. (ML&P) wants to construct the 3.5-mile trail between Kapalua and Honolua bays that will feature panoramic vistas of Molokai and Lanai. When completed in early 2009, the public trail will likely be a combination of sidewalks, crushed gravel and natural paths. It will connect seven beaches to ML&P resorts and is part of the developer’s overall plan to build a 100-mile network of trails across West Maui. The Kapalua Coastal Trail will also link several public recreation areas together, including D.T. Fleming Beach Park.
The project still needs to get county building permits and permission from the state Department of Land and Natural Resources’ Office of Conservation and Coastal Lands, said Thorne Abbott, Maui County coastal resources and shoreline planner.
New Funding possible for Lahaina Harbors - Funding has been approved by the Hawaii House of Representatives but still needs to be approved by the Senate. There is an immediate need for dredging at the Mala Wharf but unless the county clears out the sediment retention basin above Kahoma Stream, Mala will fill right up again and they will probably need to dredge it within five years. At Lahaina Harbor, new projects that were funded by funding of $10 million, included new sewage pump-out stations, hose bibs, security lighting, a new floating dock for surfers, and repaving Wharf Street. The federal government is also expected to remove the wreck of the Dolphin sailboat north of Lahaina Harbor next year.
New Molokai Agricultural Tour - The new tour has everything from a mule-driven wagon ride that goes to the top of Sweet Potato Hill for a panoramic lunch in a county pavilion to an oceanfront blast from the past with a historical perspective of the islands’ ancient fishponds. It can be a one day excursion from Maui by taking the 7:15 AM ferry out of Lahaina Harbor. The phone number is 808-553-8284
Pu’ukoli’i Village - The Kaanapali Land Management Corp. (KLM) unveiled plans for Pu’ukoli’i Mauka, a 940-unit development proposed at the former Pu’ukoli’i Village plantation camp. Plans are for a mix of land uses with 940 housing unit that are 50 percent affordable; community facilities; recreational features; and open space. You can view the plans at www.KaanapaliLand.com
Maui Water Supply - A planned Waiale water treatment facility could help quench the thirst for water in Central and South Maui. The facility is in the design stage and the completed plant is 18 months to two years in the future. It would be located behind Maui Community Correctional Center on Waiale Road. This facility would be the second water treatment plant in Central Maui. The county already has a plant in Iao Valley treating 2.5 million gallons per day from surface water sources.
Biofuel Plant to proceed with EIS - BlueEarth will proceed with their Environmental Impact Statement for a 40 million gallon biodiesel refinery at Waena. BlueEarth plans to use oil from crops grown especially for fuel but plans to import raw oil at first. They also anticipate participating in research into fuel crops that could be grown in Hawaii and provide aid to farmers converting. Corn, jatropha, African oil palms and soybeans are among crops under consideration. The BlueEarth refinery, which was originally planned for a 2009 opening, is to have a capacity of 40 million gallons and could be expanded quickly and begin producing 120 million gallons by 2011.
Halloween Time in Lahaina - The streets of Lahaina will look like a little Mardi Gras when October 31st arrives. Front Street will be closed to auto traffic from 4:00 p.m. until 11:30 p.m. The evening’s festivities begin at 5:00 p.m. with the West Maui Soroptimist and Lahaina Rotary Clubs' Annual Children's Costume Parade starting at Lahaina Center, on the corner of Front and Papalaua Streets. Hundreds of tiny spooks and superheroes will make their way down Front Street to Kamehameha Iki Park at 525 Front Street, where they will receive a parade ribbon and a free bag of goodies to start off their night of trick-or-treating. If you plan on attending the Children's Costume Parade, be sure to arrive early to get a good seat on the curb and remember to bring some candy for the children in the parade. At the Lahaina Banyan Tree Park, from 5:00 to 10:00 p.m., nonprofit organizations will be offering shoyu chicken plate lunches, kalua pork sandwiches, chili and rice, brownies, shave ice and more for sale. Those who are skilled in the arts of palmistry and tarot reading, mask making and face painting will also be featured under the landmark Banyan Tree. Hector Serrano & Friends will perform Afro-Latino music on stage at the Lahaina Library lawn (Front St. side) from 5:30 to 7:30 pm, followed by Reggae recording artist Marty Dread & 40 PTS. performing between 7:30 and 9:30 p.m.
The Pioneer Inn's Annual Costume Contest, which starts at 10:00 p.m. in the Courtyard, concludes the evening festivities. Plan to arrive before 3:00 p.m. to get one of the hard-to-find parking spaces in town. Bring candy for the trick-or-treaters and don't forget your camera. The family friendly part of the celebration is the Children’s Costume Parade at 5:00 p.m. Once night falls, downtown becomes more of an adult celebration with huge crowds of young adults partying well into the night. For more information about Halloween in Lahaina go to www.visitlahaina.com.
Medical Facilities on Maui - The Association for Improved Healthcare on Maui (AIHM) http://www.aihm-maui.org whose mission is to serve as an advocate for the creation of a system that will provide improved healthcare services to all of the citizens and visitors of Maui County has been making some excellent progress. For more information on making a contribution to this great cause, please visit www.aihm-maui.org/ourfriends.htm. To stay informed of what is transpiring with future approvals of either the Kihei or West Maui hospital, you can send me an email and request a subscription to the “Coconut Wireless” to either my email at Jim@JameBFoster.com or Jan@SunshineRainbows.com
Lahaina Bypass Status - Construction of the Lahaina Bypass continues to be on hold because Archaeological sites were discovered during a field survey. For current information visit www.LahainaByPassNow.com
Real Estate & Financial Planning Tips
What is the explanation for Capital Gains? - Profit made from buying real estate and reselling it at a higher price. There is a Special Real Estate Exemption for Capital Gains tax liability. Since 1997, up to $250,000 in capital gains ($500,000 for a married couple) on the sale of a home is exempt from taxation if you meet the following criteria:
- Owned the home for at least two years.
- 2. Lived in the home as your main home for at least two of the past five years.
Understanding Capital Gains in Real Estate - When you sell a stock, you owe taxes on your gain, the difference between what you paid for the stock and what you sold it for. The same is true with selling a home (or a second home), but there are some special considerations. What you paid for the home includes not only the original price, but also the cost of many improvements, so hold on to your receipts!
How to calculate gain - In real estate, capital gains are based not on what you paid for the home, but on its adjusted cost basis. To calculate this, the basics are:
1. Use the purchase price of the home: This is the sale price, not the amount of money you actually contributed at closing.
2. To the purchase price, add adjustments: Cost of the purchase--including transfer fees, attorney fees, inspections, but not points you paid on your mortgage. Cost of sale--including inspections, attorney's fee, real estate commission, and money you spent to fix up your home just prior to sale. Cost of improvements--including room additions, deck, and etcetera.
3. The total you get from above is the "adjusted cost basis" of your home.
4. Subtract this adjusted cost basis from the amount you sell your home for. This is your capital gain.
If you need additional information call me at 1-888-661-7994 or send us and email and we can help you compute the approximate Federal Capital Gains Tax and the Hawaii State tax on sale (HARPTA).
I recently had a person who was interested in our selling property and that she and her sisters had inherited the property from their mother. They wanted to know if they were subject to the Federal Capital Gains Tax and Hawaii Real Property Tax Act (HARPTA). As they received a new "stepped-up basis," which is the market value on the date of the decedent's death (or valuation date used by the deceased's estate), the heirs can sell the inherited property immediately with no capital gains tax to pay. The reason is the heir receives a new "stepped-up basis" of the property market value on the date of death (or alternate valuation used by the deceased's estate). However, if a dying person deeds real estate as a gift, the donee takes over the donor's usually low adjusted cost basis and does not receive the major benefits of a new stepped-up basis on the date of death. There generally is no need to hurry and sell inherited real estate as you will have a new stepped-up basis for the property. You will owe capital gains tax only on the increased net sales price above the stepped-up basis.
We have the Real Property Tax Rates for July 1, 2007 through June 30, 2008 and can email you an attachment with the new rates and additional information. You can also check your current assessed value and taxes at the Maui County web site for real property taxes at http://www.mauipropertytax.com/
Hawaii has a real estate transfer tax. For property with a value less than $600,000 the tax is 15 cents per $100.00 of actual value. For property of $600,000 and up to a $1,000,000 it is 25 cents per $100.00 of actual value and for property of $1,000,000 or greater it is 35 cents per $100.00 of actual value. For more details send me an email and I can email the information to you.
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 give us a call. 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 at 808-661-7994 or email Jim@JamesBFoster.com
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(Tenant In Common) 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
Useful Internet Sites:
http://woodrow.mpls.frb.fed.us/research/data/us/calc/ - In financial matters it is often convenient to know what the Consumer Price Index is. The CPI is often used in lease situation when calculating a new five year lease to readjust rents or in calculating the average change in our purchasing power
http://www.revouninstaller.com/ - Go to this site to see a great way to uninstall that program you don’t want on your computer anymore? The standard Windows Remove Program often leaves lots of remnants. This program does the job efficiently and includes other useful related functions. You can install at no cost and it performs many functions such as uninstalling, canceling auto start, and initiating Google related searches.
http://800notes.com/ - This has information about telemarketing, harassing calls and the Do Not Call Registry. If you have caller ID on your phone you can go to this site, type in the caller’s number and access reports from others who have been offended by the same caller.
http://www.audible.com/ If you prefer listening to the narration of a book rather than reading, this web site allows you to choose from over 35,000 titles and download the book of your choice for portable listening anywhere and anytime that suits your fancy. These books are digital and you can download a book and listen to it right away.
www.lifelock.com With identity theft rampant this is an important service with modest fees. Lifelock is not like credit monitoring, they are the next generation. They are the lock, and you hold the key. If your Identity is stolen while being a client, Lifelock will go out and hire the right people to work to get your good name back and it won't cost you one red cent. If you lose money they guarantee to re-imburse you all the way up to $1,000,000.
www.carbonite.com Here is a great back-up system for the files on your computer. Carbonite is an online backup service that starts automatically and works quietly and continuously in the background protecting your data. If you accidentally erase something they have the copy. You can restore deleted files with just a few clicks on your PC. If your PC crashes, just visit their website to recover lost files. The service is reasonably priced and invaluable if you lose your data.
www.accucoverage.com/ As we have all observed in the last couple of years hurricane and flood damage have been responsible for billions of dollars of loss. There have been horror stories of consumers having to deal with insurance companies to prove losses. If you have home owners insurance, you have the responsibility of insuring for the correct amount. To be sure that you are covered, you must know the current replacement cost of your home and you can at this web site for only $7.95.
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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