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March, 2007 - Newsletter for the Maui Market
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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 or send an email to Jim@JamesBFoster.com.
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 or send an email to Jim@JamesBFoster.com.
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 or send an email to Jim@JamesBFoster.com.
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 458 and seemed to peak at 465 on February 24th 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.
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 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; February, 2007 there were 431 condominiums for sale with the total value of $393,681,669.00; and at the beginning of March, 2007 there are 458 condominiums for sale in the West Maui area with the total value of $420,941,268.00. The condominium for sale inventory since July, 2005 has been as low as 165 and is up to 458 for March 1, 2007. The “for sale” inventory on West Maui continues to increase.
Condominium Sales - The total condominium sales for West Maui during the month of 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; for January, 2007 total condominium sales were 37 and the total value was $33,091,000.00; and for the month of February, 2007 as of 3/1/07 in the MLS data, total condominium sales were 25 and the total value was $15,800,000.00. 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; January, 2007 was 37; and February, 2007, the shortest month of the year, was 25. 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% 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% for the same time period when the average price was $567,233.00.
For the time period of 1/1/07 to 1/31/07 the average price for a home on Maui was $1,340,592 which is up 21% from a year ago for the same time period of 1/1/06 to 1/31/06. For the same time period the average price for a Fee Simple condo on Maui was $1,004,351.00 which is up 64% from a year ago for the same time period when the average price was $612,586.00 according to the RAM (Realtor Assoc. of Maui) statistics. Condo sale 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 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; 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 3/1/07 - 62 condominiums sold in the West Maui area listed on the MLS for a total value of $48,891,000. 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 3/5/07 – from Town Island Mortgage, LLC – Hse/Condo: Full Docs: 5.625% 30yr fixed 2.0 pts (5.85 APR); 5.875% 30yr fixed 1.0 pt (6.00 APR); 6.125% 30yr fixed No Points (6.20 APR). No Docs: 5.75% 5yr ARM 1.0 pt (7.03 APR); Interest Only: 6.125% 7yr ARM No Points (7.00 APR); 1st Time No MI 100%: 6.50% 30yr fixed 1.0 Pt (6.63 APR); $1M: 6.25% 30yr fixed No Points (6.32% 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 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.
Weather – February and the first part of March has brought us excellent weather and the first week of March has been almost perfect, light trade winds and plenty of sunshine. Lucky to be on Maui!
Medical Facilities on Maui – Maui County Land Use Committee voted 8-0 to pass a resolution calling for the Maui Planning Commission to recommend approval of reclassification of a 14.9-acre parcel in Lahaina from agricultural to urban use. Two Mainland firms – InnoVative Capital LLC and Ameris Health Systems LLC have indicated interests in developing a West Maui hospital but first a required environmental assessment and a finding of no significant environmental impact must be completed by June then a certificate of need application (CON) could be filed with the State Health Planning and Development Agency, which must approve the hospital plans which has proved to be a treacherous process. Also, House bill 1067 proposes to establish a blue-ribbon panel to study the process in other states and recommend changes or abolishment of Hawaii’s certificate-of-need process. 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.
The Cannery Mall planned expansion - The expansion plans are for two free-standing buildings along Kahoma Stream on the south. Originally opened in 1987, the mall is anchored by a Longs Drugs store and a Safeway. The first floor of the first building, of about 10,000 square feet is expected to be “lifestyle apparel” businesses. The second floor, of 6,000 square feet, is designed for a restaurant. It would have two lanai dining areas, with views of the ocean and of the mountains.
The second building is designed for a bank, retail shops and perhaps a restaurant, with offices on a 5,500-square-foot second floor. The mall’s 620 parking stalls would increase to 855. Currently only three spaces are unleased with two of those are in negotiations. Longs, Safeway and Compadres Bar & Grill were original tenants with the most recent addition of the E&O Trading Co. restaurant.
Hawaii Whale Research - It appears Hawaii’s humpback whale population has been increasing at an annual rate of approximately 7 percent. ON one recent Saturday the Pacific Whale Foundation recorded 959 whale sightings off the coast of Maui. The largest number of sightings was 243 Maalaea and Lahaina. In 2006 there were 1,265 record-breaking whale sightings off Maui shores. There continues to be more and more whales sighted off Maui, and remaining in the nearshore waters. For more interesting facts and information about whales visit – www.hawaiihumpbackwhale.noaa.gov
Maui Land & Pineapple (MLP) - ML&P is proposing approximately 40 rural units in the Kapalua area, clustered on the mountain side of the highway and in the approval process. On the ocean side of the highway will be an 18-hole golf course, coastal trail connecting to Kapalua Resort, Surfer’s Park, Windmills Beach Park, a Hawaiian Educational Facility and park facilities in Honolua Bay, a popular dive spot. The vision of a landscaped cultural park, surf park and campgrounds north of Kapalua in the wilds of Honolua, Lipoa Point and Windmills have been drawn on three different planning maps.
MECO (Maui Electric) seeks 5.3% rate hike - For a typical Maui residential customer using 600 kilowatt-hours of power, the monthly bill would go up $7.78 to $179.41. In 1999, neither wind energy nor co-generation were in MECO’s forecast of sources, but in 2007 both supply some but not large, amounts of electricity. The newer the equipment, the more expensive the kilowatt, at least until the size of units can grow enough to move to the next level of efficiency. During the last eight years MECO has installed 41.2 MW of new capacity – a combustion turbine, a steam generator and 2 MW of new generation in Hana. Currently Peak demand is around 200 MW and expects to add capacity beginning in 2011.
Traffic control center for Maui – If you have been caught in the traffic on the West Maui side of the island you would agree traffic control would be an excellent idea. More responsive traffic signals on the west side might go some way toward easing Lahaina’s legendary late afternoon traffic jam. West Maui Rep. Angus McKelvey is working toward that by introducing a bill to create a Maui Traffic Control Center. The proposed bill passed unanimously out of the Transportation Committee but was recalled following comments from the state Department of Transportation calling for revisions.
West Maui Landowners want a partnership for parkway – Maui county is proposing to develop a nearly continuous stretch of shoreline park running from the pali to Puamana Beach Park. As proposed, the park would encompass lands makai of the future Honoapiilani Highway realignment. The county has already purchased 100 acres at Ukumehame for the project, but it granted land-use entitlements to the landowners to develop adjacent lands as a condition of the sale. An environmental study looks at the proposed new highway alignment from Ukumehame to Lahaina which would move the coastal road out of the tsunami and flood-inundation zones. The expanded highway also would leave the ocean side coastal lands of the new alignment as a shoreline preserve for open space and ocean recreation.
Real Estate & Financial Planning Tips
For avoiding probate the revocable living trusts can be used by those who owns a home or other major assets. A living trust has two primary benefits: (1) avoidance of Probate Court costs and delays after the trustor dies, and (2) management of the living-trust assets if the trustor becomes incapacitated before death. If a person becomes incapacitated with Alzheimer's disease or a severe stroke and that person’s major assets are in a living trust, and need to be sold or refinanced to provide for care, the successor trustee (probably a daughter or son) can do that without Probate Court interference. However, if your major assets are not in a living trust, a conservator would have to be appointed by the Probate Court to manage your assets. Keep the government out of your financial affairs at all costs. The revocable living trust for a married couple will not impact what a seller is trying to do with a tax deferred exchange because it does not violate the rule of IRC Section 1031 that title to the old and the new has to be the same. The same tax return will be acquiring the property and the trust does not file a tax return.
Tax Deferred Exchanges for Vacation Homes, Second Homes and Timeshares -
Capital gains deferral under Section1031 is limited to property “held for investment” or for “productive use in a trade or business”. Some tax practitioners have opined that vacation or second homes rented out for most of the year with little or no personal use will qualify as “held for investment” under Section 1031, while others believe that as long as the taxpayer’s personal use does not exceed the limitations set forth under IRC Section 280A, the property will qualify.
Does failure to rent disqualify a property from Section 1031 deferral? Property held solely for appreciation qualifies as “held for investment” under Section 1031. The Treasury Regulations specifically define “held for investment” as follows: Unproductive real estate held by one other than a dealer for future use or future realization of the increment invalue is “held for investment” and not primarily for sale. Thus, failure to rent property is clearly not fatal to its characterizations "held for investment” under Section 1031.
Does personal use disqualify a property from Section 1031 deferral? There is no definitive answer. In Private Letter Ruling 8103117, the taxpayer owned two properties they intended to exchange. One property was intermittently rented out for a period of time and then for several years thereafter not rented at all. The second was purchased by them solely for personal enjoyment of the community investment. The replacement property acquired in the exchange was for “personal enjoyment of the community” and “to make a sound real estate investment”. Notwithstanding the personal use by the taxpayer, the IRS held that no gain would be recognized in the exchange because both the relinquished and replacement properties were essentially “investment” properties. Unfortunately, the IRS provided no indication of when and how much personal use would be disregarded under similar circumstances. Therefore, based on the foregoing, when a second/vacation home is never rented and the personal use is minor, it may qualify under Section 1031.
Timeshares - A timeshare is generally characterized in one of two ways:(1) the right to use a property for specified period of time pursuant to a contractual timeshare agreement; or(2) actual co-ownership of a fractional fee interest in a property – having the right to occupy the property for a period of time designated by agreement. Since both types of arrangements are almost always acquired and used for a taxpayer’s personal use, it is difficult, in most cases, to argue for qualification under Section 1031 as property
held “for investment”. There may, however, be certain situations when a fractional ownership interest is acquired and rented to others purely for a profit. Under those circumstances, a timeshare may, in fact, qualify under Section 1031.Therefore, although it appears that second/vacation homes and timeshares may qualify in certain circumstances under Section 1031, because of the lack of legal precedence for this proposition, taxpayers should be cautious in pursuing these transactions – except upon the advice of their tax advisor.
1 Under Section 280A property is treated as business property (and thus depreciation deductions can be taken) or investment property (allowing for losses on a sale) so long as the taxpayer’s personal use does not exceed the greater of 14 days or 10% of the number of days the property is rented at fair market value to others.
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
We were recently working with a client that owned to condominiums side by side with an adjoining door purchased at different time. One condominium they owned as the marital community and the other as a Subchapter “S” Corporation but had not filed the tax return for three years or so. They assumed they could transfer by Quit Claim Deed the condominium owned by the Subchapter “S” Corporation to themselves and us their marital tax deduction and avoid capital gains. What they were not aware of was the maximum deduction when selling your primary residence is $250,000 for the wife and $250,000 for the husband. If you purchased your primary residence for $500,000 and are selling it for $1,500,000 you will pay capital gains tax on $500,000 of the gain. In this instance they can sell on of the condominiums as their primary residence and do a tax deferred exchange with the one owned by the Subchapter “S” Corporation.
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
Useful Internet Sites:
www.gethuman.com The gethuman project is a consumer movement to improve the quality of phone support in the US. This free website is run by volunteers and is powered by over one million consumers who demand high quality phone support from the companies that they use. Go here and learn how to get out of “Voicemail Hell”.
http://www.angieslist.com/ For a small monthly fee you can locate a contractor to repair a cabinet or replace some glass or other chores around the house. A rating system from customers who have used the contractors with details about their work, the cost of the job, how responsive and level of professionalism.
https://www.dealmine.com/ This web site tracks over 30 discount programs such as AAA, AARP, American Express, Visa, Delta SkyMiles, American AAdvantage and more. Go here, enter the product you want to purchase and get price comparisons covering the discounts available to you. As an example, AAA members get a 10% discount on all their shopping at Target.
http://filext.com/index.php For the email with a file that won’t open, go here to find out what program to use to open the file. There is more information on the file type than you will ever use. All the good basic information is there along with links to the program vendor where there is sometimes a free evaluation copy available. You can also often find a way to view the file contents that by-passes the required program.
http://www.dealerrater.com/ Save this site so when you are ready to purchase your next vehicle you can be armed with the experience of previous customers. Customers visit the site and rate the dealer on a scale of 1(the lowest) to 5 (the highest). Each dealer is rated on the basis of Customer Service, Quality of Work, Friendliness, Overall Experience and Pricing. The most enlightening evaluations (and often entertaining) are the customers’ vignettes describing their experience doing business with the dealer.
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
EmailJim@JamesBFoster.com
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