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March 1, 2009 - Newsletter for the Maui Market
Aloha! Here is your eNewsletter for the Maui Market from Jim Foster
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Maui Real Estate – I have an opportunity to speak with a variety of buyers, sellers, lenders, appraisers, throughout the United States and currently there is a lot of fear and uncertainty in the market. DON’T DESPAIR! There are buyers in the market that will buy and they are proceeding cautiously. Maui Real Estate is an excellent long term investment and it is subject to ups and downs but an investment here is fairing much better than many other alternatives.
As I indicated in the newsletter last month, contrary to what is heard often in the market place there are buyers, many are waiting on the side-line trying to anticipate the bottom of the market but there are also many buyers in the market to purchase well located property that are priced aggressively. Sellers who are motivated to sell and willing to negotiate with buyers at realistic values can find buyers in the current market.
Maui is a special place and people continue to have an interest in buying here.
There is funding available for buyers who require loans but the down payment typically needs to be in the 25% to 30% range and the buyers require excellent credit. (See current mortgage rates below)
To view the 2007 & 2008 Year End Statistics go to http://www.jamesbfoster.com/condosales.php and click on Maui MLS Statistics 2007 & 2008.
The West Maui real estate market continues to favor Buyers with Sellers willing to negotiate their prices. The current inventory of West Maui condominiums for sale is now at 787 (at 3-2-09) and on the same month in 2007 it was 460. Properties are requiring more time to sell such as five to six months 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. In the current Maui real estate market, the for sale inventory continues to increase and prices are typically flat or have decreased.
Condominiums for Sale
2007 - In the West Maui real estate market, at the beginning of January, 2007 there were 410 condominiums listed for sale 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 condos with the total value of $420,941,268.00; April, 2007 - 479 condos with the total value of $429,708,159.00; May, 2007 - 472 condos with the total value of $424,095,260.00; June, 2007 - 455 condos with the total value of $415,187,129.00; July, 2007 - 475 condos with the total value of $432,797,008.00; August, 2007 - 469 condos with the total value of $420,479,301.00; September, 2007 - 474 condos with the total value of $430,914,408.00; October, 2007 - 471 condos with the total value of $423,631,002.00; November, 2007 - 466 condos with the total value of $416,008,907.00; and December, 2007 - 485 condos with the total value of $421,080,117.00. The average number of condominiums for sale on West Maui for 2007 was 462 and the average total value was $416,730,118.25.
2008 - At the beginning of January, 2008 there were 511 condominiums listed for sale with the total value of $445,656,447.00; February, 2008 there were 559 condos with the total value of $500,946,603.00; March, 2008 - 595 condos with the total value of $529,779,322.00; April, 2008 - 647 condos with the total value of $606,635,687.00; May, 2008 - 634 condos with the total value of $583,391,821.00; June, 2008 - 644 condos with the total value of $590,736,279.00; July, 2008 - 680 condos with the total value of $662,919,268.00; August, 2008 - 703 condos with the total value of $693,069,348.00; September, 2008 - 693 condos with the total value of $654,411,079.00; October, 2008 - 673 condos with the total value of $620,032,454.00; November, 2008 - 715 condos with the total value of $652,379,032.00; and December, 2008 - 729 condos with the total value of $660,335,998.00. The average number of condominiums for sale on West Maui for 2008 was 648 and the average total value was $604,191,111.50.
2009 - At the beginning of January, 2009 there were 742 condominiums listed for sale with the total value of $693,143,047.00; in February, 2009 there were 757 Condos with the total value of $709,234,346; and in March, 2009 there were 787 Condos with the total value of $681,864,289.
The condominium for sale inventory since July, 2005 has been as low as 165 and is up to 787 for March 2, 2009. The “for sale” inventory on West Maui continues to increase.
Condominium Sales
2006 - The total condominium sales on West Maui during the month of January, 2006 there were 42 sales and the total value was $28,574,643.00; February, 2006, there were 48 sales with total value of $32,995,078.00; March, 2006 - 40 sales with total value of $32,199,584.00; April, 2006 - 43 sales with total value of $41,898,525.00; May, 2006 - 51 sales with total value of $39,644,886.00; June, 2006 - 40 sales with total value of $32,533,500.00; July, 2006 - 30 sales with total value of $26,212,000.00; August, 2006 - 28 sales with total value of $31,885,500.00; September, 2006 - 30 sales with total value of $24,770,000.00; October, 2006 - 29 sales with total value of $23,359,299.00; November, 2006 - 22 sales with total value of $13,414,600.00; and December, 2006 there were 30 sales with total value of $23,169,999.00. For 2006, the monthly average sales were 36 sales per month with the average sales value of $29,221,467.83 per month.
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; February, 2007 there were 26 sales with total value of $16,330,000.00; March, 2007 - 32 sales with total value of $24,121,000.00; April, 2007 - 27 sales with total value of $16,766,000.00; May, 2007 - 28 sales with total value of $30,774,929.00; June, 2007 - 28 sales with total value of $18,917,000.00; July, 2007 - 21 sales with total value of $13,314,200.00; August, 2007 - 32 sales with total value of $33,258,999.00; September, 2007 - 23 sales with total value of $24,701,900.00; October, 2007 - 42 sales with total value of $28,159,900.00, however this included a packaged sale of 19 units at Aina Nalu in Lahaina; November, 2007 - 15 sales with total value of $15,930,000.00; and December, 2007 there were 13 sales with total value of $13,335,500.00. For 2007, the Month of December saw the lowest number of sales in 2007. The monthly average sales were 27 sales per month with the average sales value of $22,391,702.33 per month.
2008 - The total condominium sales for West Maui during the month of January, 2008 there were 20 sales and the total value was $16,184,800.00; February, 2008 there were 20 sales and the total value was $14,414,584.00; March, 2008 - 26 sales and the total value was $20,079,000.00; April 2008 - 28 sales and the total value was $20,488,500.00; May 2008 - 22 sales and the total value was $20,055,000; June 2008 - 14 sales and the total value was $11,957,000; July 2008 - 10 sales and the total value was $6,955,999; August 2008 - 13 sales and the total value was $8,055,000; September 2008 - 12 sales and the total value was $6,707,122; October 2008 - 12 sales and the total value was $8,042,500; November 2008 - 10 sales and the total value was $8,444,000; and December 2008 there were 6 sales and the total value was $6,265,000. For 2008, the average monthly sales were 16 sales per month with the average sales value of $12,304,042.08 per month.
Condominium Sales in 2009 - The total condominium sales for West Maui during the month of January, 2009 there were 17 sales and the total value was $12,880,000.00; February, 2008 there were 16 sales and the total value was $23,191,650.
We have gone in to the Maui MLS database and pulled information for 2000 through 2008. 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 - 327 condominiums for a total value of $271,290,428.00; and in 2008, - 193 condominium units sold in the West Maui area for a total sales value of $147,648,505.00.
For previous condo sale details, go to our web site, http://www.jamesbfoster.com/condosales.php then scroll down to your choice and click to open the ADOBE pdf. For the time period of 1/1/2009 to 1/31/2009 the average price for a home on Maui was $889,234 which is up 4% for the time period of 1/1/08 to 1/31/08 when the average price was $857,857. For the same time period the average price for a Fee Simple condo on Maui was $759,599 which is down 21% for the same time period when the average price was $957,581 according to the RAM (Realtor Assoc. of Maui) statistics. Condo sales in Wailea, Makena, Kapalua and Kaanapali are having an impact on the Fee Simple Condo average price by increasing it.
Mortgage Rates for week of March 1, 2009 - from First Hawaiian Mortgage - Rates: Houses & Condos Full docs: 4.875% 30yr fixed 1.75 pts (5.112 APR) 5.125% 30yr fixed 1.00 pt (5.320 APR) 5.50% 30yr fixed -0- pts (5.529 APR) Stated Income - No longer available: Interest Only: 6.125% 30yr fixed 1.25 pts (6.259 APR) To $1M: 7.375% 30yr fixed 1.75 pt (7.571 APR) 6.75% 30 yr fixed 1.25 points for condotels.(6.905 APR) (Points include origination fee)
Mortgage Rates for week of February 5, 2009 - from First Hawaiian Mortgage - Rates: Houses & Condos Full docs: 4.875% 30yr fixed 1.75 pts (5.112 APR) 5.125% 30yr fixed 1.25 pt (5.320 APR) 5.375% 30yr fixed 1.00 pts (5.550 APR) Stated Income - No longer available: Interest Only: 6.375% 30yr fixed 1.125 pts (6.554 APR) To $1M: 7.375% 30yr fixed 1.00 pt (7.487 APR) 6.50% 30 yr fixed 1.50 points for condotels.(6.737 APR) (Points include origination fee)
Mortgage Rates for week of January 5, 2009 - from First Hawaiian Mortgage - Rates: Houses & Condos Full docs: 4.625% 30yr fixed 1.625 pts (4.848 APR) 4.875% 30yr fixed 1.00 pt (5.045 APR) 5.250% 30yr fixed .25 pts (5.355 APR) No Stated Income Available: Interest Only: 5.875% 30yr fixed .50 pts (6.008 APR) To $1M: 5.500% 30yr fixed 1.00 pt (5.60 APR) 5.75% 30 yr fixed .50 points for condotels.(5.882 APR) (Points include origination fee)
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 and past news about what is going on in Maui & Hawaii
Weather - As I am writing this newsletter today, March 4, 2009, it is about 76 degrees and cloudy with overcast. Over the next ten days we are expecting some sunshine, occasional showers and clouds and sunshine.
West Maui Hospital – Hurray!!!! The third and final hearing was conducted on Maui on March 4th for the approval of the Certificate of Need (COD) and the final review panel gave its approval so the West Maui hospital is a go and all that remains is for the head of the State Health Planning and Development Agency (SHPDA) head to sign off on the $45 million facility. www.westmauihospital.org
Lawsuit Filed by 33 Buyers at Honua Kai –Richard Rost, Maui Attorney, has filed lawsuits now for twenty seven buyers in phase one, which opened this month, and six in phase two, which is under construction and is expected to increase toat least 40. The buyers are seeking refunds of deposits totaling between $7 million and $8 million.
Several buyers are objecting that they were told a Duke's restaurant, as operated by the T S Restaurants chain, would be on the property at North Beach (Keka'a) at Kaanapali.
They later learned that there will not be a Duke's, the lawsuits say, and that the developer never applied for the special management area permit that would have been needed for a 7,500-square-foot restaurant on the beach. (Honua Kai did get a permit for a smaller restaurant building, although at its grand opening, managers said construction was being deferred until a later stage of construction.) The buyers seeking to back out represent 8 percent of the 318 units in phase one of Honua Kai.
Maui Business Leaders Believe Maui County Can Endure The Downturn - They believe it's just a matter of time before the national economy corrects itself, but there's plenty that Maui County can be doing to coax dollars out of the pockets of tourists and the federal government as soon as possible. The County should be prepared to obtain as many federal stimulus dollars as possible by having infrastructure projects ready to proceed. Tourism officials have been working harder than ever to talk to the media and vacation planners to publicize that this is the least expensive time in four years to visit Maui.
Basil Tomatoes Italian Grille On The Way To The Royal Lahaina – A Secret in the Kaanapali area. You take Kaanapali’s Kekaa Drive north right behind the Fairway Shops, paralleling Honoapiilani Highway to the resort’s entrance, and there on your left sits the rustic, homey Basil Tomatoes Italian Grille Restaurant. Fine Northern Italian cuisine in a small, intimate restaurant is located on the fifth green of Kaanapali’s North Golf Course with ample complimentary parking. The Applegates, who own the restaurant, grow 4,000 tomato plants in greenhouses on the 4.5 acre farm and provide produce to some of Maui’s finest restaurants. They also grow lemons, limes, bananas, cucumbers, zucchinis, eggplants, papayas and every herb imaginable. Come to Basil Tomatoes Italian Grill for a late breakfast of Eggs Any Style with your choice of bacon or sausage and cheese, bell peppers, onions and fresh tomato at no additional charge. For prudent diners who don’t want to dine late, a lighter luncheon fare is served if you are seated before 5 p.m. From 5 to 6 p.m., you’ll receive 50 percent off the second entree on the dinner menu of equal or lesser value. For reservations, call 1-808-662-3210.
Honoapiilani Park opens to the public at North Beach - Added to the West Side inventory of parks for the public at the North Beach subdivision. An oceanside boardwalk connects the North Beach Subdivision running from the south end at Kahekili Beach Park to the north at Honoapiilani Park. The almost three-acre recreation area with its access along Lower Honoapiilani Road across from Honokowai Plaza is Phase A of a two-stage development. With 80 parking stalls, other Phase A amenities include four picnic tables, four barbecues, a comfort station with washroom facilities and outdoor showers. Phase A is the public connection to the beach front and is why it was organized to complete first. Open daily, it is closed, but not locked, between the hours of midnight to 3 a.m. The second stage is planned to come online in mid-2010. Phase B is about two acres in size and will contain more open space. It will also have four picnic tables and four barbecues. It will have approximately 25 additional parking stalls.
The Two Phases, A and B, will be a single park on approximately 4.75 acres with 105 parking stalls.”
The Ritz-Carlton Club and Residences at Kapalua Bay - The Kapalua Bay venture has concluded a financing agreement to complete construction of its joint venture project, The Ritz-Carlton Club and Residences at Kapalua Bay. After filing for bankruptcy in September 2008, the joint venture’s lead lender, Lehman Brothers Holdings Inc., discontinued its funding of the project. On Jan. 28, 2009, the United States Bankruptcy Court approved terms of a new loan agreement sufficient to fully fund completion of the development. Under the new agreement, Central Pacific Bank replaces Lehman as the administrative agent under the loan. Lehman has agreed to provide $35 million of the $120 million in completion financing, with other co-lenders, including Deutsche Hypothekenbank and Landesbank Baden-Wurttemberg and Marriott International Inc., providing the balance. The development did not lose a day of construction and were able to sustain the jobs of hundreds of construction workers from our community. The Ritz-Carlton Club and Residences at Kapalua Bay will offer 84 private ownership residences and 62 residences sold in deeded, one-twelfth fractional ownership interests, along with amenities on a 24-acre oceanfront site.
Mauian A Participant In Amazing Race - Lahaina resident Michael Munoz who enjoys singing karaoke at the Lahaina Kobe Japanese Steak House and his brother, Mark, from Los Angeles, are contestants on the CBS reality show. They both professional stuntmen. Michael commutes to Los Angeles, where he has done stunts and acting in television shows and movies such as the "Tonight Show with Jay Leno"; played a monster in the movie "Van Helsing"; and played a child hanging from a chandelier in the movie "Cheaper by the Dozen." He and his brother have also worked on the "Spider-Man" films. On Maui, Munoz said, he likes to surf and swim. You can find Mike at Puamana and "Shark Pit" surf spots. His wife, Marisa, also enjoys the water and remains on Maui when Munoz goes to work in Los Angeles.
Remodeling or Upgrading condominium or house - It is critical to have a licensed contractor and subcontractors with excellent references and experience working with Maui properties if you will be Remodeling or Upgrading a condominium or house Should you need assistance or referrals for a property you own or need an estimate for property you are contemplating purchasing, all Jim Foster on his toll free number 1-888-661-7994 or send him an email to Jim@JamesBFoster.com and we can provide names and contact information.
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 the web site for AIHM at www.aihm-maui.org 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
Real Estate & Financial Planning Tips: This month I have incorporated an excellent article written below by Treavor Mosbaugh with Welton Street Investments. With so much negativity in the market place this provides a different perception than what we are exposed to on a daily basis.
THE PERCEIVED ABSENCE OF CONTROL IN THE ECONOMY
By Treavor Mosbaugh Welton Street Investments www.ticstrategy.com
As we ponder the future of real estate it's hard to see anything positive, but current conditions actually provide evidence that a big opportunity may be on the horizon. There is a psychological condition called "learned helplessness" in which a human being has learned to act or behave helpless under certain circumstances. The theory suggests this condition results from a perceived absence of control over the outcome of a situation. I believe real estate owners are currently experiencing a glimpse of this condition and it is important for everyone to put things into perspective.
We have been here before. Most everything that we have witnessed in the financial markets has happened in the past and the markets recovered; bank failures, takeovers, buybacks, credit crunches, market collapses, cash infusions - it has all happened before, from 1970 to present[1]. Remember Chrysler's collapse, New York City nearing bankruptcy, Latin America's debt crisis, U.S. stock market crash of '87, Drexel Burnham's bankruptcy, Solomon T-bill scandal, Kidder Peabody's crisis, Asian financial crisis, Enron... you get the picture.
Once we have all the information, once government responds, once certainty reigns, markets recover. Discovery - Shock - Response - Recovery. President Obama recently signed The American Recovery and Reinvestment Act, a $787 billion stimulus package, the most unprecedented recovery package of our time. Whether you personally agree with the plan or not, it is clear the "response mode" is in full effect.
We should be mindful of fundamental demographics and that the U.S. population is still growing at a rate of approximately 2.5% per annum. This creates a demand for goods and services[2], the fundamentals needed for a growing economy. Further, the current employment decline is expected to be milder than in previous recessions as most companies have remained better capitalized than in previous expansions. Growth is expected to commence toward the second half of 2009.[3]
In real estate, we have recently witnessed a significant decline in investment property transactions due to the lack of affordable financing. There has been an obvious decline in market prices due to a rise in cap rates and other economic factors. Both the real estate investment marketplace and the 1031 exchange (an explanation of 1031 exchanges is available at www.irs.gov) industry are primarily driven by transaction activity, not by market prices. Market prices are simply a reflection of a price that people are willing to pay for a property in a given market. If a real estate owner has made a cognitive decision to buy or sell, the decision will be made despite the current market prices so long as an agreement can be made. If you are an investor who has held property for a long period of time and have built up substantial equity, then the opportune time to sell is dictated in part by your individual circumstances and not necessarily reliant on external market forces. Notwithstanding today's doom and gloom headlines, there may very well be strong arguments in favor of selling now as opposed to waiting around for the market to recover.
Lower interest rates, availability of financing and attractive prices will help bring real estate investors back to the market. Economists expect transaction activity to increase as much as 15 percent in 2009. Toward the third and fourth quarters, there should be as much as a 30 percent increase in transaction activity over current levels.[4]
Historically, when there have been extreme levels of contraction, they have been followed by extreme levels of expansion. Our economy has proven itself to be resilient and able to rebound abruptly. Similar to previous downturns, many investors have a perceived powerlessness that leads them to assume this time around we may not get a rebound. However, all past economic downturns have presented a window of opportunity. The effects have yet to be felt by the potential liquidity infusion, the stimulus, the initiatives to create jobs, and lenders re-entering the market. But when those changes eventually take effect, they will more than likely be positive and recovery will begin.
Warren Buffet said it best, "Be fearful when people are greedy and greedy when people are fearful." The psychological shift doesn't happen overnight - it takes people time to build up the confidence to invest again. The question then is - when will a real estate investor transition from their "learned helplessness" and take advantage of the opportunities that currently exist?
1] Genworth Financial, November 2008
[2] Bureau of the Census
[3] Dividend Capital, October 2008
[4] Grubb & Ellis, January 2009
In past newsletters, I have mentioned that the easiest way to minimize the tax impact when selling is a tax deferred exchange. 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) that qualify for replacement properties.
If you want to learn more about Tenant In Common (TIC) interests and how they can solve the problem of sellers trying to complete a tax deferred exchange here is a web site that you can visit for a short and informative explanation of the process and how it can benefit you. www.ticstrategy.com
Many property owners who currently own underperforming assets can sell those assets and take advantage of tax deferred exchanges, turning 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
If you are contemplating selling highly appreciated real estate during 2009 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.benjaminmoore.com How would you like to see the results of your redecorating without picking up a paint brush? With this great tool you can change the color combinations in your home with a mouse click and if you don't like the looks of your creation just start over and see another masterpiece in two minutes. This color visualization program allows you to select an exterior home or interior room image from a big pictorial library. You can even import an image of your own home and experiment with colors to your heart’s content.
www.google.com/mobile/default/latitude.html Google has a new gadget that allows you, your friends and family, to keep track of each other’s meanderings. Once set up with Google Latitude, you can view your friends' locations and status messages on a full screen map in real time - either from your desktop or your cell phone. You can quickly contact them with SMS, IM, or a phone call.
www.freecycle.org This web site is a place to go when you want to give away things you no longer need or what others are offering to give away with no strings attached. This extensive network is made up of over 4,600 local groups with over 6 million members across the globe. It's a grassroots and entirely nonprofit movement of people who are giving and receiving stuff for free in their home towns. Each local group is moderated by a local volunteer and there is no cost to belong. The network keeps over 300 tons a day out of landfills by turning trash into treasure.
www.bubblecaption.com To have some fun with a photo of your favorite person or not so favorite go to this web site where you can easily and quickly add bubble captions to your photos and images like you see in the newspaper comics. Just upload the photo of your choice, drag and drop a bubble onto your photo, enter some text and you're ready to regale the world with your entertaining work of art! You can add your creation to family albums and online social network places like MySpace -- or wherever you decide to share your captioned photo.
Kindest Regards, Jim Foster
Chase 'N Rainbows Real Estate, Inc.
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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