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November 1, 2005 - Newsletter for the Maui Market
Don't forget; if you currently own a property and would like to be notified when there is a new listing in your particular complex, we can set you up to automatically receive the new listings via email. The service is also available for those interested in purchasing a condominium, home, land or other property. If you provide me with your first and last name, your email address, and the condo complex you wish to be notified of, we can program the system to notify you as new listings become available.
At the beginning of December, 2004, there were 186 condominiums for sale in the West Maui area and the total value was $156,629,640.00. At the beginning of January, 2005 there were 202 condominiums for sale in the West Maui area and the total value was $181,300,850.00 which translates in to a 9% increase in the number of condominium units listed for sale and 15.75% increase in total value. At the beginning of February, 2005 there were 213 condominiums for sale in the West Maui area and the total value was $192,803,740.00. At the beginning of March, 2005 there were 191 condominiums for sale in the West Maui area and the total value was $175,106,140.00. At the beginning of April, 2005 there were 176 condominiums for sale in the West Maui area and the total value was $166,628,680.00. At the beginning of May, 2005 there were 176 condominiums for sale in the West Maui area and the total value was $166,079,990.00. At the beginning of June, 2005 there were 164 condominiums for sale in the West Maui area and the total value was $161,629,240.00. 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. At the beginning of August, 2005 there were 166 condominiums for sale in the West Maui area and the total value was $154,446,497.00. At the beginning of September, 2005 there are 176 condominiums for sale in the West Maui area and the total value wass $163,215,390.00. At the beginning of October, 2005 there are 177 condominiums for sale in the West Maui area and the total value is $168,464,220.00. At the beginning of November, 2005 there are 199 condominiums for sale in the West Maui area and the total value is $188,377,265.00. The condominium for sale inventory since June, 2005 has been as low as 166 and is back up to 199 for November 1, 2005 . So for sale inventory is increasing.
The total condominium sales for West Maui during the month of December, 2004 was 47 and the total value was $21,974,500.00 during the month of January, 2005 total condominium sales for West Maui was 30 and the total value was $18,658,400.00; during the month of February, 2005 total condominium sales for West Maui was 64 and the total value was $32,380,771.00; during the month of March, 2005 total condominium sales for West Maui was 62 and the total value was $36,995,304.00; for the month of April, 2005 total condominium sales for West Maui was 69 and the total value was $37,681,957.00; for the month of May, 2005 total condominium sales for West Maui was 59 and the total value was $33,964,000.00; for the month of June, 2005 total condominium sales for West Maui was 59 and the total value was $34,565,250.00; for the month of July, 2005 total condominium sales for West Maui was 73 and the total value was $43,969,186.00; for the month of August, 2005 the total condominium sales for West Maui was 40 and the total value was $21,749,104.00; for the month of September, 2005 total condominium sales for West Maui was 51 and the total value was $36,318,521.00; for the month of October, 2005 total condominium sales for West Maui was 32 and the total value was $18,973,291.00 and three of these sales were at The Villas at Kahana Ridge with a value of $1,242,346.00. The total condominium sales for August was 40, September was 51 and October was down to 32.
For previous condo sale details go to our web site, www.jamesbfoster.com and click on Condo Sales. September is shaping up in the West Maui area to be similar to August, using a scale of 1 to 10 with 10 being a good Seller's Market; West Maui is approximately an "8" and defying predictions of a slow down. The real estate market is still very active. The year to date ending September 30, 2005 average price for a home on Maui is $945,098 which is up 29% from a year ago for the same time period ending September 30, 2004 and the year to date ending September 330 2005 average price for a condo on Maui is $514,194 which is up 17% from a year ago for the same time period according to the Realtor Association of Maui statistics.
We have gone in to the MLS data base and pulled information for 2000 through 2004. In 2000 there were 654 condominiums sold in the West Maui area for a total value of $209,064,010; in 2001 there were 605 condominiums sold in the West Maui area for a total value of $271,681,337; in 2002 there were 730 condominiums sold in the West Maui area for a total value of $240,178,915; In 2003 there were 737 condominiums sold in the West Maui area for a total value of $319,748,466; In 2004 there were 699 condominiums sold in the West Maui area for a total value of $374,926,467. Up through October, 2005 we have 578 condominium sales in the West Maui area at an approximate value of $340,829,784.00 . The statistics have bumped up because of the 71 sales at The Villas at Kahana Ridge during 2005 totaling $22,500,727. At the end of October, 2004 there were 587 condos sold in W. Maui for a value of $316,637,992. The total number of condos sold in 2005 is less than 2004 but the dollar volume increased 7.64%.
Mortgage Rates for week of October 31, 2005 from Central Pacific Bank - House/Condo: 5.875% 30 fixed 2.0 pts (6.12 APR); 6.1255% 30yr fixed 1.0 pt (6.25 APR); No Docs: 6.1255% 30yr fixed 1.0 pt (6.25 APR); Interest Only: 6.25% 30 yr fixed 1.0 Pt (6.38 APR); Condotel: 6.25% 30yr fixed 1.0 pt (6.38 APR); Construction: 5.375% 3 yr ARM 1.0 pt (6.61 APR); $1M NIV loan 20% down: 6.375%, 30yr 1.0 pt (6.50 APR); No Income, 80/20 & Stated Land loans (Pts include 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. I also post a Vacation Rental Management Report for your viewing by clicking on that tab in the upper left corner of my web site. 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.
Although there are indications in many areas on the mainland the Hawaii real estate market has not experienced a significant slow down at this time. Properties are taking a little longer to sell and we are seeing some price reductions but the real estate market here remains robust. Overall economic indicators are pointing to a slowdown but we are not yet experiencing it to any degree on Maui .
Maui finished atop the Conde Nast Traveler magazine “Best Island in the World” poll this year and also captured “Top Travel Destination in the World”. We continue to see our tourism traffic increase and occupancy rates for the hotels and vacation rental market increase. Bookings for the fourth quarter of 2005 and first quarter 2006 are very strong.
The Wailea Marriott, in the Wailea area, announced the new owners are going to invest $60 million to bring it back to being a “genuine four-star hotel.”
The Honua Kai project at Kaanapali is proceeding with it’s 242 unit first phase and construction of it’s showroom and sales office across from Star market in Lahaina adjacent to the Westin Time Share development.
We are at that time of the year again when you need to start organizing your end of 2005 tax information. If you are contemplating selling any of your real estate go through and calculate what the tax impact will be compared to selling it in 2006. You also have time to determine what amount you are going to put in to your retirement plan such as your Roth IRA, Sep/IRA, Education Savings Account, or 401-k, 403b, 457, or ESOP at the beginning of 2006.
Ten things you and your accountant need to review at years end for your tax return are :
- Deduct principal residence acquisition loan fee if you bought a home last year.
- Remember to deduct home mortgage refinance loan fees over the life of the home loan.
- Deduct loan fees not previously deducted from a prior home loan refinance.
- Deduct any mortgage prepayment penalty you paid.
- If you changed job location and your residence, your moving costs may be deductible.
- Remember to deduct any casualty loss.
- Deduct pro-rated property tax in year of home sale or purchase.
- Deduct pro-rated mortgage interest in the year of home sale or purchase.
- Deduct prepaid property taxes and mortgage interest.
- If your home is on leased land, you may be entitled to deduct ground rent.
For your primary residence you have a $250,000 (up to $500,000 for a qualified married couple) tax-free principal residence sale offset for the capital gains tax. The Internal Revenue Code 121 requires the home to have been owned and occupied by the seller(s) at least an “aggregate” 24 of the 60 months before the sale. There is no limit to the number of uses of the IRC 121 exemption but it cannot be used more frequently than every 24 months. The occupancy time need not be continuous so if you occupied your home for 12 months after its purchase, and then you rented it to tenants for two years before moving back in a year ago, you meet the two out of last five years occupancy test. If just one spouse meets the test, then only a $250,000 exemption is available. The method of holding title is irrelevant. Title can be in one spouse’s name alone, or in both spouse’s name. Or title can be held in a living trust, providing the ownership and occupancy tests are met. There are no age restrictions. They were eliminated in 1997, as was the need to buy a replacement principal residence of equal or greater cost.
It is very important to have a separate file for each property you have purchased with copies of the real estate contract and addendums, your title insurance policy, copy of your closing statement, loan documents (promissory note, deed of trust or mortgage), warranties, surveys and etc. At the beginning of each year it is a good idea to coordinate with someone to update the value of your property and have a Net Proceeds Statement prepared as property values change. This outlines the various costs a seller has at closings and is an important item to have in your files. If you would like to know what your net proceeds would be if you sold at a particular price, let us know and we can prepare one for you and email you the document in an ADOBE pdf format. If you are not a Hawaii resident, you will have to deal with the Hawaii Real Property Tax Law HARPTA when you property sells and 5% of the selling price is withheld unless you do a tax deferred exchange or have transferred title to a Hawaiian registered entity such as a Limited Liability Company. HARPTA is not a tax . This is a common misunderstanding. HARPTA was enacted to provide a means for the state to collect capital gains taxes from absentee owners. HARPTA is very similar to laws passed by several o the r states as well as to a federal law that applies to non-US citizens that sell real estate. These are items to discuss with your attorney and accountant.
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 visit www.ixg1031.com. They provide free consulting and we have worked with them on many tax deferred exchanges. 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.
For those who have investment property and would like to trade it for their “dream home” and not pay the capital gains tax on the investment property they can trade the investment property into a principal residence and eventually sell and claim the $250,000 or $500,000 tax exemption of Internal Revenue Code 121. The “dream home” property must be a rental at the time of acquisition. Most tax advisers suggest renting it for at least six to 12 months after purchase to show rental intent. Then you can move in and convert it to your personal residence. Remember, before you can sell the acquired residence and claim your $250,000 or $500,000 principal residence exemption of IRC 121, the October 22, 2004 tax changes of Internal Revenue Code 121(d)(10) now require you to own the acquired residence at least five years and live in it as your principal residence at least 24 of the 60 months before its sold.
For those of you who enjoy or use the internet on a regular basis or use your computer frequently, here are some interesting web sites you may want to visit.
http://www.finaid.org - For those parents or students that are interested in financial assistance, here is an excellent web site. This public service, award-winning site has grown into “the most comprehensive annotated collection of information about student financial aid on the web.” In addition to tons of valuable information, there are links to the major scholarship and student loan search programs.
http://researchworldwide.com - Need a real estate research report? Want to pick from 1757 worldwide locations? How about information on worldwide publicly traded real estate companies? This independent research resource maintains a database of close to 15,000 real estate specific research reports searchable by country and keyword. For example: Type “condominium conversion” into the search box and the following records appear: Association (1), Strategic Views (2), Who’s Who Profiles (5), Publicly Traded Company (1) and Research Reports (7). Neat targeted real estate research resource.
http://www.forbes.com/lists/2005/54/Worth_1.html - Interested in knowing who is on the list of the “400 Richest Americans”. This intriguing place allows you to sort by name, rank, age, residence, net worth and the source of their wealth. Want to see what your favorite billionaire looks like? Each listing has a photo plus a quick story telling how each arrived in this lofty perch (even if by inheritance).
http://earth.google.com - Here is a way to solve those computer or tech problems the easy way and what tech support does not tell you. There is an incredibly effective way to quickly come up with the solution to most computer problems. Next time you get an error message, rather than sit on hold for an hour, simply type the error message into your favorite search engine (Google, for example). The odds are that your problem has been discussed before and your search will bring up the solution in a nanosecond rather than an hour or so. The tech support person you waited an hour for probably did the same thing.
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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