December 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 were 176 condominiums for sale in the West Maui area and the total value was $163,215,390.00. At the beginning of October, 2005 there were 177 condominiums for sale in the West Maui and the total value was $168,464,220.00. At the beginning of November, 2005 there were 199 condominiums for sale in the West Maui area and the total value was $188,377,265.00. At the beginning of December, 2005 there are 231 condominiums for sale in the West Maui area and the total value is $222,669,115.00. The condominium for sale inventory since June, 2005 has been as low as 166 and is back up to 231 for December 1, 2005 . So far 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 for the month of November, 2005 total condominium sales for West Maui was 38 and the total value was $28,453,380.60 . The total condominium sales for August were 40; September was 51; October was 32; and November up to 38.

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 a little less than an "8" and beginning to show a few signs of a slowing market, although the Maui real estate market is still very active. The year to date ending October 31, 2005 average price for a home on Maui is $937,714 which is up 27% from a year ago for the same time period ending October 31, 2004 and the year to date ending October 31, 2005 average price for a condo on Maui is $520,033 which is up 18% 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 November, 2005 we have 623 condominium sales in the West Maui area at an approximate value of $373,482,348.00 . At the end of November, 2004 there were 652 condos sold in W. Maui for a value of $352,961,967.00 . The total number of condos sold in 2005 is less than 2004 but the dollar volume increased 5.8%.

Mortgage Rates for the week of November 28, 2005 from Central Pacific Bank -House/Condo: 5.75% 30 fixed 2.0 pts (5.98 APR); 6.0% 30yr fixed 1.0 pt (6.13 APR); No Docs: 6.125% 30yr fixed 1.0 pt (6.25 APR); Interest Only: 6.375% 30 yr fixed 1.0 pt (6.50 APR); Condotel: 6.125% 30yr fixed 1.0 pt (6.25 APR); Construction: 5.375% 3 yr ARM 1.0 pt (6.61 APR); $1M 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.

The Maui real estate market, booming in 2003 and 2004, is slowing in 2005. Single family homes through October, 2005 increased a little over 8% across the Island led by strong results in Central and Upcountry Maui. Condominium and Land unit sales Island-wide for the year through October declined by 11% and 15%. This slowing in unit transactions was offset by increases in average sales price: Homes 27% -Condominiums:18% - Land: 42%.

Some prognosticators state the Maui real estate market is, on average, about a year behind what happens in California . What happens there will happen here and if California slows down we will also, just a little later. We cannot continue at the pace we have had, a 35 percent appreciation in the first six months of 2005, but will the bubble burst or just slowly come to a gentle landing? I believe it will be a gentle landing. Our prices are still high and actually climbing, but I think we will not have a sudden dramatic decrease in prices. Maui Sellers might need to have a little reality check on current list prices, but values should not experience a rapid decline as some pessimists are predicting.

Maui 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 .

The Whales are back! The earliest was a sighting October 13, 2005 of f Poipu Beach , Kauai and on Thursday, November 10, 2005 around 6:30 AM Jacqueline Bentley, volunteer coordinator at the Pacific Whale Foundation, was traveling along South Kihei Road in the vicinity of Kihei Canoe Club. She looked out and saw a dorsal fin, then a tail fluke and then a bit of a spy hop which is when a whale will poke their head out and hold that position for several seconds.

A second sighting was reported recently by Maui Dive Shop’s boat Maka Koa, which saw a pair of humpback whales – a mother and calf – about a quarter-mile off McGregor Point and Pacific Whale Foundation’s catamaran Manute’a recently saw two humpback whales, believed to be one adult female and a yearling calf, accompanied by eight bottlenose dolphins, about three miles off Launiupoko. These first reported Maui sightings of the season are later than normally expected as last year the first sighting was even earlier, October 23 rd. The first sighting of 2003 was on October 21 st, on November 3, 2000 and October 31, 2001 .

The Royal Lahaina is set for “revitalization” that will reduce the number of visitor rooms from 583 to 455. The complex north of the Sheraton on Kaanapali Beach , is a mix of hotel structures and cottages scattered over 27 acres and is scheduled for renovations that will cut the number of rooms while adding amenities, including an expanded pool/water feature.

The Honua Kai project at Kaanapali is almost complete with the construction of it’s showroom and sales office across from Star market in Lahaina adjacent to the Westin Time Share development and are doing landscaping and putting on the finishing touches. Some of the prospective buyers who are on the reservation list are going through the decision making process of whether to put up the substantial deposit required to proceed.

As we near the end of the year thoughts turn to how to minimize the tax liabilities for 2005and beyond. Aggressive tax shelters are still in the crosshairs of the IRS. Some suggestions as strategies for trimming your tax bill are: 1) Charitable Remainder Trusts (CRTs) – It can reduce capital-gains, income and estate taxes for the philanthropically minded. The donor gives assets to an irrevocable trust and receives a regular payment stream for a period of years. At the end of the trust’s term, what is left goes to a designated charity. The heirs can be protected by purchasing a life insurance policy using proceeds from the trust. 2) Private Annuity Trusts (PATs) – It allow individuals with appreciated assets, such as real estate, to defer capital-gains taxes and reduce estate taxes. Appreciated assets, such as real estate are transferred to a trust for a series of annuity payments that last the rest of your life, which spreads out the taxes over the time. 3) Family Limited Partnerships – This process can cut gift and estate taxes when assets, such as a family business, are transferred to children. The parents transfer asset ownership to a partnership formed with their children. Most of the shares given to the children are from the parents’ estate. The kids are typically limited partners, with less control over management decisions, so the value of their shares might be discounted by 20% or more, lowering gift taxes.

If you have Living Trusts or contemplating establishing one, all the income earned by the trust is attributed to you and you pay tax on it just as if the trust did not exist, so you should not get a separate Tax ID number for the trust as it will just get confusing. The Living Trust unlike an Irrevocable Trust does not typically reduce estate taxes. With a Living Trust you have to pay to convey assets to the Trust, whereas with a will you simply state to whom you want the assets to go. You still need a will as your Living Trust will only cover what property you have conveyed into the Living Trust, as estate practitioners will typically use a “pour over” will in conjunction with the Living Trust.

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 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.smarter.com/sms/ - These folks maintain a deep searchable database of online coupons and cash back rewards and help consumers make smarter buying decisions with their comparative price database. The most intriguing feature here is their mobile comparative shopping system. You could be standing in the store looking at the electronic marvel you are contemplating purchasing and before you buy you dial out on your cell phone and send smarter.com the product part number in a text message. Then the system responds with the lowest available price online, usually within one minute. The cost for this service is free.

http://www.airtroductions.com - Remember sitting next to someone that talked continuously throughout your airline flight? Now you can use part of that time buckled in your seat talking to some one who could broaden your business or cultural horizons. Here is a new service that helps business travelers hook up by matching itineraries by checking the background and interests of others registered here for your flight. Keep in mind, of course, that the other passengers are "self described". There is no cost to get registered for this interesting service.

http://books.google.com - Find the book you want, complete with text. Google has a plan to make the collections of some of the world's leading libraries available on the Web. They have started to scan and digitize material, creating a huge virtual library for books, research papers and special collections. Visit this beta project and do a word or phrase search that will yield every book in the huge database that refers to the phrase. For example, type in "real estate appreciation" and up come links to 62 books. With your Goggle account you can login and by clicking a book title you'll see information about the book plus your search term highlighted in the book’s text. You may also view sample pages or even the entire book if it is out of copyright.

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

Chase ‘N Rainbows
Real Estate Inc.
P.O. Box 10398
Lahaina, Maui, HI 96761
Email: jim@jamesbfoster.com