The Honolulu Board of Realtors has released their latest monthly Oahu residential real estate statistical report for August 2017. You can view the reports here: General Housing Statistics Report and Local Neighborhood Market Update.
(Following article will be published in The Kahala News’ September/October 2017 issue.)
Our last report was for the March/April edition of The Kahala News and the headline was “The Market for Kahala Homes Will be Stable in 2017”. As of August 21, 2017, the market for Kahala and all of East Oahu has strengthened.
There were 28 sales between January 1, 2016 to August 21, 2016 for Kahala, including Waialae Golf Course and Kai Nani. This year there have been 35 sales through August 21, 2017. The high sales up to that date were 4504 Kahala Avenue for $4,580,000 where Choi International brought the Buyer and a private sale of 1015 Kaimoku Place for $11,500,000 where Choi International also brought the Buyer.
The obvious acceleration of sales in Kahala matches the strength that we are seeing across the board in East Oahu. We would characterize the market as strong and the market may be strengthening. In the trenches, we are seeing more activity, more showings, more offers and more properties in escrow in comparison to 2016.
Bay Area Luxury Brokers View the Luxury Market as Strong
Our affiliate, Pacific Union Real Estate is the largest real estate company based in the San Francisco Bay Area. In reviewing the activity in Silicon Valley through Quarter 2 of 2017, they found “renewed enthusiasm” of buyers, with more homes engaged in bidding wars, a median price of $3,270,000 and a 9% overall increase in prices. Their prediction was that September would kick off another wave of buying in what is a strong market.
This contrasts with January 2017 predictions that the San Francisco Bay real estate market would be flat in 2017 much like 2016. The market has exceeded expectations.
So the picture is improving in Silicon Valley, which has a direct consequence to our market here. Choi International advertises extensively in Silicon Valley Magazines for this reason. Many of our transactions involve Silicon Valley clients and affiliating with the Bay Area’s largest Real Estate Company helps. California is our leading market in the continental United States with 263 transactions in the first 6 months of the year. This compares with 149 transactions from Japan and 13 from China.
Source: Title Guaranty Bulletin for January-June 2017 OAHU – Top Foreign and U.S. Buyers of Oahu Property, released Mid- August 2017
The China Market
As we reported in the March/April Issue, China instituted a very strict new monetary policy that reduced the amount of money that could be brought out of the country. According to Maggie Huang (RB-22050), Choi International’s Vice President of the Greater China Region, there should be little effect on the Honolulu Luxury Market. Basically, the Chinese who can afford luxury homes have already gotten their money out of China or have income outside of China. Maggie advises that Chinese clients who have yet to get their money out can cause unnecessary delays and complications in transactions.
The Japanese Market
There is some effect on Japanese Buyers due to the fluctuation in the yen versus the dollar according to Mami Takeda (RB-22153), our Vice President of Japan Sales. When the yen is in the 120+ range to the dollar, there is less incentive to buy. When it is in the 100-110 yen range, as it has been recently, the incentive for Buyers is higher. Despite recent fluctuations in the yen, the expectation is that the Japanese will continue to comprise the majority of foreign buyers. A lot of purchases have been made in the new Kakaako condominiums and especially in the $1 million to $3 million range, which appears to be a comfortable price point.
We are currently more optimistic about this year. The trend is clearly for more sales in Kahala and the same could be said of much of East Honolulu. It is encouraging that our affiliates in California and the Bay Area have experienced a jump in sales activities and prices. For the first half of 2017, the leading foreign buyers for Honolulu were as follows:
South Korea 11
Hong Kong 5
The leading continental United States Buyers were from California 263, Florida 49, Texas 46 and Washington 30.
Source: Title Guaranty Bulletin for January-June 2017 OAHU – Top Foreign and U.S. Buyers of Oahu Property, released Mid-August 2017
It is easy for us to overlook the advantages that Hawaii offers for buyers from the mainland and from foreign countries. For mainlanders, the allure of Hawaii is evident with Mark Zuckerberg buying 100+ acres of Kauai and Larry Ellison buying Lanai. Hawaii is a great product, one that is easy to sell. For example, looking at a presentation that we made in Hong Kong to the local press, we noted the things that we so often take for granted. Whereas Beijing regularly has air pollution measuring in the toxic range hazardous to humans, Honolulu has really clean air. Our water quality is great, but the safety of our food chain is also as important as clean air and water. The diversity of Japanese, Chinese, Korean and Pacific Rim cultures provides a welcoming environment that cannot be duplicated on the mainland. Hawaii continues to be a Paradise on Earth, which is the reason our real estate market continues to flourish.
This Summer started with more activity in all segments of the real estate market, but also in the high end of the market. Our Summer season begins in late June and lasts through mid-September, occasionally extending into early October. Traditionally, Summer is our busiest period, along with the Winter season. We are now about half way through the season and if you are planning to sell your home this year, you should get on the market now. If you are a Buyer, there should be more inventory coming on the market as people realize that this is a good time to sell.
Interest rates are still rather low, so financing is still attractive. In addition, there is increasing interest in single-family homes and sales look like they will be greater than 2016. Showings have picked up, and sales generally follow an increase in showings. Part of the reason for the increased interest in single-family homes is that the New Kakaako Luxury Condominium Effect continues to diminish. For example, 58 buyers in the $3+ Million price range completed their Waiea purchases at the end of 2016. More recently, 100+ Park Lane buyers completed their purchases on August 2nd and the last phase is scheduled to close in early December.
SUMMER IS HERE!
Summer Season Means Sales
Favorable Factors for Summer Sales
New Kakaako Condominium Effect Continues to Diminish
Sales Sped Up for the Last Quarter of 2016 and First Quarter of 2017
43 Condos Subject to as much as Triple Real Property Taxes – Need to File Forms
The Summer Season Means Sales
East Honolulu sales were decent in the First Quarter of 2017, followed by a slow Second Quarter. Our Summer Season starts about now and lasts through mid-September. Traditionally, Summer is our busiest period, along with the Winter season. The times in between are so-so. If you are planning to sell your home this year, you should get on the market now. If you are a Buyer, there should be more inventory coming on the market as people realize that this is a good time to sell.
Favorable Factors for Summer Sales
Interest rates are still rather low, so financing is still attractive. In addition, there is increasing interest in single family homes and sales look like they will be greater than 2016. Showings have picked up, and sales generally follow an increase in showings. Part of the increased interest is that the Kakaako New Luxury Condominium Effect has abated.
The New Kakaako Condominium Effect Continues to Diminish
On October 19, 2016, we predicted that Luxury Home Sales would be improving due to the diminishing inventory of new Kakaako luxury condominiums. Then on December 7, 2016, the Honolulu Star-Advertiser’s Business Section confirmed “Oahu home, condo sales jump in November.” The new condominium projects took many of the $3+ Million buyers out of the real estate market for East Oahu. For example, at the end of 2016, 58 buyers between $3,072,000 and $12,800,000 completed their 2-year long purchase of the Waiea Condominium. These were 58 buyers who might have bought homes in East Honolulu.
Beginning in April 2017, continuing in August and again in December, closings at the Park Lane Condominium project in the Ala Moana Shopping Center have and will involve another 100+ luxury buyers who purchased in the $3+ Million price range.
Sales Have Sped up for the Last Quarter of 2016 and the First Quarter of 2017
Given the lower inventory of true luxury condominiums in Kakaako, sales did accelerate in the last quarter of 2016. Of the 30 sales over $3 Million in East Honolulu last year, 13 occurred in the last quarter. This year, we have been involved in 4 of the 15 sales over $3 Million of Single Family Homes in East Honolulu. Choi International brought the Buyer for the highest sale among the Top 10 Brokers. In our view, sales over $3 million will increase by about 30% over 2016, and many of those sales will occur in the summer months and during the winter of 2017/2018.
43 Condominiums are Subject to High Rates of Tax, unless the owner files the appropriate RESIDENTIAL USE DEDICATION FORM (and notifies the City of any changes)
On June 16th, the City & County of Honolulu mailed out notices to owners in 43 condominium projects that are condo/hotels or mixed use with commercial and others. The full list is included at the end of this report.
The designated condominiums will be subject to a higher real property tax rate than the residential tax of $3.50 per thousand or the $6 estimated tax for non-homeowner exemption residential property of $1 Million+. The tax for certain buildings can be subject to the commercial rate tax of $12.40 per thousand or hotel/resort tax of $12.90 per thousand, unless the owner files a form designating the property tax class as their primary residence or a long-term rental (rented for over 30 days at a time). Penalties are heavy for any misrepresentations or failure to amend the filings in a timely manner. When the property is sold, the law requires the new owner to file a new form. To find all of the condominiums that are affected and the required filing, click on this link: https://www.realpropertyhonolulu.com/media/1491/condo-ded-info.pdf.
Following is the full list of condominiums:
2338 YOUNG STREET, 2338 Young St
441 LEWERS, 441 Lewers St
465 KAPAHULU (CPR 9‐18 only), 465 Kapahulu Ave
ALOHA SURF HOTEL, 444 Kanekapolei St
BAMBOO, 2425 Kuhio Ave
BEACH VILLAS AT KO’OLINA, 92‐104 Waialii Pl
CABANA AT WAIKIKI, 2551 Cartwright Rd
CENTURY CENTER, 1750 Kalakaua Ave
EXECUTIVE CENTRE, 1088 Bishop St
FOSTER TOWERS, 2500 Kalakaua Ave
HARBOR COURT, 66 Queen St
HAWAIIAN COLONY, 1946 Ala Moana Blvd
HAWAIIAN MONARCH, 444 Niu St
ILIKAI APT BLDG, 1777 Ala Moana Blvd
ILIKAI MARINA, 1765 Ala Moana Blvd
IMPERIAL HAWAII RESORT, 205 Lewers St
ISLAND COLONY, 445 Seaside Ave
KAIMUKIAN, 1120 Koko Head Ave
KALAKAUA SANDS, 1670 Kalakaua Ave
KALAKAUAN, 1911 Kalakaua Ave
KAPIOLANI MANOR, 1655 Makaloa St
KUHIO VILLAGE II, 2450 Prince Edward St
KUHIO VILLAGE I, 2463 Kuhio Ave
LUANA WAIKIKI, 2045 Kalakaua Ave
MARINE SURF WAIKIKI, 364 Seaside Ave
MEHANA‐AWAKEA, Manawai St/Kakala St
MEHANA‐NANALA, Kunehi St/Manawai St/Kakala St
MERIDIAN EAST, 14 Aulike St
OCEAN VILLAS AT TURTLE BAY RESORT
PACIFIC MONARCH, 2427 Kuhio Ave
REGENCY AT BEACHWALK, 255 Beach Walk
RITZ CARLTON TOWER 1, 383 Kalaimoku St
ROYAL ALOHA, 1909 Ala Wai Blvd
Royal Garden at Waikiki, 440 Olohana St
ROYAL QUEEN EMMA, 222 Vineyard St
SEASHORE, 2450 Koa Ave
TRADEWINDS PLAZA, 2572 Lemon Rd
TRUMP INTL HTL & TWR AT WAIKIKI BCHWLK, 223 Saratoga Rd
URAKU TOWER, 1341 Kapiolani Blvd
WAIKIKI BEACH TOWER, 2470 Kalakaua Ave
WAIKIKI GRAND HOTEL, 134 Kapahulu Ave
WAIKIKI PARKWAY APTS, 1660 Kalakaua Ave
WAIKIKI SHORES, 2161 Kalia Rd
Photos courtesy of Luxury Homes International
Maggie Huang (RB-22050), Choi International’s Vice President of the Greater China Region, attended the 2017 Mid-Year Real Estate Review featuring guest speaker, Economist Paul Brewbaker. The event was held on June 15th at the Waialae Country Club and was sponsored by Luxury Homes International, Honolulu Home Loans, Howard Hughes, Honolulu Property Management, Hawaii International Real Estate Council, Title Guaranty Escrow and Diamond Head Home Inspections.
Brewbaker is the Director of the Hawaii Economic Association and the President of Hawaii based economic consulting firm, TZ Economics. He previously served as Senior Vice President and Chief Economist at Bank of Hawaii.
Congratulations to our three outstanding agents for being recognized as one of the Top 100 Realtors in the State of Hawaii for 2017 by Hawaii Business Magazine!
PATRICIA CHOI (RB-11824), President & Principal Broker – $34,878,488
CYNTHIA NASH (RB-17455) – $24,740,000
JULIANNA GARRIS (RB-17280), Broker-in-Charge – $22,252,760
The annual Top 100 Realtors list recognizes the top producers in Hawaii’s residential real estate industry. The 2017 rankings are based on transactions that closed in 2016, and also ranks agents with the most transactions and vacant-land sales, as well as the top real estate companies. Patricia, Cynthia and Julianna have all been included in this prestigious annual ranking for multiple years. This year, Choi International was also ranked as one of the Top 25 Real Estate Companies by Total Sales. The Top 100 were honored at an awards reception held at the Royal Hawaiian Hotel on June 1st.
View the complete Top 100 rankings: http://www.hawaiibusiness.com/top-100-realtors-2017/