SUMMER IS HERE!
Highlights:
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