Maui Real Estate News

Big sale in Makena !

2010-05-05T12:26:00.003-10:00

This $ 19 850 000 cash sale in Makena shows there are still buyers who believe in Maui real estate, and are willing to pay for it !

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2010-04-08T21:05:00.001-10:00

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Hawaiian Hale on Maui

2010-04-08T20:50:00.002-10:00

I saw this classic Hawaiian Hale (house) being built, and stopped by to take a look. It has a ground floor and a first floor .... I would love to have been one of the early settlers, arriving on Maui to see many Hawaiian Hale !

Makena Resort Auction, 29 April 2010

2010-03-18T08:55:00.004-10:00

Lenders Wells Fargo foreclosed on the Makena Resort some time ago when borrowers, Morgan Stanley Real Estate, and Everett Dowling stopped paying on their $ 193 million mortgage. Wells Fargo has roughly $ 183 million left on the loan, but isn't concerned as they are in first lien position and the Makena Resort is worth more than $ 183 million. The ones in trouble are Morgan Stanley and Everett Dowling, as they invested hundreds of millions of dollars, and sit in second position. This means when / if the Makena Resort is sold at auction (29 April), Wells Fargo will be paid first, and remaining proceeds will go to Morgan Stanley and Everett Dowling. Auction estimates range from $ 350 million to $ 425 million ..... which would result in massive losses for the Morgan Stanley / Dowling partnership.

This story from Chris Hamilton at the Maui News.

WAILUKU - The 1,800-acre property formerly known as Makena Resort and the Maui Prince Hotel will be up for public auction April 29 in the lobby of the Wailuku courthouse.

The auction begins at 11 a.m. at 2125 Main St. and is believed to be the largest foreclosure sale in Maui County history.

The transaction is a fee-simple sale, with no minimum bid required, according to the notice of foreclosure that appeared on Page C8 of Wednesday's Maui News.

Last month, 2nd Circuit Judge Shackley Raffetto appointed Honolulu real estate developer and broker Chris Lau to conduct the sale for what is now called the Makena Beach & Golf Resort. Bidders must register with Lau five days prior to the sale, and the winner must be able to provide a 10 percent down payment April 29.

The South Maui property stretches from Haleakala's slopes, across dryland forests and over lava-rock expanses to beaches. The auction comes

after Maui developer Everett Dowling and Morgan Stanley Real Estate defaulted in August on $192.5 million in loans for the original purchase price of $565 million in 2007 from the Japanese firm, Seibu.

Dowling and Morgan Stanley lost their entire investment in the property, which is said to include millions for development planning, design, publicity, archaeological and engineering surveys, land preparation and permit-acquisition work.

On the other side, the lenders are owed an unspecified amount of accrued interest and fees.

Wells Fargo Bank is acting as trustee for the collection debts owed investors holding the resort's commercial mortgage securities. The bank, which managed to come out of mortgage crisis relatively unscathed, is reportedly in the running itself to buy the Makena Beach & Golf Resort.

The buyer will need to have deep pockets and receive the approval of Raffetto, who's been the property's arbiter, landlord and watchdog for months now.

The auction is for the entire property. That includes 36 holes of golf, 18 of which need to be rehabilitated before reopening, a clubhouse, 2,500 square feet of retail space, 5,200 square feet of meeting rooms, three restaurants and bars, a swimming and wading pool and snack bar, seven outdoor areas for weddings and parties, jacuzzis and a lattice work of hiking and mountain-biking trails.

The real prize, aside from shoreline access points such as Makena Landing, is 1,300 acres of vacant land. That's because Makena Beach & Golf resort also has an assortment of lucrative Maui County residential and commercial entitlements for further development, which County Council members approved at the end of 2008 to spur construction jobs that never materialized.

Dowling, who also has said he would like to regain ownership, had planned to build a luxury-home subdivision and spa, among other amenities, and rebuild the 310-room hotel - before the bottom fell out of the economy.

Without enough cash from pre-sales coming in, he lost the capital required to continue with a project estimated to be worth billions when hundreds of homes, time-share units and condominiums were finished after more than a decade of construction. Many county officials have said they are hopeful that once the economy rebounds, Makena Resort, and all the work and contract dollars it would provide to Mauians, will get back on track.

Prince Resorts Hawaii quit as the resort's management in September, after operating the property since the early 1980s. The court-appointed receiver, Miles Furutani, replaced Prince Resorts with the Mainland company, Benchmark Hospitality International, to oversee the hotel, golf course and land until the resort is acquired by a new owner.

General Manager Kelly Lewis has said Benchmark has substantially improved the resort's financial performance.

In the meantime, the management company also has been able to retain dozens of employees.

Maui Mayor looking to raise .... hell ?

2010-03-16T15:13:00.001-10:00

Well, the Maui County Mayor is looking to raise .... hell ?

This article from Cris Hamilton at the Maui News.

WAILUKU With $53 million less in the county's anticipated fiscal year 2011 budget revenues compared with last year, Mayor Charmaine Tavares on Monday proposed to increase or "adjust" the real property tax rates for several classifications.

While Tavares may have asked for real property tax increases, assessed home and land values have sunk so deeply in the global recession - even on Maui, where home values skyrocketed for years - it is estimated that the county's largest source of revenue will still be down by eight digits.

In order to maintain and improve Maui County's utilities, Tavares also said it will be necessary to make increases to some utility fees for at least a second year in a row.

Her proposed budget would make what she said she considers to be modest increases to wastewater treatment, water service, garbage pickup and vehicle registration fees.

Maui Bus, the county's increasingly popular public transit system, likely will also see some fare hikes, as well as beginning to charge customers fares for routes that previously were free, she said.

Maui County had managed to survive the recession to this point without raising taxes. Over the past two years, elected officials instead have cut department budgets, imposed hiring freezes and reduced spending on overtime and travel.

"As we all know, the slowdown of the economy has had a serious effect on real estate, causing a reduction in assessed values," Tavares said during a news conference Monday where she handed out her budget proposal. "If tax rates remain at the same level as the current year, it would mean a projected revenue decrease of $30 million to the county."

This would lead to a drastic reduction in services, she said. So, Tavares is asking the County Council to adjust tax rates upward to generate $223 million in real property taxes, which still is actually $10 million less than the $233 million raised during fiscal year 2010.

Property taxes make up 41 percent of the county's $563 million current fiscal year 2010 budget. It is Maui County's largest funding source, with the hotel tax, or transient accommodations tax, a distant second with about $17 million generated this year.

Despite Tavares' proposed property tax increases, Maui County will continue to have the lowest property taxes in the state, she said on Monday.

Here's a breakdown of the proposed real property tax rates over the current fiscal year. The amounts are per $1,000 of net taxable assessed valuation:

* Time share: $14; no change.

* Improved residential: $5.80; plus 95 cents.

* Apartment: $5; plus 45 cents.

* Commercial: $6; plus 25 cents.

* Industrial: $6.50; no change.

* Agricultural: $5; plus 50 cents.

* Conservation: $5; plus 25 cents.

* Hotel & Resort: $8.75; plus 55 cents.

* Unimproved residential: $7.25; plus $1.90.

* Homeowner: $2.50; plus 50 cents.

* Commercial Residential: $6.25; new tax category.

The County Council still needs to work out its version of the budget during meetings over the next couple months. The fiscal year 2011 budget goes into effect July 1.

A few council members in recent weeks have suggested reducing the homeowners property tax exemption as a way to deal with the shortfall. But that was not an option proffered by the mayor on Monday.

The mayor and County Council were able to make it through the last budget cycle without touching real property taxes. But with fixed costs on the rise, such as fuel and health insurance, and maintenance always an imperative, utility rates will have to go up, as they have in past years, county officials said.

Tavares said the departments need the money in order to keep equipment operating safely and to stay in good standing with other government agencies that grant water-quality and other permits.

This is what Tavares proposed on Monday:

* The monthly base charge for wastewater service would increase by $1.50.

* Water rates will go up by $1.75 a month.

* Tipping fees at the landfill for solid waste will go from 2 cents to 3 cents per pound, or $3 per ton.

* Vehicle registration fees would go up 1 percent per pound of vehicle weight.

* Nearly all of the Maui Bus routes will remain $1 per trip. But commuter fares will double to $2 for the runs to and from Upcountry and East, South, Central and West Maui.

* The Wailuku-Kahului loop routes will no longer be free and cost $1.

Tavares said that the bus system is a subsidized program that costs $7 million a year to operate. She said it will continue to grow to match ridership, including a $1 million program this year to finally install much-anticipated bus shelters.

However, Maui Bus expenses break down to actually cost $4 per passenger ride, Tavares said.

"I recognize the value of our bus service to the community and believe that we can continue to support keeping bus fares at a portion of what it costs taxpayers to operate," said Tavares, who has said that expanding the Maui Bus system is one of her top achievements during this, her first term as mayor.

97% financing from Homepath ???

2010-03-11T21:22:00.003-10:00

Yes, its true ! Buyers can get upto 97% financing from Homepath (Fannie Mae), with no mortgage insurance, no appraisal, and no condo doc approvals !! Minimum credit score is 660. Why ? How ? you ask ... well this program is only offered on Fannie Mae foreclosures ... and is, of course, funded by Fannie Mae !

Freddie Mac has a very similar program for its foreclosures called Home Step.

Please contact me for a list a Freddie Mac and Fannie Mae foreclosures in your area.

Aloha !

Peter

Maui Land and Pine (ML&P) records a big loss in 2009

2010-03-10T19:10:00.004-10:00

Wow ! Maui Land and Pine (ML&P) is at it again .... losing $123.3 million in 2009 !

This article from Harry Eagar at the Maui News.

" A much-shrunken Maui Land & Pineapple Co. finished 2009 losing $123.3 million, equivalent to $15.33 a share.

The year before, it had lost $79.4 million, or $9.98 a share.

With Maui Pineapple Co. gone and the Community Development segment almost at a standstill, in the fourth quarter the company business was mostly Kapalua resort.

The resort had revenue of $6.8 million, down from $8.5 million in the last quarter of 2008, reflecting the decline in the visitor industry. Its operating loss was $4,672,000, down from $6,621,000 the year before.

For the year, Kapalua had revenue of almost $30 million and losses of $16.1 million. Thus the resort accounted for about three-fifths of the company's total operating revenues in 2009 of $50 million, and about 13 percent of losses.

Pineapple had continued at a low level through the end of the year, and it continued to pile up losses. The loss from discontinued operations of $24.7 million accounted for four-fifths of the $30.3 million in losses in the fourth quarter.

Since then, ML&P has sold much of its Maui Pine assets to Haliimaile Pineapple Co., run by former employees, who are attempting to revive pine cultivation, although with a market to be limited almost entirely to the islands.

Of all the losses during the year, pine made up $11 of the $15.33 per share.

Despite the poor results across all sectors, ML&P stock has been riding up along with the broad market. It reached a 12-month low of $2.05 per share in February and rose to $5.23 Tuesday. The fourth-quarter results were released after the New York Stock Exchange closed.

The results released Tuesday were unaudited interim numbers. The final, audited report, with management commentary, is expected to be submitted to the Securities and Exchange Commission by the end of this month.

The 2009 operating results have been adjusted to remove the discontinued Maui Pine operations. Without pine, ML&P in 2009 was about the same size as ML&P in 2008: $50.4 million in revenue.

As of Tuesday, its market capitalization was about $41 million, about one-seventh of what it was before the wheels came off.

The company said its fourth quarter results include charges of $20.9 million related to the sale and lease of Maui Pine assets, employee severance from the approximately 285 layoffs and cancellation of contracts.

The company's failed joint venture into Kapalua Bay Holdings (the Residences at Kapalua) cost it nearly as much as the failure of pineapple. In 2008-09, ML&P took losses of $92.5 million. The project was completed, after a suspenseful search for new lenders after the failure of Lehman Brothers, and it continues to offer units for sale.

The KBH losses contributed to operating losses of $62.6 million last year (and more than $100 million in two years) for Community Development. With little in the way of new product on hand, and not much demand for either resort commercial or resort residential property, the sector had 2009 sales of only $19.9 million, including sales of undeveloped land.

The resort saw fewer visitors (along with the rest of the island and state), lower revenues due to price cutting, fewer rounds of golf and lower income from retail and villa rental operations. After operating the resort itself since developing it three decades ago, late last year ML&P brought in Outrigger to manage it.

That was among the cost-cutting measures that helped reduce the level of operating losses in the fourth quarter."

Maui is #1 !

2010-03-07T13:15:00.007-10:00

That's right ! Maui is #1 .... at least according to this Barron's article by in the Wall Street Journal.

Maui, and specifically, the resort area of Wailea, is their # 1 pick to own a second home. I couldn't agree more !

Aloha,
Peter

" BARRON'S COVER
| MONDAY, MARCH 8, 2010
10 Best Places for Second Homes

By STEVEN M. SEARS | MORE ARTICLES BY AUTHOR

AT LONG LAST, THE MARKET FOR LUXURY REAL estate is coming back to life.

Prices for primary residences, which plunged at least 20% from the peak in 2007, appear to have bottomed. In some of the snappiest locations, scattered bidding wars are breaking out and prices are turning upward.

In Greenwich, Conn., realty brokers say, the final months of 2009 were almost record-setters for sales volume, as two years of pent-up demand was unleashed. Even the megadeal is back. In Beverly Hills, film producer Jeffrey Katzenberg just plunked down $35 million for an 8,700-square-foot home on six acres.

There's nothing like a stabilized economy and a huge rebound in stocks to send folks looking for the perfect manse. The return of hefty Wall Street bonuses hasn't hurt, either.

With all that in mind, and with summer just around the corner, Barron's sized up the market for upscale second homes, one of the greatest luxuries of all. We scoped out dozens of deluxe enclaves across the country, speaking with brokers, homeowners and others. Our conclusion: Now could be an excellent time to buy.

Prices are way down -- 40% off the peak in some locations. Seemingly at or near bottom, they are starting to attract the first wave of bargain hunters -- and not just families in need of R&R. Hard-nosed investors also are on the prowl, says Jan Reuter, head of residential real estate at U.S. Trust Bank of America Private Wealth Management: "We've seen an uptick in buying in just the last couple of months."

To help you in the hunt, Barron's has selected the 10 best places in America for second homes. These alluring locales have it all: gorgeous houses, spectacular views, world-class golf, fishing and skiing, fine dining and great shopping. You'll find the complete range of lifestyles, from peaceful and easy to vigorously social.

Some warnings: 1) Our selections are every bit as subjective as tastes in homes themselves. 2) The prices cited are based mainly on conversations with locals, because hard data isn't available. 3) Your plush new retreat may take some time to rise in value. Serious appreciation will require a better economy and, quite possibly, another big rally in stocks.

But hey, you could do worse than marking time in paradise.

1. Maui Consistently rated the "Best Island in the World" by travel experts, this Hawaiian beauty underwent a growth spurt during the past decade that some critics bemoaned as excessive. But the southern coast, anchored by the hamlet of Wailea, has weathered it all well. One of the first master-planned resort communities in the nation, it's a balanced blend of understated gated communities, luxury resort hotels, three excellent golf courses, a tennis center and, of course, several crescent sandy beaches. Wailea has 500 single-family homes, and their views are stunning: lush, verdant hills, brilliantly blue ocean and, after the steamy sun showers, rainbows over the horizon.

Median Price: $1.5 million
Drop From Peak: 27%
Neighbor: Oprah Winfrey

2. Kiawah Island, S.C. Languid elegance defines South Carolina's coast, and Kiawah, just off Charleston, may be its ideal expression. The island has one developer, Kiawah Development Partners, and an architectural review board that protects the 4,500 or so properties from the excesses often seen when wealth meets water. It has 10 miles of hard-sand beaches and abundant wildlife: bobcats, gray foxes, loggerhead turtles and more. Its Ocean Course has long been favorite of golfers; it hosted the 2007 Senior PGA Championship. Want to tee up some culture? Charleston is just 45 minutes away.

Median Price: $1.4 million
Drop From Peak: 21%
Neighbor: Dan Marino
[Hamptons] David Dietrich, Corcoran

3. The Hamptons Long the favored retreat of high-powered New Yorkers, the Hamptons are a just now experiencing a fresh jump in home sales, realty brokers say. Credit the revival in Wall Street bonuses. Southampton, bastion of old money, is known for its grand estates, but lovely homes can be found in what not long ago were potato fields. In chic East Hampton, the choicest real estate is on Georgica Pond. Alas, most of the area's finest properties never come to market. Once you own a home in the Hamptons, you own it forever.

Median Price: $1.5 million
Drop from Peak: 30%
Neighbor: Steven Spielberg

4. Park City, Utah Skiers love Park City for its powdery winters, but homeowners relish the summers, too. The crowds thin out, life slows down and the tall aspens lining the nearby Wasatch range shimmer in the breeze. The one-street Old West downtown is dotted with classic Victorian houses, while Deer Valley, an understated year-round resort community, sits on the eastern edge. Its namesake ski hill has been crowned by readers of Ski Magazine as North America's top ski resort for three years running. For $100,000, you can join the nearby Talisker Club, with links designed by PGA Tour Champion Mark O'Meara. Bonus: Salt Lake City International Airport, a Delta Air Lines hub, has direct flights to the East and West Coasts.

Median Price: $1 million
Drop From Peak: 45%
Neighbor: Robert Redford
[Aspen] BJ Adams and Co. Real Estate

5. Aspen, Colo. Aspen isn't just a year-round playground; it's also a cultural oasis, the home to the Aspen Institute think tank, a world-class symphony, and dance and art festivals. The four major ski hills speak for the themselves. The Maroon Creek Club includes a challenging golf course designed by Tom Fazio. The city's West End has a mix of 19th-century Victorians and modern abodes not far from the "beachfront" -- downtown neighborhoods within walking distance of the lift. The posh shopping is so good that some folks never find their way up to the trails.

Median Price: $5.6 million
Drop From Peak: 6%
Neighbor: Jack Nicholson

6. Pebble Beach, Calif. Golfer Jack Nicklaus once said that if he had one last round to play before he died, it would be at Pebble Beach. The site of four U.S. Opens, The Links are rated the No. 1 public course in America by Golf Digest for 2009-10. There are several other public and private golf courses within the guarded gates of the verdant Del Monte Forest, which surrounds the community of Pebble Beach. Stunning estates not far from the first tee offer sweeping views of Monterey Bay. Duffers who buy in can play the Golden Bear's dream course every day.

Median Price: $1.1 million
Drop Since Peak: 20%
Neighbor: Clint Eastwood.

7. Palm Beach This Florida island hovers above reality, and at $30 million-plus, so do its finest pads. Oodles of socialites and tycoons wouldn't have it any other way. Neither would Jimmy Buffett, Rush Limbaugh and too many other boldface names to mention. In addition to the never-ending social whirl, residents like the shopping on Worth Avenue and the beauty of Addison Mizner's Mediterranean-style architecture. Mortals can enjoy the town by buying "over the moat" -- in Jupiter, North Palm Beach, Palm Beach Gardens and Delray Beach.

Median Price: $3.5 million
Drop From Peak: 11%
Neighbor: Henry Kravis
[Sanibel] Sotheby's Intl Realty

8. Captiva/Sanibel Island, Fla. Sitting off the coast of Fort Myers, a nerve center of America's foreclosure crisis, the barrier islands of Captiva and Sanibel are the very picture of laid-back living. Linked by a bridge at Sanibel's northern point, the islands are renowned for their pristine beaches and abundant seashells. Then there are the hiking trails; half the island is a nature preserve. The late Robert Rauschenberg is, even in death, one of the largest landowners. His 35-acre spread, complete with studio, is intact on Captiva's northern end.

Barron's Penta inaugural list of second-home communities from the Hamptons to Hawaii.

Median Price: $3.5 million
Drop From Peak: 40%
Neighbor: Ted Koppel

9. Asheville, N.C. Nestled in the mountains of North Carolina, Asheville offers a four-seasons lifestyle with just enough culture and good restaurants to keep urban-withdrawal pangs at bay. Some homebuyers come from the Northeast, and many come from Florida to beat the heat. The locals call them "halfbacks," since Asheville is halfway up the East Coast. The town has a university and a thriving art scene. We like the 1920s-vintage Tudor homes in the Biltmore Forest district, once part of the adjacent Biltmore Estate. The funky Grove Park neighborhood is also worth a look.

Median Price: $700,000
Drop From Peak: 38%
Neighbor: Andie McDowell
[Gasparilla] Gasparilla Properties

10. Gasparilla Island, Fla. Katherine Hepburn used to rent a beach house here, and it's easy to see why. The small island off Florida's southwest coast has been lovingly preserved: The Gasparilla Act, a state law passed in 1980, put a tight lid on population density, building heights and commercial development. Golf carts -- some customized to resemble '57 Chevys -- are the favored mode of transportation. The historic downtown has gracious homes, and the waters around the island are renowned for tarpon fishing. To check it out, check into the plush Gasparilla Inn.

Median Price: $1.8 million.
Drop From Peak: 18%
Neighbor: Harrison Ford, frequent visitor. "

Developer Discounts on Maui

2009-11-24T08:17:00.004-10:00

Regardless of shape or size, developers who have brought new product to market in the last two years, have had to offer big incentives and further reduce prices to attract buyers. Examples of this can be seen at the Cottages and Villas at Kehalani in Wailuku, developed by Stanford Carr, or Moana Estates, and the Ke Alii Ocean Villa's by Towne Island Home, Ltd in Kihei, or the Cottages at Kulamalu in Pukalani, by DR Horton. Incentives inlcude free furniture packages, large closing cost credits, A/C installation, and if the unit is not quite complete, then upgrades to the finishes.

In some cases, the second or third phase has been suspended, like Houna Kai in Kaanapali, developed by Interwest.

When you add foreclosure and distress sales to this saturated market place, its easy to understand why developers have to offer these incentives lure buyers.

Thank you for reading my blog.

Aloha,
Peter Slate R(S)
Haiku Properties

4 Very important steps to remember when buying a home

2009-11-19T08:58:00.002-10:00

Four of the most important steps to remember when buying a home are:

1) Building inspection - absolutely always get a professional building inspector to examine the structure prior to closing the transaction. Its a good idea to accompany the inspector during the inspection, as you'll learn a lot about your new home !

2) Appraisal - even if you're not using a bank, ie paying cash, an appraisal is a good idea, as it will give you an unbiased third party value of the home.

3) Termite inspection - always have this done, no ifs, ands or buts !

4) Survey - don't leave it to chance that some tree, or wall, or driveway is part of the property. A survey will clarify all of the boundary lines, show any encroachments, and for a little extra, you can have the surveyor draw in the location of the house.

I hope you find all these tips helpful in your real estate acquisition.

Thanks you for reading my blog.

Aloha,
Peter Slate R(S)
Haiku Properties

More deals being done on Maui

2009-11-18T10:07:00.003-10:00

I'm pleased to report that the number of escrows on Maui is on the rise. Over the last year the number of escrows on Maui has been as low as 277, compared with 460 escrows today. The bulk of the escrows (98%) are spread out over single family, vacant land and condominiums. The rest are commercial. Single family homes has the best percentage of escrows with 210 escrows on 1112 listings (20.2%), next are condos with 178 escrows on 1573 listings (11.3%) with vacant land having 42 escrows on 610 listings (6.8%).

While this doesn't indicate a red hot market, it does show there is increasing interest in Maui real estate.

Thank you for reading my blog.

All the best,
Peter Slate R(S)
Haiku Properties

North Shore Maui holding its value

2009-11-11T12:38:00.004-10:00

The North Shore of Maui had a very respectable multi million dollar sale recently. 38 Nonohe Place, a 3990 sqft house on a little over half an acre, sold for $ 2.9 million earlier in November. The same house sold for $ 2.7 million at the top of the market in 2005. While the house had been upgraded since 2005, this sale shows that despite a terrible down turn in the economy, buyers are prepared to shell out for what they really want.

Thanks for reading my blog.

Aloha,
Peter

Senate extends $ 8000 first time home buyer tax credit

2009-11-03T20:27:00.006-10:00

Great news ! The $ 8000 first time home buyer tax credit extension has passed the senate and looks like it will be sent to the president for signatures soon. The proposed extension will extend through 30 April 2010.

Stay tuned !

Papali Wailea .... What a deal !

2009-10-20T08:12:00.005-10:00

Papali Wailea is a very upscale, brand new, single family community located at 3100 Wailea Alanui Drive, Wailea, Maui, Hawaii. Completed in 2008, Papali Wailea is well thought out and exceptionally well built. Only 24 single family homes are built on 10.4 acres to ensure low density. The complex has four, evenly spaced terraces which ensures that each home enjoys an incredible ocean view! The recreational area includes a large infinity edge pool, and a state of the art gym .... all of course, with large, expansive ocean views !

Papali Wailea hasn't escaped the softening of real estate prices. Starting at $ 3 700 000 at the out set, one could now own unit 19 for $ 2 595 000 ! ...... further making Papali Wailea a must see !

Thank you for reading my blog.

Aloha,

Peter Slate R(S)
Haiku Properties

Wailea / Makena real estate comps crushed

2009-02-11T08:01:00.003-10:00

Wailea and Makena real estate prices have suffered a major set back by the only real estate sale in the area during the month of January 09.

This beach front house on One Palauea, listed for $ 20 000 000, sold for $ 7 750 000 ! This sale will set the tone for other sales in the area, as appraisers will have to include it when appraising other transactions.

Stay tuned ..... this could get really exciting !

First time homebuyers win with FHA loans

2009-02-02T07:55:00.007-10:00

With housing prices continuing to fall, first time home buyers are in a great position. Not only can they take advantage of improving pricing, they can also take advantage of a Federal Housing Administration (FHA) program that allows for just a three and a half percent (3.5%) down payment, one loan, with the same interest rate as conforming, conventional loans ..... Incredible !

Add to that, first time home buyers can get that 3.5% down payment from their retirement accounts ..... penalty free !

Remember the three rules when buying real estate anywhere, any time listed in my previous blog, and take advantage of your real estate market today.

Good luck !

Wailea Makena, big houses, big discounts.

2009-01-30T08:09:00.007-10:00

The prices of coveted Wailea and Makena are under pressure ! Click on the links and follow the pricing necessary to get these properties sold .... incredible !

Top 3 Rules to Remember when buying a home - anywhere, any time.

2009-01-17T08:50:00.007-10:00

In todays soft housing market, how do you know you're getting a good deal ? Here are 3 simple rules to live by:

1)Does this house suite my needs, and does it meet all of my search criteria ? While location is very important, it's not everything. Having a house that meets all your goals is the # 1 Rule to Remember.

2)Understand the value. Appraisers assign value in two principal ways: sales comparisons (similar style homes sold in the same area), and replacement cost (what would it cost to buy the land and build that particular home on the land, minus the depreciation).

3)Are there any compensating factors ? This includes view, upgrades, yard, easy and affordable maintenance, shops and stores within short distances, manageable Home Onwers Association (HOA), and Association of Apartment Owners (AOAO) fees etc etc.

Thank you for reading my blog. I hope found it helpful.

I look forward to hearing from you.

Aloha,

Peter Slate R(S)
Haiku Properties
808 276 4017

Government seeks ways to reduce housing surplus in 2009 !

2008-12-27T19:17:00.002-10:00

With all the outrage at government over the loose handling of the Troubled Asset Relief Program (TARP) money, where after dispersing the first $ 290B to 19 different banks, mortgage rates went up ! More recently, the debacle of Government funding a request of $34B to save the "The Big 3" automakers left many on Main Street wondering. What about me?

After heavy persuasion from two huge lobbyist groups National Association of Realtors (NAR) and the National Association of Home Builders (NAHB), government knew it had to do something. Two weeks ago Government announced it would back stop through Freddie and Fannie, up to $600B in clean money. This resulted in mortgage rates dropping almost a full percentage point from 6.375 % to 5.5%, which in turn resulted in surge of refinance applications, but still only a small number of purchase applications. It was recently leaked that the Federal Reserve and Treasury Department are looking to offer 4.5 % mortgages for new and existing homes purchased. This leak has sparked a general optimism that Government hasn't forgotten about the guy in the street, and that direct action is underway. A couple other ideas being floated are a $ 7 500 tax credit for any house purchase, and trimming, or even axing altogether, the capital gains tax on housing for a period of time. Given that there are roughly 4.5 Million houses on the market in the US in general, the US Government is simply going to have to do something drastic to reduce the housing surplus ! We believe that if Government adopts all three of these steps, the housing market will soon bottom out, and stabilize.

As many have witnessed, the stock market has been difficult. Experienced investors and new-bees alike, many have taken their losses and gone into cash. Confidence is low. Given that there has been such tremendous hedge fund redemption, and that there is far more than normal cash sitting on the sidelines, that when Government brings into action a plan that Main Street can embrace, and confidence returns .... there will be a strong upward move.

If the Federal Reserve and the Treasury Dept are successful in implementing the plans mentioned above, then this will be the last opportunity for buyers to purchase homes at 70-75 cents on the dollar with great financing.

I want to thank you your support this year, and wish you a Merry Christmas, and a Happy New Year.

All the best,

Peter Slate R(S)
Haiku Properties

The Maui Real Estate Investor and a 1031 Exchange

2008-07-02T10:34:00.006-10:00

Many people have heard about a 1031 exchange, but aren't quite sure what it is, or how it works. I hope to shed some light on the subject. Important to note is that there is a tax exemption on the sale of your primary residence, and while a 1031 exchange can be applied to any property, it's most commonly applied to investment properties, where the owners tax burden is not protected by a primary residence status.

The basic principle of doing a 1031 exchange, forward or reverse, is to defer the taxes on the sale of the house that you own (relinquished property). In a forward 1031 exchange, the seller of a house transfers the proceeds from the sale of his house directly into an account with a 1031 exchange company. Note the proceeds are not realized by the seller, they go directly into an account at the exchange company. The seller then has 45 days to identify a new property (replacement property), and 180 days to close on it. The seller can identify upto three replacement properties, as not every escrow is successful, and the seller has the specified time in which to close on one of the identified properties. The seller can choose to identify more than 3 properties, but if he chooses to do so, the total value of the identified properties can not exceed two hundred percent of the sales price of the relinquished property. So, by doing the forward 1031 exchange, the seller defers the taxes due on the relinquished property, identifies a replacement property, and closes on it in a specified time period. A forward exchange will cost roughly $600.00.

In a reverse 1031 exchange, the owner of a property (relinquished property) can go about acquiring a new property (replacement property) before the the relinquished property is sold. In this case, the seller deeds the exchange company title to the relinquished property, which is held in a Limited Liability Company (LLC) at the exchange company. The owner goes about acquiring the replacement property in the regular fashion, with cash, or some cash and a mortgage, and can begin enjoying his new property. From the time the reverse exchange is established, the owner has 180 days to sell the relinquished property. When the relinquished property is sold, the proceeds from that sale are credited towards the acquisition of the replacement property, and the seller of the relinquished property is credited that amount. If for whatever reason, the relinquished property doesn't sell within the 180 days, the exchange company deeds the title back to the owner. In this case, the owner is not entitled to any refund of the roughly $ 4000.00 cost of setting up the reverse 1031 exchange.

If you have any questions about this post, please contact me by email: SA7@PeterSlate.com or by phone: 808 276 4017.

Thank you for reading my blog.

Aloha,

Peter Slate R(S)
Haiku Properties

Canadians are King

2008-05-20T08:36:00.004-10:00

The Vancouver Sun picked up on an article I wrote about Canadian arrivals on Maui, and since the article published, I've had a great response, with many inquiries into Maui Real Estate, especially ocean view condos.

Looking through the Canadian visitor arrivals for the first quarter of 2008, I arrived at the conclusion ..... Canadians are King ! The following figures are published by Hawaii's Department of Business Economic Development and Tourism (DBEDT). Below is a summary of Canadian visitors to Maui, and to the Hawaii Islands in general for the first quarter of 2008.

14 737 Canadian visitors arrived on Maui in January 08, up 38 % from the 10 654 Canadian arrivals in January 07. Canadian travel to the Hawaiian Islands for Jan. 08 was up 27%, with a daily average census of 20 500 visitors.

15 453 Canadian visitors arrived on Maui in February 08, up 68 % from the 9 156 Canadian arrivals in February 07. Canadian travel to the Hawaiian Islands for Feb. 08 was up 31%, with a daily average census of 21 168 visitors.

17 114 Canadian visitors arrived on Maui in March 08, up 23 % from the 13 862 Canadian arrivals in March 07. Canadian travel to the Hawaiian Islands for March. 08 was up 16%, with a daily average census of 18 877 visitors.

Thank you Canadians ! and thank you for reading my blog.

Aloha,

Peter Slate R(S)
Haiku Properties

Maluhia Country Ranches ..... Kahakuloa's Finest !

2008-04-03T18:09:00.017-10:00

Imagine your dream home on this spectacular view lot in a very upscale, gated community, Maluhia Country Ranches. This 2.954 acre lot offers incredible views of Haleakala, Maui's North Shore and Kahului Town. A 20 minute drive from Maluhia Country Ranches gets you to the airport and Kahului's town center. Private, secure and spacious, this Maluhia Country Ranches lot is being offered at $ 549 500. For more information, please contact Peter Slate R(S) Haiku Properties Tel- 808 276 4017.

Thank you and Aloha !

Kula, Keokea, and Ulupalakua .... Maui Real Estate's new high end market

2008-03-25T09:12:00.012-10:00

It's easy to understand why high net worth people gravitate towards resort areas such as Wailea and Kapalua. Given the manicured golf courses, and the presence of large, high end hotels to help secure the value of their investments, this clientele finds their comfort zone in these areas. However, with new development adding to the traffic congestion and living density, buyers are looking past the typical resort areas, and toward other options ..... and there's plenty to see !

Maui's Kula, Keokea and Ulupalakua areas are the exact opposite of your Wailea / Kapalua resort area, and until recently lacked the large scale marketing and awareness necessary to bring peoples attention to a particular area. Coming online shortly is a 1800 acre development in Lower Kula which will be heavily marketed and promoted by one of the biggest real estate brokerage firms in the world. Given the attention that will come with such a large scale development, and the promise of the long awaited highway that will connect Kula and Kihei with a 20 minute commute, I looked at some of the houses available on the Kula / Keokea market that would benefit from large scale marketing. The results were surprising! I found that what was once considered sleepy old "Upcountry" was, in fact, now, a very high end area, with very desirable Gentleman's estates ! Take for example this 4000 sqft, "Hamptons" style house on almost 4 acres in Keokea, or this incredible 5000 sqft plus house on 8.6 acres complete with pool and exquisite library built in Omaopio Ridge. The most recent Kula mansion on the market boasts over 7100 sqft of living area, a pool, a tennis court, a separate 958 sqft cottage, and every upgrade imaginable !

With all the marketing and roadways aimed at connecting Kula, Keokea and Ulupalakua with the high end resorts, it's my prediction that more and more high net worth people will begin to realize the true value of Maui's Upcountry Gentleman's estate. Click on this Kula, Keokea, Ulupalakua link to see a complete list of incredibly beautiful homes.

Should you have any questions, please leave a comment, or call me directly on 808 276 4017. Thank you for reading my blog.

Aloha !

Makena Property on Maui

2008-03-02T09:07:00.007-10:00

This incredible piece of Makena property is up for sale, but few understand its full potential.

With the current agricultural (Ag) zoning, and leaving the lot lines as they are, the property could be developed into five main houses and three 1000 sqft cottages. Total acquisition $ 26.5MM for the land, plus a $ 30MM (estimated) build out of all the house and cottages, totals $ 56.5MM. Total gross form the sale of the house and cottages would come in anywhere between $90 MM - 100MM (based on current comps), which allows significant profit margin. Expected permitting and build out to take 5-6 years to complete. With water meters and power available on all four lots, a buyer would be able to start planning right away. An SMA (Special Management Area) is required as part of the building permit condition.

To expand on the development possibilities: If the current Ag zoning were changed to match the Rural zoning called for in the General Plan, the owner would be able to subdivide the total property into fourteen, one acre lots, with the possibility to build a main house and a cottage on each lot. The down side being additional fire protection (water) would need to be brought to the property, a major SMA, and sub-division final approval, would need to be completed before any construction could start. With fourteen new lots, an affordable housing component would need to addressed. The upside being an even higher profit margin.

Another option would be four families who acquire this 4 lot, 14.15 acre, magical Makena property, each take a lot, and build their dream homes with ultimate privacy and space!

Click this Wailea Makena Real Estate link for a complete list of luxury properties in the Wailea / Makena area.

Thank you for reading my blog. If you have any questions, please leave a comment, or call me on 808 276 4017. I look forward to speaking with you soon.

Aloha !

Real Estate Agents Fiduciary Responsibilites Questioned

2008-01-22T22:39:00.000-10:00

2008 started with stock markets plummeting around the world. This distracted many people from the ongoing credit crises, and brought about fear and a panic sell off, which resulted in huge losses over only a few days trading.

In the Campaign debates there is much reference to what can be done to keep homeowners in their homes, and who is most likely to achieve it. As many homeowners, feeling poor from the loss of equity in their homes, and the loss of asset value in the stock market, sit and watch all this going on around them, they have begun to ponder: how did I get here ?

With home prices falling in almost all parts of the country over the last eighteen months, in some places double digit declines, here comes the the next question: Was my realtor negligent, or did he/she fail in their fiduciary responsibilities when representing the value, or the future value of a home ? If so, what can I do about it ?

Well, articles like these are seen more frequently, and if there is ever a conviction, then realtors, watch out, and be very careful of what you say !

Stay tuned ......

Reale Estate sentiment in 2008 ...

2008-01-13T21:19:00.000-10:00

There has been so much attention given to the sub-prime mortgage mess, crumbling lenders, falling real estate prices, and rapidly increasing foreclosure, its no surprise that buyer sentiment is dazed ..... confused, and buyers are possibly more than a little freaked out! I've heard seasoned real estate agents say the next cycle won't start until 2009. I disagree.

The Countrywide bomb exploded last week, with Bank of America diving on top of it just before it was too late. In the same way JPMorgan will come to the rescue of Washington Mutual, the time has come for the big banks to bail out those in need. Federal regulators are not going to stop these mergers, as there is simply too much at stake. There is no longer any need to speculate on the extent of the Sub-prime mess ... it went all the way to the top ! with Countrywide having to merge with Bank of America to stay afloat ! How much damage was there along the way ? 218 banks and lending institutions (50 000 jobs) have gone out of business in the last 15 months !! Yeah, I'd say there was some damage.

Looking forward, the Bush Administration is discussing a stimulus package, Federal Reserve Chairman, Mr. Bernanke, has assured the Nation (and the World) that the Federal Reserve will do whatever is necessary to maintain liquidity in the banking system, and the Feds are on the verge of dropping interest rates again. Fantastic ! The stock market is all over the map, which is another indicator that real estate may come back into favor sooner rather than later.

My disagreement with above mentioned realtor's is that the there is now consolidation in banking, investment groups have already taken their write-downs, and while prices will remain soft for some time, there is more incentive for buyers to put pen to paper. You gota remember, opportunity is constant.

Time will tell, stay tuned.

Real Estate up in 09 ?

2008-01-13T21:07:00.000-10:00

With articles like this one suggesting real estate prices won't recover nor will buyer sentiment change until 2009 .....I disagree.

Maui and Canadians .......

2007-12-12T22:09:00.000-10:00

Changing tracks a little, I did some research into visitor arrivals. Looking through The Department of Business, Economic Development and Tourism (DBEDT) figures, it's the Canadians who are bring the most Christmas cheer to Hawaii, and Maui in particular. According to DBEDT figures, Canadian arrivals are up 10% in Oct 2007 for the State, at 18 797 people, compared with 17 089 Canadian arrivals in Oct. 2006. There is a 14.8 % increase in Canadian arrivals (4 657) on Maui for Oct 07 vs Oct 06. The Oct. 07 DBEDT numbers show they are vacationing longer, and spending more money during their stay. With the Canadian dollar is off its high of 91 Canadian cents to the US dollar, and is now $1.01 to the US dollar, we have seen Canadians showing more and more interest in Maui real estate, and not only in the Kihei / Wailea condo market.

The influx of Canadians, lower interest rates, referenced by the Feds 1/4 point rate cut announced earlier today, plus volatility in the stock market, are all factors in setting the stage for a real estate come back on Maui. After months watching Maui real estate prices deteriorate, or in some cases remain flat, we believe prices will firm, with buyers realizing the bottom is near. Most significantly, is the increase in buyers ready to put pen to paper, and make an offer.

We want to thank you for support, and wish you a Merry Christmas, and a Happy New Year.

Ordinance Closes Makena

2007-12-04T17:13:00.000-10:00

As reported in the Maui Times, the discovery of unexploded ordnance in the Ahihi-Kinau Natural Area Reserve last week led state officials to close the road to the reserve on the southern flank of Haleakala.

The road will remain closed until the area is cleared by an Army explosives-disposal team, said Deborah Ward, spokeswoman for the state Department of Land and Natural Resources.

Members of that team were busy Monday removing an unexploded bomb on Oahu, she said. It was not known when the disposal team would be able to fly to Maui to handle the ordnance found late Friday in the reserve's aa lava fields by the U.S. Army Corps of Engineers.

Ward did not have details on the type or size of the four objects found at Ahihi-Kinau, but she said officials were concerned enough about the discovery to close the area, at least temporarily, out of concern for public safety.

Mortgage Woes include Wells Fargo

2007-11-27T22:12:00.000-10:00

Wells Fargo, known for its tighter guidelines and conservative practices, is not exempt from the mortgage dilemma which continues to unfold day after day. Wells Fargo, the fifth largest U.S. bank, said it will recognise $ 1.4 billion in loses for the fourth quarter. Despite this fourth quarter loss, Wells Fargo is getting off lightly compared with some of its peers like Countrywide and Washington Mutual, which has suffered tens of billions of loss over the last year. To give you some perspective, Wells Fargo originated roughly $ 2 trillion since 2001, recording incredible profits during that time.
For the complete story, click on the link provided.

http://biz.yahoo.com/ap/071128/wells_fargo_charge.html

Maui Builders of Affordable Housing Fees Waived

2007-11-14T15:33:00.000-10:00

The Land Use Committee has paved the way for builders of affordable housing to save thousands of dollars in county fees. For the full story, click on this link.

http://www.mauinews.com/story.aspx?id=35987

Maui Real Estate Sales Activity October 2007

2007-11-14T15:02:00.000-10:00

Aloha,

Thanks for your comments and feedback.

Instead of analyzing the October sales figures, I've attached a link to the Real Estate Association of Maui's sales summary:

http://www.mauiboard.com/complete_stats.mv

Particularly interesting are the sales figures from 2002 and 2003, which show the total number of sales month to month, and year to year, dating back to Jan. 2002. By looking at these figures, you'll see there were many more sales, month to month, andyear to year in 2003, 2004 and 2005 than in 2006 and 2007. I've often wondered about the mental tug of war between buyers and sellers, and now I get to see the transition in action. Considering the large number of new developments that have come on line in the last three years, combined with the growing number of people listing their properties, its no surprise Maui's real estate market is anxious. Listed in Maui County, today, any buyer has the choice of 1086 homes, 1333 condos and 519 pieces of vacant land. There are 153 homes (14 %) in escrow, 116 condos (9 %) in escrow and 50 pieces of land (9.7%). These escrow numbers are sobering, no question.

More rate cuts are expected when the Fed meets on 11 December. Should this happen, it will total three rate cuts in four months. Sound familiar ? Remember April of 2002 ? Given that real estate movement lags rate cuts anywhere between three to six months, we anticipate buyers to return soon (Dec/ Jan) based on the half point September rate cut. Interestingly enough, I recently spoke with a Canadian couple this weekend who bought on Maui a year ago. They wanted to know the current state of market. After a short explanation, the wife, head in hands, said "Oh s...t, now is the time we should have bought!" With a weak dollar, "very motivated" sellers, and excessive inventory on the market, foreign money could very well turn this market this winter. Now is the time to do your due diligence and position yourself to buy. Looking forward the next six months, we could see one of the great buying opportunities for years to come.

Please note, if you'd like to opt out of this letter, simply reply to this mail telling me so.

Thank you,

John Papazian R(B) Peter Slate R(S)

Haiku Properties Haiku Properties

808 878 6800 808 276 4017

Big Banks carrying Bad Debt

2007-11-07T12:24:00.000-10:00

In all the credit turmoil among major banks and lending institutions, real estate transactions are held hostage by borrowers ability to borrow money. I submit that real estate agents get together and say a small prayer for the credit crisis to be over, and for jumbo loans, with loose guidelines to return, as soon as possible !
Shares of Washington Mutual fell rapidly to their lowest levels in 20 years after the company issued its latest forecast. By midday in the session, the lender's stock had dropped more than 19% on nearly twice its average daily volume. Washington Mutual Inc. said on Wednesday that 2007 credit losses could amount to between $2.7 billion to $2.9 billion, almost double the estimates it made in July when the subprime meltdown began wreaking havoc in U.S. mortgage markets.
During presentations, the savings and loan cited Fannie Mae data that suggest U.S. mortgage origination in 2008 will fall to $1.5 trillion for the industry. That would be a substantial decrease from $2.8 trillion from all lenders in 2006. Earlier projections were that new mortgage-loan volumes would slump to around $2.4 trillion. Kerry Killinger, Washington Mutual's chief executive, refused to speculate on whether the company's board of directors would raise dividend rates. He pointed to a lack of visibility over market conditions, liquidity issues and even earnings.
"We don't always have great certainty around the future," Killinger said during the daylong conference. "We just don't know how long this level of lower performance will remain."
Adding to the uncertainty are comments from Chief Financial Officer Thomas Casey, who warned that overall expenses in 2007 could turn out to be greater than a broad range Washington Mutual had given in its third-quarter conference call.

Kauai and Big Island Home Resales Down

2007-11-06T21:59:00.000-10:00

Home resales on the Big Island and Kaua'i last month were down by 24 percent to 56 percent, as Hawai'i's residential real estate market continues to soften. The softening real estate market is everywhere with other resort destinations such as Florida being hit particularly hard. As winter approaches, and the U.S. dollar weakens, many real estate agents are looking to Canadians and Foreign Nationals to help support their local real estate market. Stay tuned

HR 3648: Capital Gains Tax Exemption Proposal

2007-11-06T21:41:00.000-10:00

When 2008 rolls around, HR 3648, a bill making its way through Congress, will limit investors exemption on "primary residences" ..... this is to say houses that are second homes and claimed as their primary residences.

Under current laws, if an investor lives in a residence for 2 of 5 years they are eligible for a full tax exemption: $ 250 000 for a single person, and $ 500 000 for married people. If HR 3648 passes, it will pro-rate the tax exemption for time an owner lives in a primary residence. Hence, an investor who lives in one of his houses for 2 years over a 5 year period will only be eligible for 40% of the full tax exemption.

The Pines of Koele and The Palms of Manele on Lana'i

2007-11-02T12:41:00.000-10:00

The Pines at Koele are located "Upcountry", above Lanai City, and very close to the Four Seasons Lana'i, the Lodge at Koele. The Pines will offer twenty separate, fee simple, dwellings. Currently Phases 1 and 2 are on the market, priced from $ 1.150 000 to $ 1 559 250. There are two basic floor plans, a single story 2 or 3 bedroom and a two story 4 bed floor plan, settled alongside a lake, and adjacent the 2nd and 7th holes of the Experience at Koele Golf Course designed by Greg Norman. The Pines at Koele offer a fantastic second home opportunity. Residents of The Pines can purchase a membership in the Island Club, which, in addition to providing a full residential concierge staff, affords them use of facilities at both Four Seasons Resorts, the Lodge at Koele and Manele Bay, as well as preferred pricing at the restaurants and shops.

The Palms at Manele consist of eight duplex condominiums, located above the 18th fairway of the Challenge at Manele and offering stunning views of Hulopo'e Bay. The Palms feature ten foot ceilings and quality finishes range in price from $2.3 to $ 2.895 million. Single story and two story plans are available. As with the Pines, Owners may purchase a membership in the Island Club and enjoy the hotel, its amenities and preferred pricing.

In addition to The Palms and The Pines, there are 3 absolutely gorgeous, ocean front lots available which overlook Hulopo'e Bay.

For more information regarding Lanai property, please contact me directly: 808 276 4017, or visit my website: http://www.peterslate.com/

Honua' ula advances another round.

2007-11-01T19:48:00.000-10:00

After months of hearings and open discussion, the County Council Land Use Committee seems ready to make a recommendation on the Honua'ula project, also known as Wailea 670.
Land Use Chairman, Mike Molina was quoted "I sense the members are ready to bring this to some resolution, and I know that the public is also awaiting our decision."
"We're definitely on the home stretch," Molina said.
Despite these upbeat comments, Molina was also quoted as saying "This is just a small step, literally a small step." Should the Land Use committee agree to approve the Honua'ula project, the project would require two readings by the full council, during which changes can still be proposed.
Stay tuned.

Rate cuts need to be bigger to stir housing market

2007-10-30T20:27:00.000-10:00

Many speculate that a Fed rate cut on 31 October will not be enough to stir the Nations housing market, and start this sector of the Nations economy. Directly affected are developers such as: D.R. Horton Inc., Lennar Corp. and Pulte Homes Inc as there are fewer buyers. Similarly, housing prices have soared over the last 6 years, and many homeowners took advantage of growing equity in their homes, by means of a cash out refinance. Today's financial environment makes it difficult for these homeowners to refinance as many of the Stated / Stated programs are no longer available. Borrowers now need to document income and verify assets, and homeowners are no longer able to take advantage of growing equity in their homes. Will the Fed continue to cut rates ? ....we'll have to wait and see.

Investment property rental income vs. inflation vs. property values

2007-10-29T10:11:00.001-10:00

A widely held theory by many realtors is that rents will increase alongside inflation. This theory maintains that increasing rents will increase the value of the property at rates similar to the rate of inflation. Rents that increase at the same rate of inflation are nothing more than a coincidence. Supply and demand relationships are what change rents. Rents will increase when the supply/demand ratio changes. As an example, given any rate of inflation, if you have excess supply, high vacancy, and jobs declining, rents will not increase. Quite the contrary, they will decrease. Another comparison would be the double digit gains in real estate values from 2001 through 2005, and the subsequent significant softening of real estate values from 2006 through 2007, yet rents remain fairly stable.

Countrywide looks past more than a Billion dollar loss....

2007-10-26T12:39:00.000-10:00

Despite more than a billion dollar loss ($1.2 Billion) in the 3^rd quarter, Countrywide Financial Corp, said it expects to be profitable in the 4^th quarter, and into 2008. Chairman and Chief Executive Angelo Mozilo said, "We continue to be bullish about the longterm prospects of both Countrywide and our industry." Countrywide shares jumped $4.23 on this news, to close at $17.30 on Friday after rising as high as $17.51. The stock is down 64 percent from its 52-week high of $45.26.

Considering how many Maui Realtors rely on Countrywide to fund real estate transactions, seeing Countrywide's position and confidence, is very encouraging.

Maui County Council and Transient Vacation Renatls have no agreement "contract"

2007-10-25T16:01:00.000-10:00

The Maui Vacation Rental Association's (MVRA) position that they have a "contract" to operate with the Maui County Council based on the county's loose zoning enforcement, was denied by U.S. District Court, Deputy Corporation Counsel (DCC) Jane Lovell, who wrote the MVRA does not have sufficient foundation to sue for an injunction. The MVRA argued that an agreement outlined in a letter from former Planing Director John Min, as a "contract," but the (DCC) countered that all county contracts must be reviewed for form and legality by the corporation counsel and signed by the mayor, and that the agreement Min noted in writing were merely minutes of a meeting, and not a "contract".

The controversy continues .... stay tuned.

Honua'ula needs more water for affordable units.

2007-10-24T14:14:00.000-10:00

Honua'ula (formerly known as Wailea 670) needs more water to service a proposal of 250 rental units, which is part of its affordable housing commitment. The affordable rental project is proposed for a 13-acre site off Ohukai Road in an area zoned light industrial. As proposed, it would count against the 700 affordable housing units that the Honua'ula project is committed to provide. The affordable rentals are aimed at providing for lower-income families in an apartment complex.
The Dept. of Water director, Jeff Eng said it could be several years before the department develops a new source of water. Eng explained that a 2-inch would not be enough water to service peak usage times. A 2-inch line would only allow 64 showers out of at least 250 total showers at one time.
The Land Use Committee continues to review the project, and there will be more meetings regarding possibilities in Honua'ula and its affordable housing commitment soon.

COUNTRYWIDE REACHES OUT TO ITS BORROWERS.

2007-10-23T08:17:00.000-10:00

Countrywide said Tuesday it will begin calling borrowers to offer refinancing or modifications on $16 billion in loans whose interest rate is set to adjust by the end of 2008.
Countrywide has been under pressure since early July -- it has had difficulties with loan financing, its had to tap its lines of credit, and lay off 1000s of jobs.
Countrywide plans to contact borrowers of some $2.2 billion who are late on their loans and having trouble paying as a result of their Adjustable Rate Mortgage (ARM) adjusting. So far this year, Countrywide has completed about 20,000 loan modifications -- a figure that represents less than 5 percent of the more than 500,000 loans the lender reports were behind in payments as of last month. The figure amounts to about 24 percent of the roughly 82,000 loans the company said were in foreclosure as of September. Still, the company notes that its efforts to help troubled borrowers through refinancing, loan modification, repayment plans and other loan workouts, have kept some 40,000 borrowers from losing their homes.
Under the initiative announced Tuesday, Countrywide plans to offer an estimated 52,000 borrowers with subprime loans refinancing into prime rate loans or federal assistance mortgage loans insured by the Federal Housing Administration.
The company estimates some 10,000 borrowers with subprime loans who are now behind on their payments due to their mortgage interest rate resetting will be offered rate reductions by the end of the year. If your Adjustable Rate Mortgage is getting ready to adjust, contact your local lender, and know your new payment schedule.

Lanai - The Pines and The Palms

2007-10-22T11:12:00.000-10:00

I was recently invited to attend a Brokers open on Lanai show casing two developments - The Pines at Koele, and The Palms at Manele.

The Pines at Koele are located "Upcountry", above Lanai City, and very close to the Koele Lodge. The Pines offer twenty separate, fee simple, dwellings that price between $ 1.150 000 and $ 1 559 250. There are several different floor plans ranging from 4 bed 3 bath to 2 bed 3 bath. Settled alongside a lake, and adjacent the 2nd and 7th holes of the golf course, The Pines at Koele offer a fantastic second home opportunity. Residents of The Pines can purchase a membership to the Lodge at Koele, which affords them use of the Lodge and preferd pricing.

The Palms at Manele are 16 condominiums located near the ocean, and offer stunning views of Hulopo'e Bay. The Palms are connected by roof line. There are no common walls, which means less transferred noise from your neighbors. The Palms prices range from $2.3 to $ 2.595 million for the single story units, and $2.8 million for a two story unit. Residents can purchase a membership to the prestigious Four Seasons Resort and enjoy the hotel, its amenities and prefered pricing.

In addition to The Palms and The Pines, there are 3 absolutely gorgeous, ocean front lots available which overlook Hulopo'e Bay.

For more information regarding Lanai property, please contact me directly: 808 276 4017, or visit my website: http://www.peterslate.com/

Thank you.

Peter Slate R(S)
Haiku Properties

Haiku Properties Newsletter - September

2007-10-15T11:21:00.000-10:00

Aloha,

Thank you for your positive response to our first newsletter. As per your requests, I will expand on Haiku, as well as foreclosures.

Sales figures for Maui as a whole from the end of Aug 07 through the end of Sept 07 show a 12 % decrease in Single Family Residence (SFR) on 72 units sold, 82 units sold in August. A 29 % decrease in Condo sales on 78 units sold, 110 units sold in August. A 40 % increase in land sales on 14 parcels sold, 10 parcels sold in August. I was looking at these sales figures, and decided to break them up into more localized areas for closer analysis.

For example 36 (50%) of the 72 SFR homes sold on Maui in September 07 were in Central, which include new developments, that have been in escrow for several years, and finally close in September. Central includes Kahului, Wailuku and Kahakaloa. At 36 units, Central is down 4 units, having sold 40 units in August. SFR sales in Kihei were down in Sept, reporting 5 sales compared to 14 sales in August. Upcountry and Haiku held fairly steady with 5 SFR being sold in Haiku in Sept. and 7 in August. Similarly Kula sold 5 units in Sept, and 5 in August. Makawao sold 2 in Sept. and 2 in August. Pukaklani sold 4 in Sept and 6 in August.
Continuing a local month to month sales comparison: of the 78 Condo units sold on Maui in Sept, 34 Kihei Condos sold in Sept. compared with 47 units in August. 12 Napili / Kahana / Honokawai units sold in Sept. with 18 units sold in August. Wailea / Makena held steady with 17 sales in Sept and 18 sales in August.
Land Sales picked up in the month of Sept with 14 parcels sold. This is a 4 parcel gain over the 10 parcels sold in August, although I must mention that 6 of the 14 units were sold on Molokai for $ 15 000 each. Other than that, in the month of September, there was one land sale in Haiku, 1 in Hana, 2 in Kaanapali, 1 in Kapalua, 1 in Lahaina, and 2 in Kihei, total 14 parcels.

Albeit “slow”, property is still moving on Maui. There are some incredible buying opportunities. For example: 4415 Une Place is, very private, located on 2 acres property in Haiku. This 2638 sqft 3 bed / 3 bath house has spectacular, unobstructed North Shore views, and was newly remodeled in 2005. Click on the link for pictures and a short video clip of the view: www.nsviews.blogspot.com
Another opportunity is located at 18 Kapalulu Place in the Kulamanu sub-division. This brand new 2550 sqft 4 bed room 3.5 bath home is beautifully finished, and offers stunning bi-coastal views. Some pictures and a short video clip of the view can be viewed at: www.bicoastalviews.blogspot.com
Lot 6 in Kula Meadows is currently priced $ 200 000 below the last sale in that gated community. Pictures and a short video clip can be seen at www.viewsviewsviews.blogspot.com
We feel these three buying opportunities offer exceptional value.

Attending the realtor caravans, I regularly hear a realtor introduce their listing with: “ I have an extremely motivated seller …….” . There is a growing sentiment among buyers to wait and see. The theory being that we have not yet reached bottom.

“ Having experienced two severe down cycles over the past 27 years, 1982- 1986 and 1991-1995, I believe that we are close to a bottom, if not at a bottom, based on the fact that the market peaked in the summer of 05. I also believe that this down cycle is more psychological than fundamental. The 82-86 down cycle was directly related to extra ordinarily high, double digit, mortgage rates. The 91-95 down cycle was directly related to an overall recession in the U.S. economy. Neither of which exist today. Timing the bottom is often very difficult because Maui is a thin market, and a catalyst can very quickly change buyer sentiment. I am finding that since the ½ point Fed rate cut, smart, savvy buyers are starting to look seriously for the first time in months for properties that are significantly below market value.” John Papazian R(B).

This brings us to foreclosures ….. Buyers want the most for the least. There are several websites where you can see a list of available foreclosures, but before you go there, it would be wise for you to understand how the foreclosure procedure works. After three months of missed payments the bank will foreclose on the delinquent property. The Foreclosed property will be advertised in the local newspaper for at least 3 weeks, detailing when they will have the house open for inspection. At the time of inspection, potential buyers need to do all their due diligence. There are no second chances. Foreclosures offer a limited warranty, and are bought “AS IS”. There is no survey, no home inspection nor termite report provided by the courts nor by the bank. Judicial foreclosures happen through the courts, and typically take a non-refundable,10% deposit with 30 days to arrange financing. A non-judicial foreclosure happens on the court house steps, where 10% or more down payment is due on the spot with the winning bid. Foreclosures offer the allure of quick money, but buyer beware, especially for the relatively inexperienced. Foreclosures are often poorly maintained properties, and require large additional funds and time to restore them. Our advice is for you to do your due diligence now. Take advantage of our knowledge, and let us provide you with the factual information necessary for you to make informed real estate decisions. Contact either John (808 878 6800) or Peter (808 276 4017), and we will be happy to share our knowledge of under-valued homes and preferred foreclosures.

Thank you for reading our Newsletter. To see our previous newsletter, or make a comment, click here: www.mauirealestatenews.blogspot.com

Regards,

John Papazian R(B) Peter Slate R(S)
Haiku Properties Haiku Properties

What has sold on Maui in the last 30 days

2007-09-18T19:01:00.000-10:00

Aaah yes, the cold, hard facts of Maui Real Estate are best summarized in what has actually sold in the last 30 days.

A little research for the island over the last 30 days shows 75 Single Family Residence (SFR) and 89 Condominium sales. Of the 75 SFR sales, 59 (78%) were below $ 895 000, most of which were below $ 650 000. There are 10 (14%) sales between one and two million, and 6 (8%) were above two million. Two of the top three sales were in Kapalua, and the third in Makena. The list price vs sales price for these three properties is as follows: Kapalua listed for $ 4.5 million, sold for $ 3.6 million, Makena listed for $ 8.3 million, sold for $ 6 million, Kapalua listed for $ 15.9 million, sold for $ 12.5 million.

Considering Maui's 89 Condo sales in the last 30 days, 70 (78%) were below one million, 11(12%) were between one and two million, and 8 (10%) were above two million. The top two sales were both in Wailea. A Wailea Beach Villa's listed for $ 4.5 million, sold for $ 3.75 million, and a Wailea Point unit listed for $ 10 million, sold for $ 8.973 million.

With the Fed cutting rates by a 1/2 point today, I hope investors will re-gain their confidence and resume purchasing jumbo loans. With the jumbo loans being bought, interest rates for these higher loan amounts should return to the 6% range, which could serve as the basis to move the $ one -two million market.

Aloha,
Peter Slate R(S)
Haiku Properties

Fed cuts rates, at last

2007-09-18T13:55:00.000-10:00

Wall Street posted a 335 point gain to close at 13 739 on Tuesday after the Federal Reserve slashed key interest rates by a 1/2 point to ease stessed credit and housing market concerns. Investors cheered the Federal Reserve decision to cut the federal funds rate, (where banks charge each other for overnight loans), by a half point to 4.75 %.

The Fed aslo cut the Fed's discount rate (where banks borrow from the Fed) by the 1/2 point, to 5.25 %. Much speculation over how much the Fed would cut rates, with investors expecting a 1/4 point cut, and hoping for a 1/2 point cut, were dismissed with a cheer as rates were cut by 1/2 point. The news sent shares sky rocketing.

A small rate cut usually indicates more rate cuts to come. With the Fed's bold move today, investors are weary that gains may be short lived. Inflation does not seem to be an immeadiate concern. However, crude oil prices hit a fresh record high on Tuesday above 80 dollars a barrel. Financial stocks did well today. Bank of America, the second-largest US bank whose boss warned late Monday that third-quarter results would be hit by the credit crunch, gained 3.43 percent at 51.21 dollars. Citigroup rose 5.08 percent to 48.37 and JP Morgan advanced 5.59 percent to 47.82 dollars.

The yield on the 10 year bond rose to 4.480 percent from 4.462 yesterday. The public is still waiting for banks to refresh their position on Jumbo loans as $ 2 trillion worth of loans are set to adjust in the next year.

The Status of Maui Real Estate

2007-09-13T14:15:00.000-10:00

Aloha,

This blog serves a very objective perspective on Maui's real estate market. As most realtors will quickly tell you what you want to hear, we decided to forego the "sugar coating", and tell it "how it is". The newsletter will cover two parts: Maui in general, and our specialty: Upcountry

Sales figures for Maui as a whole from the end of July 07 through the end of August 07 show a 5 % decrease in Single Family Residence (SFR) sales, 8 % increase in Condo sales and a 17 % decrease in land sales. Sales figures for Maui from August 06 compared to August 07 shows a 19 % decrease in SFR, 55 % increase in Condo and 50 % decrease in land sales.

Digging a little deeper, I researched the number of SFR properties and vacant land parcels that are in escrow against those actively listed in the Upcountry area. The Upcountry area includes: Makawao, Olinda , Pukalani, Kula and Keokea. I found there are 162 SFR listings, 21 (13%) of which are in escrow. Similarly there are 62 parcels of vacant land listed, and only 4 (6%) in escrow ! Over the last year 177 SFR and 17 vacant land parcels have sold Upcountry. This would indicate, with no new listings, it would take a little under a year to sell all the SFR listed, and 3.6 years to sell the vacant land currently available on the Upcountry market. Another aspect to consider: the average days on market before a SFR sells is 172 days, and 264 days for vacant land. In our opinion, a red hot market shows 45-50% of listings in escrow, a medium market 30% in escrow, and a cool market 20% in escrow ... 15 % and below ... Down right bleak. You'll want to remember, not all escrows are successful.

With my curiosity piqued, I decided to enter into the most volatile section of Maui 's real estate: the Kihei Condo market. I broke it down into Maalea, Kihei and Wailea. I found:
Of the 45 listed condos in Maalea, there are 0 in escrow. In the last year 20 sold. This indicates that with no new listings, it would take 2.25 years to sell off the inventory. Kihei has 376 active listings, 49 (13%) of which are escrow. There were 457 condo sales in the last year. Wailea has 152 active listing, 16 (11%) of which are escrow. There were 215 Wailea condo sales in the last year. Judging by these percentages, we have no other choice than to rate the Kihei / Wailea condo market as bleak.

Expanding further, there are currently 812 active SFR listings, 1332 active Condo listings and 484 active vacant land listings on Maui.

Why is this so ?
A couple reasons. With so many Banks and financial institutions going bankrupt (149 lenders in one year) over sketchy mortgage debt, the remaining banks and lenders have made it significantly more difficult for borrowers to get financed, especially in the non-conforming, jumbo range, where most Hawaii loans are placed. Another reason, investors looking to the stock market for better returns.

Our Conclusion:
With the explosion of wealth worldwide, and the growing number of people who have a net worth of $ 5 million or more, we know there are very capable buyers, who are in a position to purchase real estate at any time. Given that Maui remains one of the worlds most desirable resort destinations, and that the population is ever increasing ... Maui is not the problem! We conclude investors need only overcome their psychological hurdle before returning in force. With investor confidence restored, we believe Maui real estate will experience a strong rebound. There are currently two Upcountry properties that we feel are exceptional buys.

If you have any questions or comments regarding this newsletter please contact us directly at (808) 276 4017 or at the office (808) 878 6800. If you know of anyone who is thinking of buying or selling real estate on Maui , please refer them directly to the telephone numbers above.

Mahalo for reading our blog.

Regards,

John Papazian R(B) Peter Slate R(S)
Haiku Properties Haiku Properties