Quarterly Newsletter October - December 2023

The December median price for single-family homes was $996,500 (5.1% lower than December 2022) and for condos was $510,000 (1.5% higher than December 2022). Demand continues to fall with 9.9% fewer single-family homes and 24.4% fewer condos sold this December compared to the same month last year. Single-family home sales have fallen twenty-three consecutive months and condo sales have dropped for nineteen straight months. The number of available properties, both single-family homes and condos, appears to be stabilizing yet scarce. There are still only 2.8 months of single-family home and 3.2 months of condo inventory. You can review more detailed current and past real estate market data on our website using the link below. Monthly Statistics October 2023 Market Update A U.S. Court District judge issued a summary judgement granting the Hawaii Legal Short-Term Rental Alliance (HILSTRA) a permanent injunction against a provision of Ordinance 22-7 prohibiting home rental periods between thirty and 89 days for property owners who were following the 30-day minimum rental period before the laws effective date of October 23 rd , 2022. HILSTRA successfully argued that the new law caused immediate and devastating economic harm to landlords and operators legally renting their properties. The permanent injunction will make the thirty to 89-day ban on newer rental properties difficult to enforce. The city has not decided if it will appeal the decision. An article by Civil Beat summarized decades of action or lack of action resulting in the years-long slog many homeowners and contractors experience at the Department of Planning and Permitting (DPP) waiting on permit approval. Back in the 1970’s, a contractor could obtain a building permit the same day by walking plans to each DPP department for signatures and being able to fix issues on the spot when an experienced examiner pointed them out. A loss of institutional knowledge when experienced examiners retired, increased regulation, a failure to update technology, and the removal of face-to-face interaction has resulted in November 2022 permit times of 330 days on average for a residential permit and 420 days on average for a commercial permit. DPP reported an average of a six-month delay in October, easy solar power permits have skewed the numbers since building permits still languish. DPP’s largest problem is hiring since people with an architecture or engineering background can make $20,000 to $50,000 more in the private sector and “don’t get yelled at as much.” Additionally, the Honolulu City Council issued a rash of new regulations from 2016 through 2020 requiring DPP to establish a new department and additional review step. DPP’s director has received additional funding to hire people to reduce the backlog, however, contractors are still waiting “longer than ever” for a permit in the meantime. National Home sales fell to a 13-year low in October and November sales rose slightly above October’s low due to lower mortgage rates. The Federal Reserve’s interest rate hikes have seized up the resale housing market and negatively impacted related businesses like furniture and home improvement stores. The furniture industry and home improvement sector have experienced four straight quarters of falling sales resulting in fewer jobs. Employment related to real estate has stagnated and some real estate agents are reconsidering their career path, particularly after the court verdict that may impact the way clients pay Buyer’s Agents. Economists think mortgage rates will have to drop at least an additional percentage before more sellers become willing to trade their currently low mortgage rates for a new home with a higher rate. Some good news came in the form of growing new home construction and a rise in building permits. The Hawaii Tourism Authority (HTA) reported 731,233 visitors arrived in Hawaii this past November, essentially the same number arriving the November prior. The number is 9.6% lower than the arrivals in November 2019, just prior to the pandemic. International visitors, including Japan, continue to significantly lag the pre-pandemic numbers. In an ironic development, the six-month old panel established by Governor Josh Green to accelerate affordable housing development, approved a school impact fee waiver for a developer to convert a commercial property into a 52-unit apartment building. The waiver does not have any impact on needed building permits. Green’s emergency proclamation was issued with the goal of building 50,000 housing units statewide, but only 1,300 more affordable rental units are in the pipeline. The Department of Land and Natural Resources (DLNR) fined a Sunset Beach homeowner for illegally pouring concrete on the beach to shore up his eroding property. Desperate homeowners have littered the surrounding coastline with boulders, sandbags, and black tarps as the state struggles to enforce laws preventing shoreline hardening that leads to accelerated beach loss. Pictures Soaring hurricane insurance rates are causing some condominium complexes to secure coverage that does not completely cover replacement costs. The rising costs are occurring despite Hawaii not experiencing a direct hit in 31 years because of the global nature of the reinsurance market. An association’s decision to reduce insurance coverage can make it difficult for home buyers to obtain mortgages and pay higher rates. A local insurance expert estimates almost four hundred condo complexes do not have full coverage including luxury buildings in Kakaako. Joint Task Force Red Hill (JTFRH) announced it finished the gravity draining portion of the defueling operation of the Navy’s underground fuel tank facility on December 15 th , 2023, removing almost 150 million gallons of fuel from the site. The last tanker of fuel departed on December 20 th for the Philippines, one of several U.S. sites in the Pacific chosen to receive the drained fuel. Workers must pump about 60,000 gallons of remaining fuel and remove about 30,000 gallons of “sludge.” JTFRH scheduled the removal of the remaining fuel by the end of January, six months earlier than planned. JTF-Red Hill Commander Provides Gravity Defueling Update A jury will decide the merits of a dispute between developer Howard Hughes Corp, developer of Ward Village in Kakaako and the Honolulu Authority for Rapid Transportation (HART) over the cost of the land HART seeks to build the rail project’s Kakaako station. The estimated price tag is $200 million, and HART has already spent $23.3 million in legal fees as of 2021. Howard Hughes Corp. disagrees with HART about receiving “special benefits” and HART using the “special benefits” to calculate the amount paid for the land. HART’s “expert appraiser” valued the land HART wants to take from Howard Hughes Corp. at $14 million. There is no current plan to build the Kakaako station at the heart of the dispute after Mayor Blangiardi postponed the construction of the final 1.25 miles of the line because of cost overruns. The U.S. Army agreed to lease the state Department of Transportation at Kawaihapai Airfield, previously known as Dillingham Airfield on the North Shore, paving the way for continued commercial activity by local businesses. State has less than 30 days to reach deal with military on Dillingham Airfield Heavy rains on December 20 th caused a mudslide on the Pali Highway, closing the Honolulu-bound lanes through the busy holiday weekend. Heavy rainfall has often resulted in mudslides closing the Pali. Multiple landslides in February of 2019 caused the state to declare the Pali Highway a natural disaster area. State construction crews spent months reinforcing the hillside above the Pali Highway and extending the tunnel to protect cars from falling debris. Pali Hwy closed through weekend as crews clear landslide Contractors removed and packed up the Caltech Submillimeter Observatory telescope on Mauna Kea for shipment for Chile in December, the first of five telescopes scientists must decommission on the Mauna Kea summit to make room for the Thirty Meter Telescope (TMT). TMT construction remains in limbo as the National Science Foundation completes more environmental studies and the new Mauna Kea Summit Oversight Authority takes over management of the summit. Caltech Submillimeter Observatory Telescope Removal The University of Hawaii’s (UH) new Reserve Officer Training Corps (ROTC) program commissioned its first Ensign on the deck of the Battleship, USS Missouri in December. The newly commissioned officer will serve on the USS Shiloh, based in Pearl Harbor, after completing the three-month Basic Division Officer Course. Tim graduated from Tulane University back in 1989 on a ROTC scholarship and served on the USS Cavalla, a fast-attack submarine based out of Pearl Harbor. A recently released study by an Arizona State University student and former Hawaii Institute of Marine Biology researcher reports fishing of herbivore species to less than 80% of the reef’s unfished density results in lower coral reef health due to the buildup of algae, the fish’s food. The state Department of Land and Natural Resources (DLNR) is considering additional reef fishing restrictions to prevent the overfishing of Hawaii’s coral reef systems. DLNR deployed its one millionth hatchery grown sea urchin in Kaneohe Bay to control two species of invasive seaweed that can suffocate coral reef patches in the bay. Once a month, a team collects twenty-five of the mini “seaweed mowers” and induces them to spawn resulting in larvae 24 hours later. Researchers siphon the swimming larvae off the top and place them in larvae rearing tanks to protect the delicate animals during development. After 28 days, the team grows a biofilm on clear corrugated roofing material that the larvae attach to and start to look like little urchins called spat. Three weeks later, researchers move the spat to grow-out tanks when they are the size of a pencil eraser and then deployed to the bay once they reach the size of a dime. Sea Life Park Hawaii kicked off “The Year of the Honu,” commemorating 50 years of its Honu Conservation program. The conservation program has released over 17,000 turtle hatchlings into the wild over its 50 years in operation. Sea Life Park Events The Lahaina wildfire destroyed Kohala Brewery and its owners rebuilding plan involves brewing their recipes at Kona Brewing Company. The arrangement allows Kohala Brewery to continue shipping beer to customers and take advantage of Kona Brewing Company’s state-of-the-art facility that allows for more tighter quality control and consistency. The second phase of Kohala’s recovery includes rebuilding the taproom and retail business. Oahu craft beer afficionados have a new option available, Howzit Brewing. The Kakaako brewery recently opened a brewery and tasting room in Ward Village. The owner was born on Oahu, learned his trade in the Pacific Northwest craft beer scene, and returned to Oahu to start his own enterprise. December provided a reminder of the danger involved with hiking some of Oahu’s trails. Fortunately, the hiker did not die from the fall. Rescuers found the hiker after a three-day search 1,000 feet below the Pali Notches Trail. The hiker suffered a fractured cheekbone, broken wrist, and several puncture wounds. Five units of about thirteen experienced hikers participated in the search to find the hiker. ‘It’s a miracle’: Hiker who fell 1,000 feet on Oahu trail, was missing for days thanks his rescue.  Take a look at our Another Day in Paradise's Video Another Day in Paradise: Waterfalls

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