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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

Stott Real Estate, Inc.

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P R I N T | R E P L I C A The September median sales price for single-family-homes was $1,050,000 (4.5% lower than September 2022) and for condos was $532,500 (6.0% higher than September 2022). Higher interest rates continue to weigh on demand with 16.5% fewer single-family homes selling in September compared to the year before and 24.2% fewer condos selling. The market continues to search for a bottom. There were 7.6% fewer single-family homes listed in September and 14.1% fewer condos. The S&P CoreLogic Case-Shiller National Home Price Index fell 0.5% lower in May 2023 compared to May 2022. The price reduction was the second month in a row as mortgage rates bounced around between 6% and 7%. Unusually low inventory has helped prevent greater price reductions as homeowners become more reluctant to sell and trade their low mortgage rate for a higher one. The median existing-home sale price dropped 0.9% in June compared with June 2022. UHERO published Hawaii Housing Factbook in June to specify the challenges Hawaii residents face when trying to pay for housing. UHERO just released the Hawaii Housing Dashboard to compliment the factbook and allow users to delve into this interactive platform and pull up statistics about Hawaii’s neighborhoods. For instance, over one-half of Oahu renters spend more than 30% of their income on rent and over one-quarter of renters spend more than 50% on rent. The median housing age is 47 years and only 24,000 housing units have been added over the past five years. The median length of time to acquire a housing permit stands at 153 days. To access the dashboard, visit the website: https://uhero.hawaii.edu/analytics-dashboards/housing-dashboards/ Sign up for our email newsletter using the QR code above with your smartphone camera. A Mixed Plate of Talk Story Maui wildfires fanned by high winds from Hurricane Dora killed 98 people and destroyed historic Lahaina and damaged or destroyed more than 2200 structures including 2,000 homes. More than 2,000 people were housed overnight on August 8th, and 4,000 visitors were flown to Oahu on August 9th. Fourteen people had to be rescued after jumping in the water to escape the Lahaina wildfires. Three victims have been flown to Oahu and were treated at Straub Hospital’s burn unit. 100 firefighters fought the blaze and high winds knocked over 30 utility poles causing additional fire and destruction. Many flights to Maui have been canceled and visitors are encouraged to check their reservations before making the trip. Officials don’t expect to know the extent of the damage for weeks. The state Attorney General started a formal investigation into the decision-making and policies before and during the wildfires. No sirens were activated to warn residents of the incoming danger and many in Lahaina woke up in the middle of the night to their neighborhood burning down, too late to escape. The Hawaii Emergency Management Agency and Maui Emergency Management Agency triggered alerts to cell phones, TV, and radio, however, Lahaina was without power for most of Tuesday with power poles and some cell phone towers down. Police and fireman were going down streets with their sirens on, knocking door-to-door. Many of the dead were found in burned out cars trying to escape. Lahaina firefighters were denied their primary tool for fighting fires when the town’s water system collapsed. The town relies on creek surface water and ground water pumped from wells which were strained from the current drought. The deputy director of water resource management from the state Department of Land and Natural resources delayed the release of water to landowners who wanted to protect their property from the fire for much of the day. The water was not released until 2 ½ hours after the fire had spread and nine hours after the initial request for the water. Firefighters noticed that the water pressure was dropping when the fire jumped over the highway and consumed houses. The resulting water leaks from melted pipes in the destroyed homes resulted in the fire hydrants running dry. Additionally, hurricane force winds prevented helicopters from carrying seawater inland to dump it on the wildfires. Firefighters had to halt their attempts to stop the fire and risked their lives to save as many Lahaina residents as they could. Hawaiian Electric Company (HECO) and Maui police have come under criticism for blocking traffic out of Lahaina while the wildfires spread. Maui police claim they were directing traffic from downed power lines even though HECO had de-energized them six hours prior and the downed lines posed no threats. Residents spent up to 2 ½ hours trying to navigate Lahaina’s narrow streets since the two main thoroughfares were blocked by police or HECO’s utility workers. No timeline has been established for releasing a detailed analysis of the town’s evacuation. The University of Hawaii Economic Research Organization’s (UHERO) third quarter forecast includes the immediate impact of the wildfires on Maui’s economy and their estimates for the eventual recovery. UHERO reported Maui visitor numbers plunged by nearly three-quarters immediately following the wildfire resulting in revenue losses of $13 million per day. Visitor numbers have just begun to recover in late September. Visitor arrivals are expected to reach 50% of 2022 numbers by the end of the year and reach 80% by the end of 2024. Unemployment numbers have surged to over 11% and the state is once again struggling to process the claims because they still have not updated their computer systems. The wildfires displaced about 7,000 individuals and it will take years to replace the destroyed housing. UHERO expects the impact on the rest of the state will be muted. Tim and Tracey’s friend has a tour business on Oahu, and she has had several cancellations since visitor plans included a visit to Maui. Time will tell how much Oahu visitor numbers will be impacted through 2023 since many people have already made and cancelled planned trips to Maui and elsewhere. When Maui Mayor Richard Bissen on September 27th announced that West Maui would be gradually reopened for tourism beginning October 8th, some members of the Lahaina community protested. The displaced residents want their kids back in school, a plan for underground utility lines, establishment and better management of firebreaks with expanded use of reclaimed wastewater, and water for irrigation of traditional crops. The demand for resources appears at odds with the island losing $13 million per day in lost visitor revenue. The first day of the planned opening on October 8th was quiet with small groups gathered to honor family and friends lost during the wildfire at the intersection of the Lahainaluna Bypass and the Lahainaluna Road into West Maui. People laid fresh flowers at the site where crosses represented victims of the wildfires. Flags from Hawaii, the Philippines, Japan, Mexico and more represented the nationalities of those that lost their lives. Some local leaders do expect things to get more tense if the county and state continue to fail in support of the families in need. “Tree-huggers” are working to revive a 150-year-old banyan tree in Lahaina after an arborist found no significant signs of charring or cracking of the main trunk or root system and the ground did not appear to be burned and the benches were still standing. The group is watering the tree and ground daily and will put down a layer of compost to help the tree heel. Groups of leaves were seen sprouting on Lahaina’s banyan tree in October, giving the community hope that the historic tree will survive. Arborists continue to volunteer their time to aid the tree’s recovery. Governor Josh Green issued an emergency proclamation aimed at building more affordable housing by relaxing state and county scrutiny of affordable housing projects to speed construction. Current regulations add approximately $233,000 to $335,000 to the cost of building a new home. The oversight does delay projects, yet some minimal oversight by neighborhood organizations does prevent building housing without sufficient parking. Per usual, the governor relies on government to solve the problem when government originally created the problem. A recent article describing the drama around a 243-unit complex that includes affordable housing repeats Hawaii’s failure at creating and maintaining housing. The Hawaii Community Development Authority (HCDA) failed to pay maintenance fees two years ago, failed to address hot water distribution problems and mold, and recently threatened to evict two tenants over past due charges of $42 and 50 cents. The residents have had enough and are making their complaints public. HCDA officials complain that rental income fails to pay management and repair expenses and the current deficit is roughly $25,000. The problems identified in the Honolulu Star Advertisers article will likely grow if the state builds and manages 50,000 more affordable housing units per Governor Green’s ambition. A Honolulu wastewater executive, Milton Choy, was sentenced to three years in prison for a multi-million-dollar bribery scheme, paying over $2 million in bribes in return for $19.3 million in sole-source contracts. Choy paid Stewart Stant, the then Director of Maui County Department of Environmental Management who spent the money on hostess bars, luxury hotel stays, travel, and jewelry. Choy also paid bribes to convicted former Senate Majority Leader J. Kalani English and former state Representative Ty Cullen. The bribery scheme is considered the largest in Hawaii’s history. Bill Wong, the architect who pleaded guilty to bribing members of the Department of Planning and Permitting (DPP), still has an active license and is submitting plans for permitting approval. The Department of Commerce and Consumer Affairs (DCCA), the state’s licensing authority, has yet to take formal action against the architect. The DCCA’s only comment was that a complaint was opened and pending with the Regulated Industries Complaints Office (RICO), the complaint department. The DCCA can suspend or revoke licenses for failing to maintain a record of “trustworthiness, fair dealing, and financial integrity,” and after a criminal conviction “directly related to the qualifications, functions, or duties of the licensed profession or vocation.” Wong was sentenced in July and will be serving time starting January. It will be interesting to see if he loses his license before reporting to jail. The success of community centered visitor management at Ha’ena State Park on the North Shore of Kauai has state officials hoping the effort can be duplicated throughout the state to create a more sustainable tourist industry. Hawaii residents chaffed at 10.4 million visitors mobbing the state in 2019, straining the state’s park facilities. The state park set a daily visitor cap, charges nonresidents an entry fee, and visitors must pay for parking when they use the park’s shuttle service. Community members meet visitors when shuttles arrive to make sure they have enough water, point out lifeguards on duty, and give times to leave different hiking spots to make the last departing shuttle at 6:40 pm. The area was a breadbasket for Native Hawaiians before the state park was created and poor management resulted in invasive plants and trees overwhelming the landscape. Local families started caring for the park by ripping out invasive trees, restoring a traditional waterway, and planting kalo (taro) for the community. A 60-page document on replicating the model has been published and communities like Kealakua on the Big Island and Wai’anapanapa on Maui hope to implement the program. The Hawaii Tourism Authority and Hawaii county funded stewards at Waiuli and Lehia beach parks to manage visitor traffic. The work to restore the Koko Crater Stairs, also known as the Stairmaster to Hell, was completed in early July. The City and County of Honolulu announced that a new 71 square foot platform replaced the deteriorating metal grate platform to the tune of $426,800. The Kokonut Koalition had shamed the city into replacing the platform after volunteers restored the stairs at minimal expense. The city had originally planned to just remove the old platform. The University of Hawaii (UH) is wrapped up its $30 million expansion of the Clarence T.C. Ching Athletics complex to raise seating capacity from 9,300 to the Division I minimum of 15,000 seats for the September 1st opener. UH was forced to upgrade its practice field to a Division I game field when Aloha Stadium was condemned in 2020. While UH scrambled to provide a home field for its football team, the state has not even demolished the rusted out and unusable stadium. A lost sea turtle hatchling was recently rescued at a skate park and placed in the ocean. Hatchlings rely on moonlight and celestial light to find the shore when emerging from their nests. Apparently, this hatchling was one of fifty that became disoriented by artificial lights and headed mauka (towards the mountain) instead of makai (towards the ocean) while only seven of their siblings headed in the right direction. More sea turtles are nesting on Oahu and the biggest threat to the hatchlings is artificial light. Researchers encourage the public to refrain from using flashlights on the beach during nesting season and keep at least 10 feet from sea turtles and their nests. The city turned off the lights at Sandy Beach on Sunday in anticipation of hatchlings emerging from six honu nests. The lights will be turned back on when researchers verify that the eggs have hatched. Tim and Tracey had to say good-bye to their dog Buddy after 14 years of loyal companionship. He brought great joy to the Stott-Kelley family over the years and will be sorely missed. Two days later, Tim and Tracey welcomed a new seven-month-old yellow-lab puppy into their home, appropriately named Buddy. While he can’t replace the first Buddy, he has both of them wrapped around his “giant” puppy paws. Warning Signs Tim and Tracey have owned investment real estate for more than 20 years and Tim has lead Stott Property Management for the past 14 years. During that time, they have learned the value of hiring competent licensed professionals to manage investment real estate owned from a distance. No Monthly Revenue: Stott Property Management, LLC has taken over accounts where the owner did not receive any income for months. In one extreme case, the owner had not received any income for almost a year without any communication from the property manager. The reasons for the lack of income ranged from excessive vacancies, failure to collect rent from dead-beat tenants, allowing friends and relatives to live in a unit rent-free, to outright fraud. Monthly Statements: Your property manager should send you statements once per month at a minimum. These monthly statements should show your account balance at the beginning of the month, the amount of rent collected, all of the expenses paid on your behalf including the property management fees, the amount of the proceeds that you should have received, and the ending balance. Paid invoices for all the expenses that your property manager paid on your behalf should accompany the statements. Communication: Effective, two-way communication is the linchpin for any successful investor / manager relationship. Communication comes in the form of financial statements, e-mail, phone calls, and face-to-face meetings. Tim and Tracey think that effective communication is so important in their business, that both Stott Real Estate, Inc. and Stott Property Management, LLC have full-time receptionists whose primary responsibility is to answer the phones. There is nothing more frustrating that being a customer that has to traverse “voice-mail hell” during normal business hours. There are property managers that do everything possible to avoid phone calls and meetings. Uncomfortable and unpleasant conversations are part of the business since moving, money, and family issues are some of the most stressful situations that people deal with. Communication should be even more of a priority during a crisis and there could be a real problem if you aren’t hearing from your property manager. Constant Turnover: Many larger property management companies have property managers that are independent contractors while centralizing their bookkeeping and maintenance services. One sign of potential problems in an office is a constant turnover of property managers resulting in someone new repeatedly taking over management of your property. Constant turnover can result in a loss of knowledge regarding your property and your investment can suffer if inexperienced managers take over. Mergers: Some large companies on Oahu have merged over the past couple of years to consolidate operations and save money. Poorly executed mergers can result in operational chaos that can negatively impact your investment. You may want to consider a change if your company has been bought out or has merged several times and you are no longer receiving the level of service that you require. Stott Property Management, LLC has taken over many accounts from property managers that raised one or more red flags. Their client’s calls either went unanswered or the property manager would make excuses for failing to return phone calls and e-mails and to why the statements were not being delivered. By the time Stott Property Management took over, the affected owners lost thousands of dollars in lost income for various reasons including outright fraud. Pay attention to the warning signs and start interviewing alternatives if your current property manager gives you reasons to be concerned. Security Deposits Note: Stott Real Estate, Inc. and Stott Property Management, LLC do not employ attorneys and its employees are not authorized to give legal advice. Stott Real Estate, Inc. and Stott Property Management, LLC encourage individuals to seek legal advice from licensed attorneys before enforcing the rental agreement or acting against a tenant or any other individual. The purpose of the article is to highlight limitations and deadlines required by Hawaii Revised Statutes (HRS) Chapter 521, the Landlord Tenant Code, and provide a guide to properly administer tenant security deposits during check-in and after checkout. Security deposit handling requirements vary state by state, so it is critical that you know the specifics for each state in which you own rental property. The state of Hawaii defines a security deposit as money deposited by or for the tenant with the landlord to be held by the landlord to: Remedy tenant defaults for accidental or intentional damages resulting from failure to comply with section 521-51, for failure to pay rent due, or for failure to return all keys, including key fobs, parking cards, garage door openers, and mail box keys, furnished by the landlord at the termination of the rental agreement; Clean the dwelling unit or have it cleaned at the termination of the rental agreement so as to place the condition of the dwelling unit in as fit a condition as that which the tenant entered into possession of the dwelling unit; Compensate for damages caused by a tenant who wrongfully quits the dwelling unit; Compensate for damages under subsection (b) caused by any pet animal allowed to reside in the premises pursuant to the rental agreement; and Compensate the landlord for moneys owed by the tenant under the rental agreement for utility service provided by the landlord but not included in the rent. The security deposit must not exceed a sum equal to one month’s rent. The landlord may require a pet deposit not to exceed one month's rent in addition to the security deposit to compensate the landlord for any damages caused by any pet animal allowed to reside in the premises pursuant to the rental agreement. The additional deposit may not be required for a service animal or emotional support animal. Please note that Hawaii limits the security deposit to the equivalent of one month’s rent and the landlord may only collect a full first month’s rent when the tenant checks in. Some clients have asked Stott Property Management, LLC to collect a security deposit plus the first and last month’s rent which is prohibited by the state of Hawaii. Standard business practice specifies that the security deposit shall be paid using certified funds (bank check, money order, or cash) and you as the landlord should not relax that requirement. Successful con artists are very skilled in developing trust before taking their victim’s treasure and accepting a personal check or allowing a tenant to pay the security deposit after moving in exposes you to the risk of being conned. It takes a finite amount of time to sue for possession of the rental property after turning over possession of the keys to a tenant resulting in the loss of rent, court fees, and attorney fees. Stott Property Management, LLC’s rental agreement specifies that the security deposit may not be used to pay last month’s rent and we enforce it by charging a late fee if the last month’s rent is not paid by the due date specified in the rental agreement. We are asked repeatedly by tenants and clients if the security deposit can be used for rent or other repairs while the tenant currently occupies the unit. Stott Property Management, LLC maintains that the security deposit must remain the security deposit trust fund until the tenant checks out and turns over the keys. This policy maintains and enforces that the security deposit may only be used to pay for unpaid charges and tenant caused make ready cleaning and repairs after the tenant checks out. The security deposit remains the tenant’s funds and may not be spent on any expenses until the tenant checks out and voluntarily returns possession of the rental property to the landlord. The landlord has fourteen days to process the security deposit if the landlord intends to withhold a portion or the entire security deposit for unpaid charges and make ready expenses due to a tenant’s actions in inaction. The landlord must notify the tenant in writing of any unpaid expenses and charges that the security deposit is being used for with copies of estimates or paid invoices for make ready repairs and cleaning that the tenant is responsible for. The fourteen days is a hard deadline and Stott Property Management, LLC has witnessed judges in small claims court order landlords to return the security deposit in full to the tenants even when the landlord provides documentation showing that the tenant owed the money. The landlord has the authority to keep the security deposit in full if the tenant is absent from the rental for twenty continuous days without notifying the landlord. Stott Property Management, LLC has a policy of notifying the tenant in writing of the total rent the tenant is liable when a tenant “wrongfully quits” or breaks a lease. The letter states the amount of the remaining rent the tenant owes minus the security deposit and is mailed to the tenants forwarding address or rental address (if the tenant does not provide a forwarding address) and a copy is posted on the front door of the rental property. This step helps meet the security deposit processing requirements even if the tenant tries to argue that he or she properly terminated the lease. A follow-up letter is mailed to the tenant’s last known address if a new tenant moves into the property and lowers the amount owed by the previous tenant. The state of Hawaii is very specific in how a security deposit must be handled and failure to follow the statute can be very costly to an uninformed landlord. Stott Property Management, LLC recommends that you read HRS 521-44 in full and establish policies abide by the requirements established by state law. Failure to do so can be costly and increasingly so if a judge determines that the violations are intentional. Odds & Ends Lowering Insurance Rates: Inflation has driven insurance rates sharply higher this year and some homeowners and raising their out-of-pocket deductible to offset the insurance company’s rate hike. One couple in the U.S. had their insurance premium raised from $1,600 per year to $2,700 per year due to hailstorms the previous year. By raising their deductible from $5,000 to $10,000, they lowered their premium to $1,100 per year. The $1,600 year savings will pay for itself if the couple does not have a claim in the next four years. Homeowners should weigh the risks of raising their deductible before making the decision. If you live in an area where serious storms are common, then raising the deductible might not be the best idea. However, if the chance of experiencing expensive home damage is low and the homeowner has not made claims in the past, then raising the deductible is most likely a good financial decision. If you decide to raise your deductible, then you should add the deductible to your emergency fund in an interest-bearing account. The interest earned can add to the annual savings. Running up a credit card bill because you don’t have the funds available if you suffer home damage will simply add to the costs and make your financial situation worse. Searching for Yield: The Wall Street Journal recently reported that some of America’s largest landowners are having problems finding homes to buy at prices they are willing to pay. The lack of supply and higher interest rates have made it much more difficult to buy homes at a price exceeding the cost of capital. In a real estate world where returns are 4% return on equity, the 5% interest banks pay looks very enticing. One large landlord has been selling property whose values have appreciated to the point of yielding less than 4% and putting the money in the bank. If a small investor is in a similar situation, then he or she should think twice before following a similar strategy. While a large company has options for offsetting capital gains and avoiding taxes, a small investor has fewer options. The federal capital gains tax is 15% for married couples filing jointly earning between $89,250 and $553,849 and 20% for married couples filing jointly making more than $553,850. The rates and income levels change based on how taxes are filed so you should check with your tax advisor. States often tack on an additional capital gains tax (Hawaii’s is 7.25%). Therefore, a small investor should estimate their capital gains taxes before deciding to sell. Your returns could end up shrinking if you have a large capital gains tax bill. The only way to increase your returns and defer capital gains taxes is by completing a 1031 exchange. If you own a rental property in an expensive home market with low cash flow, like Hawaii, then you may find rental properties providing higher positive cashflow elsewhere in the United States. Please contact us at home@stott.com if you would like to explore a 1031 exchange. Must Have Amenities and Lease Terms: Choosing the correct investment property from the beginning is paramount. Must have amenities vary based on the region of the country your investment property resides and the type of renter you are looking to attract. This article will focus on the most desirable traits for long-term rental properties (a lease greater than six months) on Oahu. Most tenants today look for a rental that have at least one assigned off-street parking space (two is optimal for a two- or more-bedroom rental), stove, oven, refrigerator, dishwasher, washer/dryer, and air conditioning. Air conditioning has become much more important over the past decade and it has a measurable impact on rents and vacancy rates. When it comes to lease terms, allowing pets has the greatest impact on rents and vacancy rates. The landlord typically has the discretion when the rental property is a single-family home. Investors targeting long-term tenants should verify that the association allows pets and the type and size of pets allowed. Please note that if you refuse to allow pets, then it is better to buy a condo in an association that does not allow pets so that you minimize your competitive disadvantage. Please also note that a tenant could still bring in a pet into the rental if they have a doctor’s note claiming that the pet is an emotional support animal. The list of must have amenities and lease terms is not a buffet of items that you can pick and choose from. A rental missing one of the appliances, or one that does not allow pets, will turn off a significant percentage of potential renters. While most rentals do offer a full kitchen and washer/dryer, many still lack air conditioning or prohibit pets. Over the past three years, Stott Property Management, LLC has witnessed rental properties languish on the market because the client refuses to install air conditioning and/or allow pets.

The September median sales price for single-family-homes was $1,050,000 (4.5% lower than September 2022) and for condos was $532,500 (6.0% higher than September 2022). Higher interest rates continue to weigh on demand with 16.5% fewer single-family homes selling in September compared to the year before and 24.2% fewer condos selling. The market continues to search for a bottom. There were 7.6% fewer single-family homes listed in September and 14.1% fewer condos. You can review more detailed current and past real estate market data on our website using the link below. Monthly Statistics The University of Hawaii Economic Research Organization’s (UHERO) third quarter forecast includes the immediate impact of the wildfires on Maui’s economy and their estimates for the eventual recovery. UHERO reported Maui visitor numbers plunged by nearly three-quarters immediately following the wildfire resulting in revenue losses of $13 million per day. Visitor numbers have just begun to recover in late September. Visitor arrivals are expected to reach 50% of 2022 numbers by the end of the year and reach 80% by the end of 2024. Unemployment numbers have surged to over 11% and the state is once again struggling to process the claims because they still have not updated their computer systems. The wildfires displaced about 7,000 individuals and it will take years to replace the destroyed housing. UHERO expects the impact on the rest of the state will be muted. Tim and Tracey’s friend has a tour business on Oahu, and she has had several cancellations since visitor plans included a visit to Maui. Time will tell how much Oahu visitor numbers will be impacted through 2023 since many people have already made and cancelled planned trips to Maui and elsewhere. When Maui Mayor Richard Bissen on September 27 th announced that West Maui would be gradually reopened for tourism beginning October 8 th , some members of the Lahaina community protested. The displaced residents want their kids back in school, a plan for underground utility lines, establishment and better management of firebreaks with expanded use of reclaimed wastewater, and water for irrigation of traditional crops. The demand for resources appears at odds with the island losing $13 million per day in lost visitor revenue. It appears the next few months will be contentious as West Maui tries to recover from the devastating wildfires. The first day of the planned opening on October 8 th was quiet with small groups gathered to honor family and friends lost during the wildfire at the intersection of the Lahainaluna Bypass and the Lahainaluna Road into West Maui. People laid fresh flowers at the site where crosses represented victims of the wildfires. Flags from Hawaii, the Philippines, Japan, Mexico and more represented the nationalities of those that lost their lives. Some local leaders do expect things to get more tense if the county and state continue to fail in support of the families in need. UHERO published Hawaii Housing Factbook in June to specify the challenges Hawaii residents face when trying to pay for housing. UHERO just released the Hawaii Housing Dashboard to compliment the factbook and allow users to delve into this interactive platform and pull up statistics about Hawaii’s neighborhoods. For instance, over one-half of Oahu renters spend more than 30% of their income on rent and over one-quarter of renters spend more than 50% on rent. The median housing age is 47 years and only 24,000 housing units have been added over the past five years. The median length of time to acquire a housing permit stands at 153 days. To access the dashboard, visit the website: Hawai'i Housing Data Dashboard The 2020 U.S. Census reported a majority of Native Hawaiian and part Native Hawaiian people live outside of Hawaii. 46.7% of Native Hawaiians live in Hawaii versus 55% living in Hawaii according to the 2010 Census. The City and County of Honolulu noted violent and property crimes have dropped significantly since Safe and Sound Waikiki was implemented September 5 th , 2022. Assaults dropped by 4%, burglary dropped 31%, criminal property damage dropped by 28%, and breaking into automobiles dropped 35%, and theft overall dropped by 6% compared to the same period one year ago. Safe and Sound Waikiki utilized the combined efforts of the city’s vice squad, foot patrol officers, and the community policing team to discourage continuing crime. The mayor stated the program will focus its efforts helping the drug-addicted and homeless population in Waikiki to build on the first year’s success. The City and County of Honolulu purchased vacant land in Kailua’s Coconut Grove neighborhood to build 42 one-bedroom and two-bedroom affordable apartments for rent. Through a public-private partnership, a developer will be provided with a land lease to build and rent out the rentals at “affordable” rents. There was no mention of the number of off-street parking that has been a bone of contention in the community. Street parking is already difficult to find, and the problem will compound if sufficient off-street parking is not provided. The Environmental Protection Agency (EPA) ordered the City and County of Honolulu to meet the pollutant discharge requirements at the Kailua Regional Wastewater Treatment Plant. The plant discharges exceeded the limits for Enterococcus, bacteria from fecal matter over 13 days in April and May. The EPA ordered the installation of new bacteria treatment technology and to conduct major repairs to the biological treatment units. The city plans on installing an ultraviolet disinfectant system in 2025. Kailua Regional Wastewater Treatment Plant Bill Wong, the architect who pleaded guilty to bribing members of the Department of Planning and Permitting (DPP), still has an active license and is submitting plans for permitting approval. The Department of Commerce and Consumer Affairs (DCCA), the state’s licensing authority, has yet to take formal action against the architect. The DCCA’s only comment was that a complaint was opened and pending with the Regulated Industries Complaints Office (RICO), the complaint department. The DCCA can suspend or revoke licenses for failing to maintain a record of “trustworthiness, fair dealing, and financial integrity,” and after a criminal conviction “directly related to the qualifications, functions, or duties of the licensed profession or vocation.” Wong was sentenced in July and will be serving time starting January. It will be interesting to see if he loses his license before reporting to jail. The success of community centered visitor management at Ha’ena State Park on the North Shore of Kauai has state officials hoping the effort can be duplicated throughout the state to create a more sustainable tourist industry. Hawaii residents chaffed at 10.4 million visitors mobbing the state in 2019, straining the state’s park facilities. The state park set a daily visitor cap, charges nonresidents an entry fee, and visitors must pay for parking when they use the park’s shuttle service. Community members meet visitors when shuttles arrive to make sure they have enough water, point out lifeguards on duty, and give times to leave different hiking spots to make the last departing shuttle at 6:40 pm. The area was a breadbasket for Native Hawaiians before the state park was created and poor management resulted in invasive plants and trees overwhelming the landscape. Local families started caring for the park by ripping out invasive trees, restoring a traditional waterway, and planting kalo (taro) for the community. A 60-page document on replicating the model has been published and communities like Kealakua on the Big Island and Wai’anapanapa on Maui hope to implement the program. The Hawaii Tourism Authority and Hawaii county funded stewards at Waiuli and Lehia beach parks to manage visitor traffic. Hawaiian Electric Company (HECO) and Maui police have come under criticism for blocking traffic out of Lahaina while the wildfires spread. Maui police claim they were directing traffic from downed power lines even though HECO had de-energized them six hours prior and the downed lines posed no threats. Residents spent up to 2 ½ hours trying to navigate Lahaina’s narrow streets since the two main thoroughfares were blocked by police or HECO’s utility workers. No timeline has been established for releasing a detailed analysis of the town’s evacuation. The University of Hawaii (UH) Wahine volleyball team started the season at a respectable 12-5 and 5-1 in the Big West Conference trailing first place UC Santa Barbara by one game. The UH Warriors football team is off to a much slower 2-4 start, 0-1 in the Mountain West conference. UH has a chance of improving its record since the next four opponents have losing records as well. A lost sea turtle hatchling was recently rescued at a skate park and placed in the ocean. Hatchlings rely on moonlight and celestial light to find the shore when emerging from their nests. Apparently, this hatchling was one of fifty that became disoriented by artificial lights and headed mauka (towards the mountain) instead of makai (towards the ocean) while only seven of their siblings headed in the right direction. More sea turtles are nesting on Oahu and the biggest threat to the hatchlings is artificial light. Researchers encourage the public to refrain from using flashlights on the beach during nesting season and keep at least 10 feet from sea turtles and their nests. The city turned off the lights at Sandy Beach on Sunday in anticipation of hatchlings emerging from six honu nests. The lights will be turned back on when researchers verify that the eggs have hatched. Sea Turtle Rescue Groups of leaves were seen sprouting on Lahaina’s 150-year-old banyan tree giving the community hope that the historic tree will survive. Arborists continue to volunteer their time to aid the tree’s recovery. Kilauea ended less than two months of quiet with an eruption in Halemaumau’s crater on September 9 th . The eruption is currently contained in the crater and is not a threat to surrounding communities. Vog has returned with this latest eruption. The volcano spewed 190,000 tons of sulfur dioxide the first day and then emissions lowered to about 49,000 tons per day. All Pro tight end Russell Francis died of a plane crash on October 1 st in New York. Francis was a quarterback for Kailua High School before playing his senior year in the mainland and going to college at Oregon. He caught his first college pass from June Jones, who later coached at the University of Hawaii. He played nine seasons with the New England Patriots and six with the San Francisco 49ers. He was as a sports director for KGMB-TV Hawaii and participated in several American Savings Bank Commercials. Friends remember Russ Francis as an imposing athlete with an iconic personality New England Patriots and six with the San Francisco 49ers. He was as a sports director for KGMB-TV Hawaii and participated in several American Savings Bank Commercials. Former UH football coach Bob Wagner passed away October 3 rd on the Big Island at the age of 76. Coach Wagner headed UH’s program for nine years and was the second winningest coach behind June Jones. Tim and Tracey welcomed a new seven-month-old yellow-lab puppy into their home, appropriately named Buddy. Tim has decided their dogs should be named Buddy in the future, and it seems to make sense. Many people have walked up to the puppy while walking on the beach to pet him saying hey Buddy. They then ask what his name is. Buddy is quite the rascal in the morning and constantly searches for things he should not have until Tim takes him on his morning walk. He does get quite mellow once he works through his manic puppy energy first thing in the morning. Tim and Tracey absolutely love him.

The August median sales price for single-family homes was $1,110,000 (1.4% lower than August 2022) and for condos was $515,000 (3.3% higher than August 2022). Demand continues to slide with a 19.7% drop in single-family home sales last month and a 16.9% drop in condo sales. Pending sales continue to decline with 14.4% fewer single-family contracts waiting to close and 10.5% fewer condo contracts. Fewer sellers are putting their homes on the market with a 13.4% reduction in new single-family home listings and 9.7% fewer condo listings. It appears that the market still has months to go before reaching a new equilibrium from rising interest rates. You can review more detailed current and past real estate market data on our website using the link below. Monthly Statistics Residents of affordable housing are being forced out by Honolulu’s Bill 7 that provides developers breaks in zoning requirements and city fees. In one example, 15 tenants living at 1202-A Pua Lane have received notices to move so that a new 60-unit building can be built. Tenants currently pay $500 to $1,300 per month and a new two-bedroom affordable apartment can fetch $2,947 per month according to current affordable housing rent rates in Honolulu. Tim noticed in 2020 when filling out a University of Hawaii Economic Research Organization (UHERO) survey that a majority of Stott Property Management’s rentals rented for less than Honolulu’s affordable housing rent rates. Why the city and state are not making vacant land available for high density housing is a head scratcher considering that only 7% of Hawaii’s land is currently zoned for housing. Hawaii’s current affordable housing initiatives are destined to fail Hawaii’s lower income residents. Maui wildfires fanned by high winds from Hurricane Dora killed 115 people and destroyed historic Lahaina and damaged or destroyed more than 2300 structures including 2,000 homes. More than 2,000 people were housed overnight on August 8 th , and 4,000 visitors were flown to Oahu on August 9 th . Fourteen people had to be rescued after jumping in the water to escape the Lahaina wildfires. Three victims have been flown to Oahu and were treated at Straub Hospital’s burn unit. 100 firefighters fought the blaze and high winds knocked over 30 utility poles causing additional fire and destruction. Many flights to Maui have been canceled and visitors are encouraged to check their reservations before making the trip. Officials don’t expect to know the extent of the damage for weeks. The state Attorney General started a formal investigation into the decision-making and policies before and during the wildfires. No sirens were activated to warn residents of the incoming danger and many in Lahaina woke up in the middle of the night to their neighborhood burning down, too late to escape. The Hawaii Emergency Management Agency and Maui Emergency Management Agency triggered alerts to cell phones, TV, and radio, however, Lahaina was without power for most of Tuesday with power poles and some cell phone towers down. Police and fireman were going down streets with their sirens on, knocking door-to-door. Many of the dead were found in burned out cars trying to escape. Lahaina firefighters were denied their primary tool for fighting fires when the town’s water system collapsed. The town relies on creek surface water and ground water pumped from wells which were strained from the current drought. The deputy director of water resource management from the state Department of Land and Natural resources delayed the release of water to landowners who wanted to protect their property from the fire for much of the day. The water was not released until 2 ½ hours after the fire had spread and nine hours after the initial request for the water. Firefighters noticed that the water pressure was dropping when the fire jumped over the highway and consumed houses. The resulting water leaks from melted pipes in the destroyed homes resulted in the fire hydrants running dry. Additionally, hurricane force winds prevented helicopters from carrying seawater inland to dump it on the wildfires. Firefighters had to halt their attempts to stop the fire and risked their lives to save as many Lahaina residents as they could. Maui County officials released the names of 385 people who are still missing as of September 4th. The Federal Bureau of Investigation (FBI) worked with the county to compile the list and released it in hopes of having the missing individual or friends and family contact the FBI to inform them the individual is safe. 1,732 people originally reported missing have been found safe. The state Department of Education has been unable to account for 495 students as of September 7 th and state officials don’t know how many students have died in the fire. Only 55 of the 115 people known to have died in the wildfires have been identified. Before-and-after video reveals Maui's wildfire damage Maui County sued Hawaiian Electric Company (HECO) on August 23 rd for failing to de-energize downed power lines, accusing the company of starting the wildfire that leveled Lahaina. HECO announced in a press release on August 28 th denying Maui County’s contention. HECO claims the power lines were de-energized for six hours before the wildfire ignited at 3:00 pm on August 8 th and HECO will vigorously defend itself in court if necessary. Officials recommend making cash donations if you are planning to send relief to the wildfire survivors. Maui’s port has been overwhelmed by food, clothing, and other donations because there are not enough vehicles to take them away from the dock. Relief coordinators also ask individuals to avoid self-deploying because Lahaina is closed off as teams search for human remains. State and federal workers have started the cleanup of Lahaina Harbor the week of September 4 th after completing a search for bodies in the harbor and nearshore waters. Officials don’t know how many boats sunk but the harbor had 99 boat slips reported near capacity when the wildfires broke out. An absorbent boom has been deployed around the harbor to contain hazardous materials and an initial assessment was made with remotely operated submersible vehicles. Three contractors have been designated to help with the cleanup efforts and 33 Coast Guard personnel have initially been assigned to the effort. The Coast Guard won’t allow public access to the established safety zone until the navigation channel has been freed of debris and harmful chemicals. The University of Hawaii Economic Research Organization (UHERO) issued a report on the economic impact from the wildfires. The economic losses currently include about $70 million per month from the destruction of Lahaina businesses and about $13 million per day from the closure of West Maui including Kaanapali to visitors. The number of visitors has dropped about 75% resulting in layoffs of about 15,000 employees so far. Here is a link to the full article. After the Maui wildfires: The road ahead “Tree-huggers” are working to revive a 150-year-old banyan tree in Lahaina after an arborist found no significant signs of charring or cracking of the main trunk or root system and the ground did not appear to be burned and the benches were still standing. The group is watering the tree and ground daily and will put down a layer of compost to help the tree heel. The tree was a gift from India in 1873 and has been providing shade for residents and visitors for generations. Here is a picture of Tim and Tracey’s kids playing in the tree during a family vacation. Greater Good Charities in partnership with Southwest Airlines and Lucky Dog Animal Rescue flew 130 sheltered kittens, cats, and dogs to Portland Oregon to make room for injured, lost, and displaced pets from the Maui Wildfires. A Portland Oregon resident immediately adopted Toulouse, when she learned Toulouse, the kitten she sponsored after finding him hiding in a cabinet at the sanctuary, was on the flight. A state senator from Maui announced he would retire on October 31, 2023, so he could participate in the lawsuits from Maui wildfire victims as a partner in law firm Takatani, Agaran, Jorgensen, & Wildman. A Honolulu wastewater executive, Milton Choy, was sentenced to three years in prison for a multi-million-dollar bribery scheme, paying over $2 million in bribes in return for $19.3 million in sole-source contracts. Choy paid Stewart Stant, the then Director of Maui County Department of Environmental Management who spent the money on hostess bars, luxury hotel stays, travel, and jewelry. Choy also paid bribes to convicted former Senate Majority Leader J. Kalani English and former state Representative Ty Cullen. The bribery scheme is considered the largest in Hawaii’s history. Another Department of Planning and Permitting (DPP) employee has been sentenced to prison for taking bribes to fast-track projects through the permitting process. She is the fifth person convicted of taking bribes from architects totaling more than $300,000 combined. The state’s long-term care crisis continues to worsen. 219 hospital patients are ready for discharge and have been waitlisted for an average of 123 days for a space in a long-term care facility. One hospital patient has been waiting two years. Some licensed facilities have beds available but don’t have the nurses and nursing assistants available to take care of the additional patients. Assisted living facilities won’t take the patients because Medicaid won’t reimburse them for their services. The City and County of Honolulu opened a new lifeguard tower at Kahe Point, more commonly known as “Electric Beach” due to the electric power plant outlet that returns warm water from the plant to the ocean about 100 yards offshore. The lifeguards have acted about 160 times per day to prevent beachgoers from injuring or killing themselves and many beachgoers check in at the tower to ask about ocean safety before swimming. Tim and Tracey have conducted ocean swims several times over the years marveling at the variety of tropical fish attracted by the warm water from the power plant outlet and have witnessed pods of dolphins swim by. Swim with Us Three Kaneohe-based U.S. Marines were killed in a V-22B Osprey crash in the jungle of a northern Australian island while participating in Predator’s Run, a multi-national training exercise. Fifteen U.S. Marines were onboard, nine have been treated and released, and three remain in the hospital with more serious injuries. There have been five deadly crashes involving the Osprey since 2012. The U.S. Navy started repacking operations to fill empty pipelines on August 28 th to remove air and commence gravity draining of the Red Hill Fuel Tanks by October 16 th . The repacking operation will take several days where the integrity of the system will be reverified and gravity draining will follow and conclude roughly three months later. The U.S. Navy will then have to decide how to remove the remaining 100,000 to 400,000 gallons of fuel remaining in the tanks after completing the gravity drain. The City and County of Honolulu awarded a $2.58 million contract to remove the Haiku Stairs, known as the “Stairway to Heaven” and the Moanalua Saddle Stairs. The Nakoa Companies, Inc. was chosen for its specialization in complex construction projects. The process will include having a biologist inspect each section of the stairs before removal to protect the native plants and add native plants as necessary to prevent erosion. The Honolulu District Courthouse was closed on August 16 th due to damage by a contractor during the evening of August 15 th to address structural damage. Coincidentally, one of Tracey’s friends texted pictures from a courthouse showing a garbage can catching a water leak from a ceiling, and “out-of-order” elevator, and section of tiled flooring blocked off and covered with plywood. The decay of the state’s infrastructure makes one wonder how Lahaina will ever be rebuilt. The seventy Ho’olau Kanaka hula festival brought together Hawaiian practitioners to Moanalua Gardens including musicians, cultural experts, and eight hula halau. The annual event concludes with the halau performing hula in a noncompetitive environment. The purpose of the event is to educate and inspire people to continue the Hawaiian tradition while encouraging people to enjoy what they are doing and creating.  Zippy’s is opening its first restaurant outside Hawaii in Las Vegas this fall. Tracey grew up eating at Zippy’s and was dismayed when we moved to Pflugerville, TX and thought her kids would grow up eating at Springhill Café. Fortunately, we moved to Hawaii in 2004 and our kids enjoyed the meals that Tracey grew up with.

The July median sales price for single-family homes was $1,090,000 (1.6% lower than July 2022) and for condos was $500,000 (unchanged from July 2022). Demand continued to fall with the number single-family homes selling dropping 28.2% and condos dropping 18.5% and pending sales of single-family homes dropping 16.8% and condos dropping 13.0%. The supply of homes remains tight as 28.8% fewer single-family homes came on the market and 15.4% fewer condos in July compared to last year. You can review more detailed current and past real estate market data on our website using the link below. Monthly Statistics The S&P CoreLogic Case-Shiller National Home Price Index fell 0.5% lower in May 2023 compared to May 2022. The price reduction was the second month in a row as mortgage rates bounced around between 6% and 7%. Unusually low inventory has helped prevent greater price reductions as homeowners become more reluctant to sell and trade their low mortgage rate for a higher one. The median existing-home sale price dropped 0.9% in June compared with June 2022. 2023 continues to challenge landlords with rising costs due to inflation. The latest reminder arrived in June when the insurance bill for Tim and Tracey’s nineteen units arrived in the mail. The bill rose over $7,000 or 25% over the past year. Combined with higher interest rates on their business line of credit, interest and insurance expenses rose 92.67%. After speaking with their financial advisors to confirm their decision, they suspended their monthly investment allotment to pay off the variable rate debt in their investment portfolio. Honolulu rail ridership fell 59% from 8,952 passengers per day to 3,666 passengers per day once rail charged $3 over the first five days. The Honolulu Authority for Rapid Transportation rail project is the most expensive in the world with each resident chipping in $10,500 to $13,700 depending on the final cost estimate. The Grassroot Institute of Hawaii estimates that taxpayers additionally subsidize chip in $51 for every $3 ride. Governor Josh Green issued an emergency proclamation aimed at building more affordable housing by relaxing state and county scrutiny of affordable housing projects to speed construction. Current regulations add approximately $233,000 to $335,000 to the cost of building a new home. The oversight does delay projects, yet some minimal oversight by neighborhood organizations does prevent building housing without sufficient parking. Per usual, the governor relies on government to solve the problem when government originally created the problem. A recent article describing the drama around a 243-unit complex that includes affordable housing repeats Hawaii’s failure at creating and maintaining housing. The Hawaii Community Development Authority (HCDA) failed to pay maintenance fees two years ago, failed to address hot water distribution problems and mold, and recently threatened to evict two tenants over past due charges of $42 and 50 cents. The residents have had enough and are making their complaints public. HCDA officials complain that rental income fails to pay management and repair expenses and the current deficit is roughly $25,000. The problems identified in the Honolulu Star Advertisers article will likely grow if the state builds and manages 50,000 more affordable housing units per Governor Green’s ambition. 300 members of Hawaii’s National Guard are participating in the Pacific Region’s largest military exercise, Talisman Sabre. The soldiers and their F-22 Raptor fighter jets are among 30,000 troops from 13 countries taking part in the 10thversion of the biennial exercise. The exercise is taking place in Australia this year and the Hawaiian force reports to an Australian Major General as part of the Australian Army’s 1st Division. The arrangement is a slight role reversal since U.S. Troops normally lead other nations in real world multi-national operations like Iraq and Afghanistan. US Military With Indian CO Conduct Talisman Saber Exercises St. Augustine by the Sea Catholic Church will resume its free lunch program after a pause requested by Mayor Rick Blangiardi over neighborhood concerns that the program was attracting criminals along with the homeless. Blangiardi showed Father Akiona pictures of repeat criminals who were attending the free lunches and the priest agreed to suspend the lunches. Supporters of the church pushed back and Father Akiona challenged the police and the mayor to address the problem since feeding those in need was unrelated to law enforcement. Many businesses do support the mayor’s initiatives and credit the Safe and Sound push in Waikiki and nightly beach closings with the sharp drop in crime in Waikiki in 2023. The Board of Directors of Hokua, a luxury condo in Kakaako, settled a case concerning retaliation against another board member for $600,000 in a widely watched case of a law passed in 2017 to prevent such incidents. A retired Army colonel had joined the board and questioned an interior decorating contract when the invoice came in roughly three times the original estimate. The company was owned by a relative of one of the board members. When the new board member questioned the incident, the rest of the board removed him from the renovations committee. The case was settled before a judge could rule on the new law’s anti-retaliation provision. Ironically, the settlement will likely be paid by the association’s insurance resulting in higher premiums to condo owners. The defendants in the case won’t have to pay a dime. Civil Beat reported condo associated board members are often prevented from helping condo owners in a timely manner by heavy handed property managers from the management companies hired by the condo association. One board member was repeatedly instructed to wait until the next monthly board meeting to inquire about important maintenance issues like a hot water heater that was down for four days and a clogged trash chute. Stott Property Management, LLC has run into this type of interference which results in unnecessary delays of important repairs resulting in hardship for both the tenants and owners of impacted condos. Some management companies even prevent board members from speaking with the contractors hired by the association. In one case, the management company refused to give a detailed accounting of a $7,000 air conditioning charge to a condo owner who was unaware of any work being completed in her unit. The management company responded that the association would be charged extra for requesting copies of paid invoices. Prepare to pack one set of clean clothes in your carry-on luggage when flying to Daniel K. Inouye International Airport or Lihue Airport. Honolulu’s airport ranked as the #9 worst and Kauai’s airport ranked as the #13 worst airport for lost luggage according to Forbes Advisor. The study included the number of property damage and property loss claims per domestic passengers and percentage of property damage and property loss claims paid in full. Best Travel Insurance Companies Of August 2023 The University of Hawaii (UH) is wrapping up its $30 million expansion of the Clarence T.C. Ching Athletics complex to raise seating capacity from 9,300 to the Division I minimum of 15,000 seats for the September 1st opener. UH was forced to upgrade its practice field to a Division I game field when Aloha Stadium was condemned in 2020. While UH scrambled to provide a home field for its football team, the state has not even demolished the rusted out and unusable stadium. UH will likely bear similar fruits to its work with additional students attending UH football games similar to the resurgence that Tim’s alma mater, Tulane University, experienced when it built an on-campus stadium versus using the Louisiana Superdome. Tim does have fond memories of tailgate parties at the Superdome, however, games against Florida State were a challenge when the Green Wave played in front of 10,000 Tulane fans and 70,000 Florida State fans at their home field. International Market Place has added an audio tour to its establishment. The approximately one-hour tour consists of 20 geotagged sights that describes Waikiki history and culture. Part of the tour includes informational plaques and statues of Don Ho and Queen Emma. Visitors can listen to the tour in English, Hawaiian, or Japanese. International Marketplace The Honolulu Department of Transportation Services has awarded $25 million to build an Ala Wai Canal pedestrian bridge that will clear the canal by 14 feet allowing canoes and other watercraft to pass underneath. The bridge will allow construction of the flood mitigation wall planned by the Army Corps of Engineers. The bridge will be open to pedestrians, bikes, and other recreational rolling activities and won’t allow motorized vehicles. Environmental reviews should be completed this winter and construction will begin Summer 2024. The work to restore the Koko Crater Stairs, also known as the Stairmaster to Hell, was completed in early July. The City and County of Honolulu announced that a new 71 square foot platform replaced the deteriorating metal grate platform to the tune of $426,800. The Kokonut Koalition had shamed the city into replacing the platform after volunteers restored the stairs at minimal expense. The city had originally planned to just remove the old platform. Koko Crater Hike. How hard is it? See for yourself. Full Trail video. A French citizen, Sebatien Roure, found an old ring near his village two years ago and learned that it belonged to a World War II Medal of Honor recipient and Hawaii resident, Staff Sargeant Robert Kuroda. Kuroda was killed fighting the Nazis and received the Medal of Honor posthumously. Kuroda was a member of the 442nd Infantry Regiment, made up of mostly Japanese American volunteers, on of the most decorated units in American military history. Kuroda wove through enemy fire to destroy a German machine gun nest that pinned down his regiment by lobbing grenades from 10 yards away. He then tried to rescue an American officer struck by machine gun fire only to find that he had been killed. He retrieved the officer’s submachine gun and took out a second nest. Kuroda was then killed by an enemy sniper. Roure returned the ring to the Kuroda family in 2022 and the family responded by inviting Roure and his family to Hawaii. One of Robert Kuroda’s nephews visited Roure in France and visited the woods where Roure found the ring. French man who found a Hawaiian hero's missing ring from World War II visits his family Roving herds of feral pigs are growing and intimidating residents in some neighborhoods in Tantalus, Palolo, Manoa, and Nuuanu. Some people have been trapped in their cars while the pigs forage next to the vehicles and ignore noisy attempts to get them to move. The herds were once a source of amusement, but the larger numbers and more aggressive members have alarmed many residents. Impacted residents are asking for culling of the herds but the City and County of Honolulu do not currently have an animal control program for feral pigs. The only source of relief is the Pig Hunters Association, a volunteer group that don’t charge but will accept donations. Hawaiian Airlines was ranked the #1 U.S. airline by Travel + Leisure readers in a 2023 survey. The airlines were rated on cabin comfort, in-flight service, customer service and value.  Hawaii’s Allisen Corpuz won the U.S. Open at Pebble Beach on 7/9/2023 to become the first American to win their first LPGA tournament at the U.S. Open. Tracey competed in the North Shore Swim Series crowned jewell, the 2.3-mile North Shore Challenge, Saturday, 7/22/2023. Five-time Olympic gold medal winner, Aaron Piersol, edged out Tracey at the finish line this year. Tracey, who has finished last in her age group in the past, finished 3rd in her age group at the North Shore Challenge and 2ndoverall in her age group for the four race series. Tracey has completed the series 7 times and hopes to continue to complete the series for years to come.

The June median price for single-family homes was $1,050,000 (4.5% less than June 2022) and for condos was $470,000 (4.5% less than June 2022). Demand continues to drop significantly prior with 30.5% fewer single-family homes selling and 24.9% fewer condos selling than in June 2022. Fewer families are moving since they are unwilling to trade their current 2.5% mortgage rate on their existing home for a 7.0% mortgage rate on a new home. 17.1% fewer single-family home listings and 22% fewer condo listings were added to the market in June. Total inventory has crept up further with 14.8% more single-family homes and 16.1% more condos available as property takes longer to sell in this high mortgage rate environment. You can review more detailed current and past real estate market data on our website using the link below. Monthly Statistics The national median price for existing home sales posted its biggest year-to-year decline since December 2011. The May 2023 median price was 3.1% lower than the previous year as rising mortgage rates have slowed the housing market. Existing home prices have dropped year-to-year for the fourth straight month and were expected to be larger but more homeowners with low fixed mortgage rates are staying put keeping the supply of homes low. Bidding wars still exist in certain locations. The Wall Street Journal described in a recent article what Stott Property Management, LLC has seen over the past two months with some of its rentals. Tenants are gaining the upper hand as the COVID fueled rent increases have faded. Asking rents declined 0.6% in May compared to the same month one year ago resulting in the first decrease since 2008 other than a brief drop during the pandemic shutdowns in early 2020. One landlord recently refused to negotiate when a tenant balked at an 11% rent increase resulting in an unnecessary vacancy. The tenants noticed that the advertised rate was lower after they moved, and they would have stayed had they been offered that rent while they were still living there. Stott Property Management, LLC has recommended keeping the rent that same when offering one-year lease extensions for many rental properties. One owner asked after hearing the recommendation when Tim had recommended raising the rent three months earlier. Tim mentioned the change in the market and cautioned that a vacancy would cost more than any potential rent increase would be. Tim suggested only raising the asking rent if the tenant moved and the property became vacant. Vacancy rates have risen 2.6% as tenants move back in with family or find roommates to share the expense. The fall in asking rents follows the national median sales price decline of 1.7%, the largest yearly drop in eleven years. The Hawaii Authority for Rapid Transportation started service on Skyline (the train service’s new name) on Friday, 6/30/2023, four years later and $5.5 billion more expensive than advertised in 2004 by then Mayor Mufi Hanneman. The project confounded four mayors and was the nail in the coffin of Kirk Caldwell’s failed campaign for governor. Tim and Tracey joined 71,000 others in riding the train system from rusted out Halawa stadium to Kapolei and back. The views were inspiring and the absence of development around the stations was evident. Most stations were blocks away from any shopping and restaurants. Skyline HART’s woes with the rail project continue as an eminent domain dispute with Ward Village developer Howard Hughes Corp. proceeds to court and $100 million spent on moving utilities will go to waste since the rail will end before reaching that area. Construction began on a new affordable rental housing tower after a three-year delay. The original plan called for three towers near the Halawa rail station and was rejected by the neighborhood board for the same reasons other boards reject the housing. The project included too many units and too little off-street parking. For some reason, council members can’t fathom that people with lower income still need cars to get to work. The revised project calling for only two towers and more parking was approved by the neighborhood board last year. The tower is scheduled to be ready for residents in the summer of 2025 with monthly rents projected to be as low as $493 for a studio and $1,418 for a four-bedroom unit. Mayor Rick Blangiardi signed the fiscal year 2024 budget totaling $3.41 billion, a 2.7% increase over the previous year focusing on affordable housing and public safety. The budget includes a $350 property tax rebate for all property owners that have a homestead exemption. The Honolulu City Council approved a reduction in property tax rates for Residential A properties from $4.5 per $1,000 of value to $4 per $1,000 of value, saving property owners who have not filed for a residential property tax exemption $500 per year in taxes. The City and County of Honolulu reopened its rent and utility relief program to 2,000 applicants on June 13th and closed the site just two hours later after reaching capacity. The program is being funded by $25 million in state and city recovery funds. The state Department of Health approved the Joint Task Force-Red Hill defueling plan which will take place with the following steps. Repairs to Red Hill facility and pipelines. Operational plan to drain surge tanks at Joint Base Pearl Harbor-Hickam (separate of Red Hill Fuel Tanks). Fill repaired pipeline with fuel to prepare for tank draining. Operational plan to drain main Red Hill tanks and tank bottoms. Removal of fuel from pipelines using gravity drainage. The operation plan to remove the final 100,000 to 400,000 gallons of fuel remaining in pipelines and surge tanks following gravity drainage. The Honolulu Planning Commission reviewed the city’s request for a two-year extension to find a replacement site for the Waimanalo Gulch Sanitary Landfill in Kapolei. The city is focusing its search for a new landfill on federally owned property under purview of the military. Development costs for the new site are expected to range between $60 million and $80 million. Kamaaina, Hawaii residents, will now be able to visit Hanauma Bay Nature preserve from 6:45 am to 1:30 pm without having a walk-in ticket or making an online reservation. The previous rule allowed residents to visit the park without a ticket or on-line reservation until 9:00 am. Active-duty military still get free admission with ID but must make an on-line reservation. Hanauma Bay Oahu Hawaii | 4K Drone Video U.S. Marines stationed at Kaneohe Marine Corps Base are cleared to operate their new Reaper drones, MQ-9A remotely piloted aircraft, and received its first two Reapers in April. The new drones replace the RQ-21A Blackjack drones the Marines previously used and can fly much higher, for longer distances, and can be refueled in the air by tanker planes. The Marines are transitioning from desert warfare and returning to their Naval roots with an emphasis of island and coastal operations. Marines train to disrupt supply lines and use missile batteries to attach enemy ships with an emphasis on the South China Sea. Kilauea started erupting again June 7th drawing large crowds to witness thirteen-to-thirty-foot lava geysers that added thirty feet to Halemaumau’s crater floor. The eruption is currently contained in Halemaumau crater and provides no threat to surrounding neighborhoods. The brief eruption paused on June 20th. Kīlauea eruption overflight video - June 7, 2023 Arizona State University is dedicating $25 million to build a new facility in Kailua-Kona (on the Big Island) to house 300,000 coral colonies and help restore a 120-mile stretch of coral reef on the western side of the Big Island. The new facility will have the capacity to grow one million coral colonies per year. Scientists from Asner labs created detailed maps of nearshore coral reefs of the main Hawaiian Islands taking pictures with a laser-guided imaging spectroscopy camera to a depth of fifty feet. The study documented vast areas of coral decline and degradation from overfishing and rising ocean temperatures. Hawaii reefs have lost over two-thirds of their reef fish over the past fifteen years. The state is partnering with a Big Island company to establish a 2.5-acre sandlewood seed orchard as an effort to restore native forests across the island chain. Sandlewood is considered a hemiparasitic plant because it pulls some of its water and nutrients from adjacent “host” trees. Iliahi (sandlewood in Hawaiian) was highly sought after for its fragrant wood and oil and its nuts were an important food source for Hawaiians. The oil was used for waterproofing, to treat skin ailments, and making tools and crafts. The company started with 3,900 sandal wood on another 3,000 acres of land and has grown the nursery to over 150,000 trees. The company, Haloa Aina, has orders for 160,000 seedlings this year. Kaena Point Natural Area Reserve celebrated its 40th anniversary with a thriving albatross colony. An estimated 30,000 seabirds’ nest in the reserve and ninety-eight albatrosses had nests this year. No seabirds nested in the area 40 years ago when the reserve was created, and the number of nests returned as vegetation returned. The area is the only protected place in the world where the public can walk un-escorted on a trail next to nesting albatrosses. Honolulu entrepreneur and fellow Hawaii tennis player, Tom Park, and his partner, Justin Park (unrelated), visited Chicago to collect the James Beard award for Outstanding Bar in early June. The Parks started the bar, Bar Leather Apron, seven years ago in Downtown Honolulu. The 25-seat bar serves custom cocktails and has an extensive collection of fine whiskeys. The website is provided below. Bar Leather Apron Kailua based Lanikai Brewery is expanding its operations on Oahu through a crowd-funding initiative to open tasting rooms and restaurants in Haleiwa, Hilo, and another unnamed location on a neighbor island. The fundraising campaign ends July 9th and the minimum investment for a share of the company is $250. The company hopes to raise $1 million through the campaign. Lanikai Brewery currently delivers beer to 332 sites around the country. The website is provided below:  Lanikai Brewing | Become An Owner