The Royal Kahana     
January 2015
LOCAL MAUI NEWS

 

Aloha Fellow Royal Kahana Owners!
 
We hit 2015 running ... and this update will reflect that.  Lahaina has been honored as the 2014 eCity of Hawaii by Google.  The award recognizes the strongest online business community in each state ... and Lahaina is the digital capital of Hawaii!  Maui's also been busy garnering awards.  From OpenTable in the 100 best restaurants in the country category ... Mama's Fish House in Paia made the cut.  At the same time AAA has awarded the Five Diamond Rating to the Four Seasons Resort at Wailea and The Ritz-Carlton in Kapalua.  
                    
NASA has selected Maui as the preferred site to establish the world's first laser communications ground terminal.  The site, atop Haleakala, will communicate with next-generation Earth-orbiting satellites and interplanetary probes.   It will spur major economic activity in the state with job creation and revenues.  Speaking of revenues, Hawaii's minimum wage rose for the first time since 2007.  It's a 4 year plan with base wages of $7.75 an hour this year, $8.50 an hour next year, $9.25 in 2017, and $10.10 in 2018.     You might want to start saving your pennies ... new Lexus and Subaru dealerships have just signed on for the Target-anchored Maui Business Park phase II.   It's not often that you get to celebrate an anniversary all year, but golfer's will be able to do just that as Kapalua's Bay Course celebrates its 40 Anniversary throughout 2015.  If you want more information on the different promotions and events click here.
       
This next paragraph took me a while to put together with seemingly unrelated stories ending up back to back.  Here goes ... South and West Maui Senator Roz Baker and Representative Angus McKelvey met with constituents in Lahaina this month.  Quoting McKelvey: "The decriminalization of marijuana is the priority of the House this year.  In particular, the Speaker of the House, Joe Souki, wants to see a decriminalization bill passed this year."   In a completely unrelated story, you won't even have to leave the house to buy Hawaii Girl Scout cookies this year.  If you want to help out the Hawaii Girl Scouts you can do so by taking advantage of their first ever online program.  You can place orders starting Feb 6 through March 15 Here!   If after all that, you don't feel like getting behind the wheel ... Uber has come to Maui. The popular car service lets you order a ride through your mobile device.  You can track where the driver is en route, you'll receive a text when the car arrives, payment will be billed to your credit card, and you don't have to tip the drivers - who own their own cars.
CURRENT MARKET ANALYSIS

rising home prices
Economists and housing analysts have high hopes for the Real Estate market in 2015.  First, we're going to see Millennial (aged 20-30's) young professionals jumping into home ownership.  According to some forecasts, Millennials are expect to drive two-thirds of household formations over the next 5 years.  Home prices are stabilizing.  After two years of abnormally high levels of home-price appreciation, price increases moderated in 2014.  Lawrence Yun, National Association of Realtors chief economist, expects moderate home value appreciation between 4-5% this year.  Likewise, realtor.com is predicting a 4.5% gain.   Another reason for price stabilization is investors exiting the market.    Foreign buyers are also buying less in the U.S.  Chinese buyers continue to have a strong presence, but buyers from Europe and Russia - where their economies are starting to soften - are beginning to lessen their stake in U.S. real estate.  
      
Mortgage rates are expected to rise this year.  Freddie Mac is projecting mortgage rates to average 4.6% but inch up to 5% by the end of this year.  Then there's the return of the 3% down payment.  Freddie Mac and Fannie Mae have lowered their conventional loan down-payment program for qualified first-time buyers, from 5% to 3%.  Foreclosures have been on the decline.  According to Daren Blomquist, vice president of RealtyTrac, foreclosures "will likely fall to pre-crisis levels in 2015."
               
The drop in oil prices will also boost housing.  Yep, housing - not just driving related expenses. In CoreLogic's 2015 Housing Outlook: "Households in the U.S. spend more than $1800 on energy-related costs annually, and 22% of that energy consumption is due to residential real estate."  Rents are continuing to rise.  It's going to continue to be a landlord's market.  The National Association of Realtors says "increases in rental costs in 2015 could outpace annual home-price gains."  In a recently released equity report, about 90% of all mortgaged properties nationwide now have equity again.  If home prices rose by 5% more (predicted for this year), an additional 1 million home owners now in negative equity would also move into positive territory.
          
On the State level, the Hawaii Lodging and Tourism Association is looking to the 2015 Legislative session.  The HLTA is opposing a Transient Accommodations Tax (TAT) on resort fees, which are usually added to guest bills to pay for WiFi, fitness centers and other amenities.  Resort fees currently fall under the GET, but the TAT would add another 9.25% tax. The HLTA is supporting initiatives going after unpaid taxes on vacation rentals by owners.  They are also pushing for a little more regulation in that area.   The HLTA is also supporting a 10% income tax credit for hotel construction and renovation.  While sun/sand destinations like Cancun, Cabos, and the Caribbean are putting up 26,000 new rooms ... Hawaii needs to keep its inventory from looking dated back to the 70's.  They are also big supporters of creating a second international port of entry at Kona Airport.
                     
Here on Maui, the median price of a single family home rose 10.2% in December, with the median price being $565,000 compared to $512,500 in December 2013.  The number of sales declined 19.2%, with 63 homes closing compared to 78 homes in December a year earlier. Meanwhile the median price of a condominium last month was $387,500, a 6.2% increase from $365,000 in December  The number of sales rose 1.7% to 122 units sold, from 120 units in 2013.  
                            
Let's take a look at The Royal Kahana:  Figures taken from the Realtors Association of Maui

Status

Unit

Bd

Ba

 List $

LT

 Sold $

Close

*ACTIVE

104

0

1

322,000

*ACTIVE

718

0

1

329,000

*ACTIVE

1019

0

1

336,000

*ACTIVE

106

1

1

492,000

ACTIVE

115

1

1

495,000

ACTIVE

708

1

1

529,000

ACTIVE

314

1

1

529,000

*ACTIVE

501

2

2

565,000

*ACTIVE

201

2

2

595,000

ACTIVE

120

2

2

595,000

ACTIVE

720

2

2

649,000

SOLD

902

0

1

329,900

312,500

03/27/14

SOLD

1103

0

1

335,000

300,000

06/19/14

SOLD

302

0

1

355,000

345,000

04/29/14

SOLD

805

0

1

359,000

320,000

08/22/14

SOLD

206

1

1

465,000

435,000

10/10/14

SOLD

107

1

1

479,000

437,000

01/02/14

SOLD

107

1

1

495,000

495,000

10/20/14

SOLD

301

2

2

499,000

472,000

05/12/14

SOLD

1201

2

2

550,000

510,000

01/10/14

* new listing

* price reduced

    
TOURISM

Visitor arrivals to Hawaii from China increased by more by 25.8% during the first 11 months of 2014, and the Chinese are spending more once they arrive in the Islands.  That trend in expected to increase, and there could be a surge as soon as next month for the Chinese Spring Festival Feb. 19-24.   Hawaii's tourism industry in general set another record for visitor arrivals.  During the first 11 months of 2014, visitor arrivals totaled 7.5 million ... 9% ahead of 2013's record.  Visitor expenditures totaled $13.3 billion, 2.3% more than a year earlier.  the State Department of Taxation collected $380.4 million.
            
Next time you're at one of Maui's airports, you'll see a new 5-minute video on ocean safety. Not only will it be played at the baggage claim areas, but also in all hotel rooms.  They're aiming for captive audiences.   Hawaii hotel room rates are on the rise.  The statewide average daily room rate last week rose 1.8% to $254.51.  Statewide average hotel occupancy was 76.6%.   Maui had the highest average occupancy rate at 78.9%, as well as the highest average daily room rate at $326.25.
               
TRAVEL

Hawaii Travel Hawaiian Airlines has reason to celebrate.  They carried over 10 million passengers in 2014, the most it has ever flown in a single year.  The airlines has come a long way.  It took 38 years for the company to reach its first cumulative 10 million passengers.  Not surprising ... they want to spread out.  Hawaiian Airlines has applied for flights between Tokyo's Haneda Airport and Kona Airport on the Big Island starting June 1st. Hawaiian believes the new service will bring 39,000 additional visitors, result in 1,151 new jobs, and $146 million in visitor expenditures.
          
Alaska Airlines passengers will be able to print out their own baggage tags at home on Maui during the first quarter of this year.  The program has already gone live in Honolulu, Kona and Lihue airports.  Ever had the problem of needing to get an envelope or box to a Neighbor Island really fast?  Well, Mokulele Airlines is now offering exactly that kind of service from all of its 10 airport locations on Oahu, Maui, the Big Island, Lanai and Molokai. You can drop off envelopes and boxes up to 10 pounds at your location, and it will be ready to pick up at the destination airport within hours!
            
A new study by Cruise Holidays International says that when cruise trips last more than 15 days, people want to come to Hawaii the most.  The most popular itinerary is a 15-day Hawaiian Island cruise from San Francisco (offered by Princess Cruises).  Coming in at No. 4 is another 15-day trip to Hawaii, but from Los Angeles (offered by Carnival Cruise Lines and Princes Cruises).
MORTGAGES

change ahead There is a lot of news in the Mortgage arena ... FHA cutting fees, Feds raising interest rates, even mortgage debt forgiveness.  I don't juggle that many hats, so I'll turn things over to my mortgage guru Dean Rathbun of Avis Mortgage.  Dean shares that mortgage finance giants Fannie Mae and Freddie Mac, will likely be guaranteeing a lot fewer new loans over the next decade, as the private sector steps up its role.  The Congressional Budget Office agrees with him - from 2008 - 2013 - Fannie Mae and Freddie Mac backed about 60% of new mortgages.  They'll likely only back about 40% by 2024 as private sources of capital take their place.    
        
Last week, the Federal Housing Administration announced it will cut its annual mortgage insurance premiums.  In an effort to bring new buyers to the table, the FHA will reduce the premium fees from 1.35% to 0.85%.   While the Federal Reserve has said it will be "patient" about raising interest rates, mid-2015 is a good bet.    Everyone seems to be in sync on that. Frank Nothaft, Freddie Mac's chief economist: "30-year fixed-rate mortgage likely reaching the upper 4% or 5% range by the end of the year."  Greg McBride, Bankrate.com's chief financial analyst is forecasting: "the 30-year fixed-rate mortgage to remain below 5% this year, but is could see lots of volatility."  Jonathan Smoke, chief economist at realtor.com is forecasting: "mortgage rates to reach 5% in 2015."
      
Dean wanted to remind those of you who did a short sale in 2014, the Mortgage Debt Forgiveness Act was signed in to law.  Meaning, any mortgage forgiveness in a short sale will NOT be counted as "phantom income" ... granting tax relief.

                                                     eco island
                    
eco footprint
Hawaii has made great progress towards our renewable energy goals. In 2014 the state had achieved about 18% renewable energy, surpassing the 2015 interim goal of 15%.  Combine that with a 15.7% reduction in energy use through conservation, and the state is nearly halfway towards its 2030 goal of 70% clean energy.  The new energy plan waiting to be approved by the Hawaii Public Utilities Commission, hopes to increase renewable energy resourced to 65%, tripling solar, and lowering customer bills 20% by 2030.
             
The Four Seasons Resort Maui at Wailea just won the Hawaii Energy Conservation Award for saving more than $1 million annually in energy costs.  Congrats to their engineering team.   Hawaii Energy just re-launched its solar water heating tune-up rebate of $150.  The tune-up rebate runs through May 31 or while funding lasts.  They're also offering a $1,000 instant rebate when purchasing a solar water heating system.
       
Here's a sneak peak into Hawaii's GREEN future.  The picture to the right is a prototype of a wind-powered ship that would carry goods between the West Coast, Hawaii and Asia.  Pacific Sky Power is formed by a former Hawaii resident, a former Matson executive, and a NASA designer.  They plan to build a dozen full-sized ships and utilize prevailing winds for a substantial reduction in fuel use and emissions.  
            
You may have heard the story, a couple thousand years ago, when Water was turned into Wine.  But Water into Fuel?  Tasos Inc., a Honolulu company, has received a patent for its technology turning WATER into FUEL for cars, trucks, and other things.  The technology encompasses "electrolyzed hydrogen gas enhancement of hydrocarbon fuel combustion." Tasos has spent about a decade perfecting what he calls the "Morpheus" electrolyzer, a long-life, noncorrosive system that splits tap water into gases, which then burn as fuel to provide high energy.  Wow!  I feel just like I did after seeing the movies "Theory of Everything" and "The Imitation Game.".  Where do these minds come from?
Maui Chinese New Year
                                MAUI HAPPENINGS


Jan 23-24: Celebrity Chef Tour  Grand Wailea Details
Jan 25: 13th Annual Art of Aloha Show  Wailea Info
Jan 29: National Puzzle Day Barnes & Noble 4-7pm
Feb 13-16: Whale Tales 2015 Presidents Day Weekend
Feb 14-22: 10th Annual Maui Plein Air Painting Invitational Sched
Feb 14: 35th Annual World Whale Day Festival Activities
Feb 15: For the Love of Maui  5k Run Details
Feb 20: Chinese New Year:  Year of the Ram
      Firecrackers, Lion Dance, Kung Fu:  Front Street in Lahaina
Feb 28: Great Whale Count Volunteer


Maui Arts & Cultural Center  Tickets 
01/22:  An Evening with Yo-Yo Ma
01/23: Judy Collins in concert
01/23: Rani Arbo & Daisy Mahem   folk music
01/24: Nick Swardson   comedy
01/25: Maui Pops   Rogers & Hammerstein
01/29: Carmen de Lavallade   her story of dance
01/30: Marc Broussard   soulful pop
01/30: Kapono, Cruz, and Noland   hawaiian
02/04: The Samurai Warrior  stage performance
02/06: Lucky Plush The Queue dance
02/07: Have Shoes Will Travel  dance 
02/08: LobsterFest  1-4  bring your appetite
02/11: eighth blackbird  sextet
02/12: Eric Bibb  blues
02/14: Na Leo Pilimehana  hawaian concert
02/15: Harlem Quartet   classical
02/16: Hawaii Youth Symphony  classical
02/18: Terrance Simien & the Zydeco Experience   New Orleans Funk
02/19: Kekuhi Keli'ikanaka'oleohaililani  talk story
02/19: Sara Evans  country concert
02/20: Kekuhi & Kaumakaiwa   hawaiian
02/21: Jake Shimabukuro  ukulele
02/22: Maui Pops with Keola Beamer  hawaiian
02/28: Abraham.in.Motion   dance


Well, I told you there was a lot going on in Maui.  Until next month, remember I'm available to you 7 days a week.  I can help you add to your real estate portfolio while taking advantage of the low interest rates.  Or perhaps you're looking to sell your unit and would like an analysis of its' current value.  I am the Broker/Owner of Berkshire Hathaway Maui Properties - Hawaii's only Berkshire Hathaway brokerage.  I've been a Royal Kahana Specialist since 1987 and have closed over $1.5 billion in Maui real estate sales. 

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