Kauai Real Estate News

Oct. 16, 2016

Testimonial from our beachfront condo owner

"Real estate is the best investment anyone can ever make... Ron made it easy for us to buy several oceanfront properties here. We enjoy coming to Kauai every winter. Now, years later, we still appreciate their friendship. Gwen is a sweetheart, too. You can't imagine how much easier it is to come to Kauai when you have friends like Ron and Gwen."- C.C., Minnesota

Oct. 16, 2016

Congratulations to our seller!

"Ron, I'd like to thank you for your help in selling my property. It was really a pleasure working with you! You guys did a great service for me. We are really happy with the work you did for us to get this thing negotiated. And we are happy for the service you provided! Thank you!" - Barry Toy Construction

Posted in clients, Kauai land
Oct. 11, 2016

Kauai Market Update Through 3rd Quater

As we complete the third quarter of sales, both the number and volume of Kauai market sales are up over sales levels from the 3rd quarter of 2015 .
The median price on Kauai for a single family home has now risen to $615,000, and the median price for a condominium is right around $398,000. That's a far cry from prices just two years ago when the single family home median was $528,750 and condo median was $342,000. As sales continue to be strong, the affordability factor for more modest priced homes gets more challenging. Rates still continue at historic lows although should the Fed ever feel confident enough to raise the rates, they will go up, further exacerbating affordability for many island residents.

On a national scale, we have started seeing a shift in the market. Properties take longer to seller and there are inventory challenges too. Lawrence Yun, chief economist for the National Association of Realtors notes  "There's no question that after peaking in June, sales in a majority of the country have inched backwards because inventory isn't picking up to tame price growth and replace what's being quickly sold. With fewer homes for sale, there naturally will be fewer homes sold. Also, the homes that are for sale might not be what active buyers are looking for, and they decide to wait until they find exactly what they want."

It's true that on Kauai there is a limited amount of inventory in certain affordably priced markets like Lihue, Kapaa and Kilauea town. Prices have returned to 2004 levels in those markets. As noted above, when there is lower inventory and high demand, prices go up and affordability declines (see graphic above). We constantly pricewatch the market for our sellers & buyers to stay ahead of the market.
Sept. 13, 2016

Where's the Kauai Market Heading?

It's an agent's job to constantly price watch the market. We know we've seen tremendous growth since 2012. In fact, single family housing on Kauai has appreciated at close to 10% a year since then. 

At a recent conference, Gary Keller, founder of Keller Williams alluded to a shift in the market that has been showing up on the mainland. Gary pointed to five indicators of a downturn of some sort. Days on the market are up, the supply of move-up and higher end housing is now growing, home prices are going down in some markets, unit sales are slowing and construction is flat. “Only four times in U.S. history have home sales been higher, it’s a sign of a shift,” said Keller.

Plus, the “median home price is higher that it has ever been in the history of recorded time — last time we were here we were on the verge of a recession,” he said.

“It wouldn’t take much right now to push us into a buyer’s market.”

Take a look at the August market stats for Kauai and you can see where our market is growing and where it's becoming stagnant. The neighbor islands of Hawaii have many micro markets.

If you want further understanding of any segment of our market place from Haena to Mana give me a call or send an email.

RonMargolis@KW.com / 808-346-7095

 

 

Aug. 5, 2016

Hawaii Economic Update from TZ-Economics

Local economist Paul Brewbaker of TZ-Economics addressed our General Membership meeting of the Kauai Board of Realtors a couple of weeks ago. Realtors always sit with baited breath to hear the predictions of an economist who analyzes big data sets and looks at real estate as one of many asset classes where individuals and business put their money.

According to Brewbaker, we’ve had 7 years of economic expansion ( the recession technically ended in 2009). The average length over the last several decades is 8 years, and the last expansion cycle was only six years.The longest one was 10 years but if this cycle lasts into the 2020's, it will be the longest expansion cycle in our history, although it doesn’t really feel that way. 

Mortgage delinquencies keep coming down over time reflecting better risk management in the financial industries. Right now we are at the lowest level of 30 day delinquencies in US history. Most of the toxic waste from foreclosures is behind us now. 
Brewbaker does not believe we are in bubble. A bubble is Where the price of the asset class (in this case, real estate)  has decoupled from underlying economic fundamentals. If we drill down into the latest set of Kauai pricing data, since 2011 prices on island for single family homes have been going up at a rate of 6.5% yearly, is that sustainable? Condos during the same time period have been increasing prices at the rate of 10%, is that sustainable? It is starting to appear that price growth may be leveling off and our housing prices are not likely to accelerate from here. During the last boom cycle, the price acceleration was fueled by all the toxic subprime loans, but that no longer is the case.

If you adjust for inflation which the fed aims to be around  2%, and if the number for Kauai over the long term is 5%, then the annualized capital gain of real estate on Kauai is 3%. Mr. Brewbaker noted the most recent data is pointing to convergence where the appreciation curve levels off to more normal levels.

Brewbaker noted, "
Capital is mobile across space and across asset classes (stocks, bonds, real estate, etc.). If you get an asset class that has had too much appreciation or looks a little rich to its alternative asset classes or places, the capital tends to migrate to find the cheaper assets with better upside. " Brewbakers’ conjecture is, “We’re not going to have another bubble, but more like we will converge to the trend and things will need to tamp down.”

 

July 15, 2016

KW Kauai - All Island July Open House

This weekend on Saturday July 16th KW Kauai will be holding 7 open houses from the east side to the south side of Kauai. Come meet our agents and see how KW is changing the standard for professional real estate services to sellers and buyers on our island. Wanna know more? Send me an email, txt, or call us anytime.

 

 

Posted in Kauai Condos
March 28, 2016

How Fast Will Interest Rates Rise

 Here's an interesting article from this  morning's Inman News
Productivity is the way we raise our standard of living, and
increased productivity is the result of increased savings
and investment -- we don’t have either of those
  • We are still growing, despite negatives in manufacturing and exports, and low energy prices still seem to be doing more harm than good.
  • There have been slim gains in wages -- but very low unemployment, suggesting increases ahead -- and falling productivity.

It was a short holiday week last week, but the argument quietly raged: How fast will the Fed raise the overnight cost of money, and what will happen as a result, especially to mortgages and housing?

New economic data confirms little change

New economic data have been a help, if only confirming little change in the U.S. economy. Fourth-quarter 2015 GDP (gross domestic production) was revised upward again, the final up to 1.4 percent. It’s a message from Jurassic Park, but it does give us the complete 2015 picture: GDP up 2.0 percent versus 2.5 percent in 2014. Not even a Fed hawk can find acceleration there.

We are still growing, despite negatives in manufacturing and exports, and low energy prices still seem to be doing more harm than good. There is always some GDP wobbling from building inventories and running them down — one main cause of revision.

The economy is being pulled ahead by consumer spending, up 3.1 percent in 2015. Why is GDP growing only two-thirds of spending? Buying stuff made elsewhere, is how. GDP is gross domestic production.

Now, we can’t do that forever, as in GDP accounting, one way or another, we’re borrowing from overseas the money that consumers are using to buy foreign stuff.

But a troubled world is delighted to loan money to the only country likely to make the payments. Funding is not the problem.

Falling productivity bolsters ‘stagflation’ argument

The tack under the Fed’s saddle is this combination: Slim gains in wages, but very low unemployment suggesting increases ahead, and falling productivity.

Productivity is the way we raise our standard of living, and increased productivity is the result of increased savings and investment. We don’t have either of those. Nor do we have corporate profits which might be used forinvestment, nor much motivation for investment because the world is drowning in excess production and capacity.

The very hardest of Fed heads are worried that even 2.0 percent GDP growth is too fast, risking inflation if productivity gains are zilch — in a productivity-zilch situation, any wage gains are inflationary. That’s the old “stagflation” argument.

There is a counter-argument, not soft-headed, but non-traditional. Like this: Productivity is down because labor is substituting for capital in a key part of the world, forcing employment gains beyond demand. China. Not inflationary — deflationary, and destructive to investment.

One hard-head had the governing principle right this week, Philly-Fed Prez Patrick Harker: “There is a growth potential out there, and the best that monetary policy can do is to help achieve that potential, but it cannot affect the potential itself.” The only problem with his true statement: Today, what is our potential rate of growth?

Harker and other hawks, all regional Fed-heads (Lacker, Lockhart, Mester, George, Williams…), and even doves now chant, “Normalize, normalize, normalize…,” referring to the Fed funds rate, the overnight cost of money.

Normally (historically) normal is about 2 percent above the rate of inflation. Reach the Fed’s 2 percent inflation target, take funds to 4 percent. Most of us out here think that a 4 percent funds rate would not only squelch any threat of inflation, but will have us living in caves.

That thought is widespread in the bond market, and the perverse reason that the 10-year T-note and mortgages are still almost a half-percent lower today than at New Year’s.



You Fed people think you have to hike to prevent inflation. We think that if you hike much at all, you’re going to abort whatever recovery we have. The more hawkish you are, the better the reason for us to buy bonds — which, even, at these ridiculous yields will do well in the next recession.

The normal, neutral Fed rate may be no higher than the rate of inflation.

One last note about Fed-chatter: the regional Fed presidents get a lot of ink, even though every speech recites, “I am speaking only for myself….”

The farther you get from them, and the closer to Chair Yellen, the more important global issues become. The weaker over there, the slower and lower the Fed.

At home, brace for employment stats next Friday, April Fools’ Day. :-)

 

The 10-year T-note is stuck

 

The 10-year T-note is stuck, waiting for something to happen. Next Friday, it will.

 

The 2-year T-note is also stuck, but Fed-defiant.

 

The 2-year T-note is also stuck, but Fed-defiant. These traders are convinced the Fed will hike only once more this year.

 

Maybe the drop in profits is merely the effect of falling energy prices and the strong dollar. Maybe not.

 

Maybe the drop in profits is merely the effect of falling energy prices and the strong dollar. Maybe not. Great chart!

 

The Fed’s "damned dots" versus market expectations. The dots have been wildly mistaken since introduced in 2012, always far too optimistic for the economy and for steep tightening.

 

The Fed’s “damned dots” versus market expectations. The dots have been wildly mistaken since introduced in 2012, always far too optimistic for the economy and for steep tightening. Some even inside the Fed wish it would drop the dots, as does everyone outside. Better not to be transparent at all, if the view through the window is destructive to confidence.

 

A tidbit from the Census Bureau. That migration to urban homes? Actually not.

 

A tidbit from the Census Bureau. That migration to urban homes? Actually not.

Lou Barnes is a mortgage broker based in Boulder, Colorado. He can be reached at lbarnes@pmglending.com.

Feb. 16, 2016

Two Remodeled Kaha Lani Condos Available

We have 3 vacation rental condos that offer great opportunities for their future owner. The first two are on the east side of Kauai located at Kaha Lani, adjacent to Lydgate Park, the multi-use walking path, and Wailua Golf Course

Units 309 and 221 are 1 bedroom/1 bath condos at Kaha Lani that have been completely remodeled with new doors and windows throughout. Both kitchens have granite counters and stainless steel appliances. Both units are tastefully furnished and turnkey. Unit 221 is closer to the white water views and has solid bamboo hardwood floors and bamboo kitchen cabinets. Enjoy  the majestic sounds of the ocean and glorious east side sunrises. 

Download this list of Kaha Lani benefits and features

 

KL309 Kitchen

Enjoy the ocean view from this Granite and Maple Kitchen  in Kaha Lani 309

Feb. 16, 2016

How Do I Find the Right Vacation Rental Property on Kauai?

Many buyers searching for island properties are looking for 2nd homes, vacation rentals or investment properties. Sometimes these classifications overlap as the owners have a want or need to rent the property when they are off island. Surely the island seems to get busier every year at this time. Kauai is no longer a secret!
An important issue to address prior to purchasing a property to vacation rent is to determine if the property lies within the proper areas or has the proper licensing to do so. 

Kaha Lani is a popular vacation rental complex adjacent to Lydgate Park
A TVR stands for transient vacation rental. It is a property located with the Visitor Destination Area. A TVNC is a property outside the VDA that has been grandfathered in through the use of a non-conforming usage certificate to be used as a legal short term rental. Both these property types must post their licenses, TVR/TVNC licenses, clearly on their rental units. Renting out your vacation home is  a way to generate revenue to  subsidize the cost of the property or in some situations, generate a positive cash flow.

Here are two very important points to consider:
  1. Self-managing your vacation rental may bring you maximum revenue with a small amount of work. There are multiple management strategies possible. The state does require you to have an on-island agent if you self manage. 
  2. In the long term, ocean view and ocean front properties tend to hold their value better than other condos.
Learning the rules of each condo complex, whether they takes pets or not, whether they allow air conditioning to be installed, the fiscal health of the home owners' association, these  are all vital pieces of information to consider and that we can offer answers for. We're here to provide you the information you need to make an intelligent and well-informed decision.    Just Ask!
Feb. 15, 2016

Understanding Kauai's Tax Rates

What about taxes on Kauai?
People are often curious about our taxes here on the island. Relative to mainland states, our property taxes on Kauai  are generally regarded as  low.  The latest tax rates are as listed below. When a homeowner receives an assessment which they disagree with, there is an appeal process. Dec. 31st is the deadline for any assessment appeal.
A residential investor is an owner with an assessed property value over $2 million and it is not the owners primary residence. 

County assessments are calculated annually with the fiscal year beginning on July 1st and taxes are due twice a year; February 20th and August 20th. The first tax bill goes out on July 20th.  It's good to note here that the county's assessed values are not necessarily the same as "market value" or "appraised value". People often assume that is the case when it is rarely is.
 
For  new homeowners, it is essential that your exemption  be filed by September 30 of each year to apply to the following tax year.  Standard exemption and disabled exemptions can carry over from year to year. Reference the exemptions below and remember to apply as soon as you have purchased your residence.
  • Standard exemption for owner occupants is $160,000
  • Owner occupant ages 60-70 are allowed  a $180,000 exemption
  • Owner occupant ages 70+ are allowed a  $200,000 exemption
  • Owner occupant with income less than $61,000 are also eligible for an additional $120,000 over standard exemption
  • Blind, Deaf or totally disabled can apply for an additional $50,000 over the standard exemption ($160,000)
  • Disabled Veterans are totally tax exempt except for the minimum tax of $100/year
Other tax relief programs are available for non-profit organizations, low-moderate income housing, parcels Dedicated toAgriculture, Tree Farm exemption, public utility exemption, Historical designation by the Hawai'i Registry of Historic Places and Commercial Alternative Energy Facilities.
Posted in Education, News