The Honolulu Board of Realtors has released their latest monthly Oahu residential real estate statistical report for July 2017. You can view the reports here: General Housing Statistics Report and Local Neighborhood Market Update.
SUMMER IS HERE!
Summer Season Means Sales
Favorable Factors for Summer Sales
New Kakaako Condominium Effect Continues to Diminish
Sales Sped Up for the Last Quarter of 2016 and First Quarter of 2017
43 Condos Subject to as much as Triple Real Property Taxes – Need to File Forms
The Summer Season Means Sales
East Honolulu sales were decent in the First Quarter of 2017, followed by a slow Second Quarter. Our Summer Season starts about now and lasts through mid-September. Traditionally, Summer is our busiest period, along with the Winter season. The times in between are so-so. If you are planning to sell your home this year, you should get on the market now. If you are a Buyer, there should be more inventory coming on the market as people realize that this is a good time to sell.
Favorable Factors for Summer Sales
Interest rates are still rather low, so financing is still attractive. In addition, there is increasing interest in single family homes and sales look like they will be greater than 2016. Showings have picked up, and sales generally follow an increase in showings. Part of the increased interest is that the Kakaako New Luxury Condominium Effect has abated.
The New Kakaako Condominium Effect Continues to Diminish
On October 19, 2016, we predicted that Luxury Home Sales would be improving due to the diminishing inventory of new Kakaako luxury condominiums. Then on December 7, 2016, the Honolulu Star-Advertiser’s Business Section confirmed “Oahu home, condo sales jump in November.” The new condominium projects took many of the $3+ Million buyers out of the real estate market for East Oahu. For example, at the end of 2016, 58 buyers between $3,072,000 and $12,800,000 completed their 2-year long purchase of the Waiea Condominium. These were 58 buyers who might have bought homes in East Honolulu.
Beginning in April 2017, continuing in August and again in December, closings at the Park Lane Condominium project in the Ala Moana Shopping Center have and will involve another 100+ luxury buyers who purchased in the $3+ Million price range.
Sales Have Sped up for the Last Quarter of 2016 and the First Quarter of 2017
Given the lower inventory of true luxury condominiums in Kakaako, sales did accelerate in the last quarter of 2016. Of the 30 sales over $3 Million in East Honolulu last year, 13 occurred in the last quarter. This year, we have been involved in 4 of the 15 sales over $3 Million of Single Family Homes in East Honolulu. Choi International brought the Buyer for the highest sale among the Top 10 Brokers. In our view, sales over $3 million will increase by about 30% over 2016, and many of those sales will occur in the summer months and during the winter of 2017/2018.
43 Condominiums are Subject to High Rates of Tax, unless the owner files the appropriate RESIDENTIAL USE DEDICATION FORM (and notifies the City of any changes)
On June 16th, the City & County of Honolulu mailed out notices to owners in 43 condominium projects that are condo/hotels or mixed use with commercial and others. The full list is included at the end of this report.
The designated condominiums will be subject to a higher real property tax rate than the residential tax of $3.50 per thousand or the $6 estimated tax for non-homeowner exemption residential property of $1 Million+. The tax for certain buildings can be subject to the commercial rate tax of $12.40 per thousand or hotel/resort tax of $12.90 per thousand, unless the owner files a form designating the property tax class as their primary residence or a long-term rental (rented for over 30 days at a time). Penalties are heavy for any misrepresentations or failure to amend the filings in a timely manner. When the property is sold, the law requires the new owner to file a new form. To find all of the condominiums that are affected and the required filing, click on this link: https://www.realpropertyhonolulu.com/media/1491/condo-ded-info.pdf.
Following is the full list of condominiums:
2338 YOUNG STREET, 2338 Young St
441 LEWERS, 441 Lewers St
465 KAPAHULU (CPR 9‐18 only), 465 Kapahulu Ave
ALOHA SURF HOTEL, 444 Kanekapolei St
BAMBOO, 2425 Kuhio Ave
BEACH VILLAS AT KO’OLINA, 92‐104 Waialii Pl
CABANA AT WAIKIKI, 2551 Cartwright Rd
CENTURY CENTER, 1750 Kalakaua Ave
EXECUTIVE CENTRE, 1088 Bishop St
FOSTER TOWERS, 2500 Kalakaua Ave
HARBOR COURT, 66 Queen St
HAWAIIAN COLONY, 1946 Ala Moana Blvd
HAWAIIAN MONARCH, 444 Niu St
ILIKAI APT BLDG, 1777 Ala Moana Blvd
ILIKAI MARINA, 1765 Ala Moana Blvd
IMPERIAL HAWAII RESORT, 205 Lewers St
ISLAND COLONY, 445 Seaside Ave
KAIMUKIAN, 1120 Koko Head Ave
KALAKAUA SANDS, 1670 Kalakaua Ave
KALAKAUAN, 1911 Kalakaua Ave
KAPIOLANI MANOR, 1655 Makaloa St
KUHIO VILLAGE II, 2450 Prince Edward St
KUHIO VILLAGE I, 2463 Kuhio Ave
LUANA WAIKIKI, 2045 Kalakaua Ave
MARINE SURF WAIKIKI, 364 Seaside Ave
MEHANA‐AWAKEA, Manawai St/Kakala St
MEHANA‐NANALA, Kunehi St/Manawai St/Kakala St
MERIDIAN EAST, 14 Aulike St
OCEAN VILLAS AT TURTLE BAY RESORT
PACIFIC MONARCH, 2427 Kuhio Ave
REGENCY AT BEACHWALK, 255 Beach Walk
RITZ CARLTON TOWER 1, 383 Kalaimoku St
ROYAL ALOHA, 1909 Ala Wai Blvd
Royal Garden at Waikiki, 440 Olohana St
ROYAL QUEEN EMMA, 222 Vineyard St
SEASHORE, 2450 Koa Ave
TRADEWINDS PLAZA, 2572 Lemon Rd
TRUMP INTL HTL & TWR AT WAIKIKI BCHWLK, 223 Saratoga Rd
URAKU TOWER, 1341 Kapiolani Blvd
WAIKIKI BEACH TOWER, 2470 Kalakaua Ave
WAIKIKI GRAND HOTEL, 134 Kapahulu Ave
WAIKIKI PARKWAY APTS, 1660 Kalakaua Ave
WAIKIKI SHORES, 2161 Kalia Rd
Photos courtesy of Luxury Homes International
Maggie Huang (RB-22050), Choi International’s Vice President of the Greater China Region, attended the 2017 Mid-Year Real Estate Review featuring guest speaker, Economist Paul Brewbaker. The event was held on June 15th at the Waialae Country Club and was sponsored by Luxury Homes International, Honolulu Home Loans, Howard Hughes, Honolulu Property Management, Hawaii International Real Estate Council, Title Guaranty Escrow and Diamond Head Home Inspections.
Brewbaker is the Director of the Hawaii Economic Association and the President of Hawaii based economic consulting firm, TZ Economics. He previously served as Senior Vice President and Chief Economist at Bank of Hawaii.
Congratulations to our three outstanding agents for being recognized as one of the Top 100 Realtors in the State of Hawaii for 2017 by Hawaii Business Magazine!
PATRICIA CHOI (RB-11824), President & Principal Broker – $34,878,488
CYNTHIA NASH (RB-17455) – $24,740,000
JULIANNA GARRIS (RB-17280), Broker-in-Charge – $22,252,760
The annual Top 100 Realtors list recognizes the top producers in Hawaii’s residential real estate industry. The 2017 rankings are based on transactions that closed in 2016, and also ranks agents with the most transactions and vacant-land sales, as well as the top real estate companies. Patricia, Cynthia and Julianna have all been included in this prestigious annual ranking for multiple years. This year, Choi International was also ranked as one of the Top 25 Real Estate Companies by Total Sales. The Top 100 were honored at an awards reception held at the Royal Hawaiian Hotel on June 1st.
View the complete Top 100 rankings: http://www.hawaiibusiness.com/top-100-realtors-2017/
It is interesting to see what the comparable owner-occupied tax rates are across the country. If you factor in all of the tax breaks allowed to a homeowner who actually lives in the property, then surprising things happen.
For example, on the sample list below, California is known to have an average tax of about 1.25% of the purchase price (1% based on sales price, bond indebtedness and special district assessments). Factoring in the average tax paid by actual homeowners, that figure drops to 0.77%.
That amount is still more than double Hawaii’s “effective tax rate” of 0.32%, which is the lowest in the nation. In contrast, homeowners in the 5 highest taxed states pay over 2% for their average homeowners property tax.
50 – Hawaii – 0.32% Effective Tax Rate
49 – Alabama – 0.48%
48 – Colorado – 0.52%
47 – Tennessee – 0.54%
46 – Delaware – 0.56%
35 – California – 0.77%
5 – Vermont – 2.02%
4 – New Hampshire – 2.03%
3 – Texas – 2.06%
2 – Illinois – 2.13%
1 – New Jersey – 2.31%
Source – For the Full List, go to: http://a.msn.com/00/en-us/BBzxPSe?ocid=se.
What does “Effective Tax Rate” on real property mean?
“States tax real property in a variety of ways: some impose a rate or a millage – the amount of tax per thousand dollars of value – on the fair market value of the property, while others impose it on some percentage (the assessment ratio) of the market value, yielding an assessed value.
Some states have equalization requirements, ensuring uniformity across the state. Sometimes caps limit the degree to which one’s property taxes can rise in a given year, and sometimes rate adjustments are mandated after assessments to ensure uniformity or maintenance of revenues. Abatements are often available to certain taxpayers, like veterans or senior citizens. And of course, property tax rates are set by political subdivisions at a variety of levels: not only by cities and counties, but often also by school boards, fire departments, and utility commissions.
Today’s map cuts through this clutter, presenting effective tax rates on owner-occupied housing. This is the average amount of residential property tax actually paid, expressed as a percentage of home value. Some states with high property taxes, like New Hampshire and Texas, rely heavily on property taxes in lieu of other major tax categories; others, like New Jersey and Illinois, impose high property taxes alongside high rates in the other major tax categories.
New Jersey has the highest effective rate at 2.38% and is followed closely by Illinois (2.32%), New Hampshire (2.15%), and Connecticut (1.98%). On the other end of the spectrum, Hawaii has the lowest effective rate at 0.28%, and is followed closely by Alabama (0.43%), Louisiana (0.51%), and Delaware (0.55%). How does your state compare?”
On May 5th, Patricia Choi (RB-11824) will be speaking on a panel of experts on “How to Market Luxury Property” at the national convention of Who’s Who in Luxury Real Estate in Maui. This conference brings together the top real estate agents from 39 countries and 3,867 offices. Patricia is one of the founding members of the Board of Regents, which is the guiding force of the organization.
Choi International takes great pride in the quality of real estate services provided to our clients. Our highly qualified and experienced agents adhere to Choi Internationals’ core principals:
A Commitment to Excellence