On Top of the Aloha Beat BLOG

While the governor of Hawaii is promoting Green legislature, the county of Kauai is still dragging its feet. A property owner in Wailua, the mountain area just above Kapaa,  hangs poised to run the island’s first Skystream 3.7 residential windmill, which he and other community members say they want in order to cut their electric bills and “go green” at home. Kauai has one of the most expensive electical costs in the entire US and many folks here would prefer to generate their own power. With current technology however, there is a still about a seven year ROI.

Kaua‘i Electric installed a 1.8-megawatt renewable-energy system Monday at the Wailua Homesteads agricultural subdivision, but the county electrical inspector still needs to sign off on it. The owner first submitted his permit package to the county Planning Department on Sept. 5. After three months of department-hopping for approvals, the county granted his request to install the windmill.

A final inspection of the project is scheduled for today. The system must have its final sign off before Kaua‘i Island Utility Cooperative says it can schedule a site visit and process the paperwork necessary to install a net metering system — a process that generally takes one to two weeks. The net metering system  allows residents using solar, wind or hydropower to plug into the local grid and literally spin their electric meters backward. It measures imported and exported power. For a wind turbine, the local electric utility would supply power when the wind fails to blow and let residents sell excess energy back when conditions are ripe.

The owner of this rural property has estimated that just 72 hours of 12 mph wind would produce 100 kilowatts and save him roughly $40 per month. But it takes about a year of data to make reliable predictions, he said.

An unclear county process has snared residents  who want to use wind turbines for crop irrigation
Kaua‘i Electric has a warehouse in Kapa‘a that houses the state’s largest inventory of Skystream systems, and until the county gets its act together, the Skystream systems will just sit and gather dust.

Despite the fact that the owner of Kauai Electric get up to 25 calls a week for his alternative energy systems, until our wonderful county gets its act together, embarking down this green road stills takes a ton of patience, and many owners are not willing to invest the time and money until the county figures things out in terms of permits and permissions.

Don't you just love bureaucracy? 

For almost as long as I've been practicing real estate on Kauai, going on my fourth year, there has been an ongoing conversation between the County Council (Kauai's governing body) and the community regarding the monitoring and enforcing of Kauai's Visitor Destination Area. That means, the areas the the county designated over twenty-five years ago for vacation rentals and bed and breakfasts and such.

It seems that as prices for Kauai real estate rose dramatically in 2002 through 2005, some people felt that vacation rentals were primarily responsible for our rising market prices, and therefore something needed to be done about it.

When i work with mainland clients who look to purchase Kauai Real Estate, particularly Kauai condos, buyers are always interested in knowing what type of cash flow they can earn from "vacation renting" their property. However, in the areas of the island that may fall under the scrutiny of Bill 2204, a realtor must disclose that the future rental income of certain areas of Kauai may have a guarded prognosis.

Next week, the County Council will meet once again to review yet another set of changes introduced by Councilwoman Joanne Yukimura, former mayor of the County of Kauai. If you want to become more educated in these affairs, you may wish to check out the website of KAVA. KAVA, the Kauai Alternative of Vacation Accommodation Association, was formed to assist and inform those folks who want to see the vacation rental industry thrive. You can click on the DOWNLOAD option on KAVA's home page and download Bill 2204.

If you wish to read the latest amendments that will be discussed next week, CLICK HERE. 

There is a law suit moving forward in Maui against the county council there asking for extensive damages for around 500 small vacation rental businesses that are threatened with closure; the reported damages could exceed $100 million. Here's the link to the Maui News report.

It's one of those challenging situations. It's clear that many visitors traveling to Kauai prefer staying in vacation rentals over an over-priced hotel. Yet, the hotel industry and their lobbyists are quite strong and certainly would probably prefer that vacation rentals go away. I for one do not think that vacation rentals are what drove our market prices up. Demand drove it up. When we had more demand than supply, prices kept rising. And now, that we have more supply than demand, well, what do you think is happening? Sure, our prices have held better than most mainland upscale markets, but, ultimately with more supply than demand, prices will go down. 

I'd be interested to hear comments from other neighbor islands regarding your perspective and the climate of vacation rentals in your markets. 

We're delighted to start the new year off with a bang and a great assortment of new condo listings on Kauai's east side. Many people who come to this island are told to go to Princeville, on the North Shore, or Poipu, on the South Shore. Those are our two most popular resort areas and there are lots of condos for people to choose from. However, not that many people are aware of the many wonderful condo complexes on Kauai's eastern shores, sometimes referred to as the Coconut Coast.

While the tourists often demand North or South, the east side has an assortment of condos that are right on the ocean. In Poipu, the condos on the ocean are generally on rocks, and in Princeville, the entire community is built on a bluff some 100 ft. above the ocean. For Princeville, that provides dramatic views, but walking to the ocean from your Princeville condo is not for the faint of heart. PLUS, being on the east side has its advantages. There is great shopping in Kapaa and you are only 15 minutes from Costco, Home Depot, Macy's and lots more. You are ten minutes from the airport. Did i hear you say, "How convenient?" I thought so.

So that brings me to our new year's listings.

 Kaha Lani View from unit

We start with Kaha Lani. This 1 BR/1.5 BA unit is uniquely positioned behind the popular Wailua Golf Course and adjacent to Lydgate Park. It's so secretly tucked in by the ocean, many people don't even know it exists. This quiet complex is right on the oceanfront and has a lovely pool, a putting green, and walking paths that are just delightful. Our unit, 116, is a ground floor unit with nice ocean views from the living room and lanai. Unit 116 is also tucked one building back from the front line, which buffers the unit from strong winds and makes it quite quiet and private. View our VIRTUAL TOUR and check out the MLS listing. Priced at $609,000 with a 10k credit for buyer upgrades (like new counters and travertine floors in bathrooms).

Wailua Bay View looking at Wailua Bay Beach just steps away.

Traveling North to Wailua, we've got two remodeled units at the Wailua Bay View Resort. These 1 bedroom condos are perched right above Wailua Bay just across the street from the legendary Coco Palms, where Elvis filmed Blue Hawaii. Listen to the sound of the ocean while you sip your morning coffee. Both units have been nicely upgraded and are ready to go. PLUS, these units are active vacation rentals with over 90% occupancy. Wailua Bay Views has the lowest monthly maintenance fees on this street of condos. View the VIRUTAL TOUR for UNIT 203 & UNIT 205 and check out the MLS listing. These are priced at $633,000 and $669,000 respectively.

Late afternoon shadows from the lanai at unit 316 at Lae Nani. Simply gorgeous

Finally, our unit 316 at Lae Nani is a 2BR/2BA unit at one of the loveliest complexes on the entire island. A beautiful pool just steps from the ocean, and lush tropical grounds for walking or chilling, are some of the wonderful qualities of Lae Nani. This 1,072 sq. ft. unit affords spacious living and has 4 very large closets. You can never have enough closets. At our first open house last week, we had over 20 people come in including some people who have owned units at Lae Nani since 1978, the year they were built. Priced at $749,000, this is the lowest priced two-bedroom unit in the complex. Tell your friends. View the VIRTUAL TOUR for LAE NANI and check out the MLS listing.

Well, there a diverse sampling of wonderful oceanfront condos. Hoping to see you on the Garden Island soon. 

One of my good friends, and one of the most talented motion graphic designers I know, has launched a website to aggregate all the video "how to" content on the internet.Not surprisingly, the site is called wonderhowto.com Check it out

You can search for things, rate your favorites and join the community. I'm not sure how much real estate - centric content is up there but hey, you could make some and post it to the site.  I'll be placing some items on how to buy Kauai Real Estate when i get a moment. Let me know what you think, and enjoy 

Yesterday, I took a short class with ORTC on the topic of short sales.  It's a relatively recent occurence for the Kauai real estate market. It was good to review some of the consequences when a seller is in a short sale. As you probably know, a short sale occurs when a seller owes more the property is worth, has no cash to close, and the lender will accept less than what they are owed. Especially when buyers have leveraged their way into a 2nd home on Kauai, and borrowed against the home to improve it, its a scenario we're likely to see more of in this market.

If you are representing the seller,  we need:
The full cooperation and trust of the seller; need to prepare them for what the lender may require.We need to ask direct questions like:How much do you make? How much do you owe? Who is on title with you. We need the complete,big picture of what is going on. It's a good idea for the seller to discuss the short slae with their accountant as the  lender’s forfeited amount may be considered capital gains by IRS.
How upside down are they? What’s the property condition.  If the seller has other real property, or retirement savings, that may be taken into consideration by the lender. 

I'm sure in larger mainland markets, short sales are a common phenomenon. When i checked this morning in our Kauai MLS, Hawaii Information Service,  there were 14 listings posted as short sales. There may be more that are not noted as such, but some properties may become short sales by the time they receive an offer. It's important to know that a great deal of patience is involved. We recently had a short sale in our office where the buyer had offered over 26,000 more than the appraised value of the 3 bedroom home on one acre, and it still took Countrywide more than 2 months to respond.

I'm curious to know if you've had to deal with short sales and what the recent disposition of the lender's is regarding agent commissions. From yesterday's class it sounded as if the agents are generally expected to throw money into the deal to make it work. Given the timeframe of the short sale, the delicacy of the emotions for the sellers, and the possible complications and demands from the lenders, it seems that an agent would earn MORE not LESS money when overseeing and managing this type of transaction.

Buyers who are looking for deals on Kauai real estate and the opportunity to purchase below market seem excited at the possibility of a short sale, but I do not think most buyers really understand the complexity of the deal and the time it can take to actually close on a property.

Bottom line is that we need to raise our awareness and be as thorough as possible when representing buyers or sellers, to make sure that we hedge our bets for success. 

Well we're almost at the end of the first week of 2008 and the Kauai real estate market is heating up. It's fairly easy to tell by the traffic jams in Kapaa and Puhi that the island is crawling with tourists. Not to mention the long waits at the tee box while golfing at the Wailua county golf course. And when tourists come to the neighbor islands ( Kauai, Maui, Hawaii ) that means good news for the Kauai real estate industry. The numbers from 2007 are now official and here's one man's observations. Listed above are the totals for the three categories that our MLS, Hawaii Information Service tracks. They are:

1. Total Sales

2. Total Sales Volume

3. Median Price

For space saving sake, I've include only the entire island totals. Kauai is divided into five zones. If you want to look at the numbers for each zone and view the total report, CLICK HERE to DOWNLOAD all the numbers for the Kauai Real Estate market.

So, let's look at few items. First, the total number of transactions/sales is down 42% for the year. Not sure how that compares with the many resort markets around America, but I'd be interested in hearing from any AR members about the numbers in their market. Remember, on an island in the middle of the sea where the median price of a home is still $650,000, the majority of our sales are to folks from the mainland, Europe, Japan, Canada and a few other places. With the constant bombardment of news about the housing industry, the lending industry, and now the impending recession, there are not as many investors in the market as before in the boom market. That relegates us to folks wanting to move here for the slower pace and tropical lifestyle, people who can afford to have a second home here, and those who are retiring to the islands. Sure, when Costco opened on the island in October '06, they brought a slew of folks from their operations around the mainland and some bought homes, but on an island of approximately 64,000 people, there will only be one Costco.

Interestingly enough, while the # of transactions are down 42%, volume is only down 27%. Looking more closely, the volume of residential sales was down only 10%, but the volume of land sales was down over 38% and the sales volume of condo sales was down 41%. It appears that the areas that experienced the greatest appreciation from 2001 through 2005, are correcting the most and I suppose that is simply common sense. The Princeville condo market has experienced substantial adjustment and yet the median price of a condo in Princeville went up almost 150,000 due to one new project, Kai`iulani. Although the Kai`iulani sales were made in '05 and '06 and '07, they did not begin closing units until '07. If one removes the Kai`iulani closings from the Princeville condo market, then the number of units and volume of sales in the Princeville resort area would be down even further. 

On The South Shore, home of Poipu Beach in the Koloa district, Poipu condo sales were only down 10% in numbers of units and volume of sales. So the land and condo markets have been the softest areas of the market and seller's will continue in 2008 to provide incentives like 3-2-1 buydowns and prepaying maintenance fees, closing costs, and the like, to continue to stimulate the sluggish kauai condo market. 

One of the product categories that is not visible when you look at these numbers are the condotels. For those of you who may be unfamiliar with the term, this is a hotel whose rooms have been renovated then resold as a fee simple condominium. There are three such projects on the east side in Kapaa and Lihue, and in these projects,between 25% to 45% of the inventory is currently on market with only a small smattering of sales. Most of the buyers who purchased at these projects were speculators looking for either a short term or medium term flip. Depending on how a particular buyer financed their purchase, many owners are upside down and bleeding with a negative cash flow at these projects. I suspect significant downward pressure at these projects, the Waipouli Beach Resort, the Hilton Kauai Beach Resort, and the Islander on the Beach. On the flip side, it is an excellent time for a buyer who wants this type of property! There are many motivated sellers right now.

Well, so much for one's mans view of the 2007 market. It's onward and upward in 2008. Kauai is a special and beautiful place. It is the unique combination of American convenience and amenities combined with the quirkiness of a third-world country all surrounded by the most magnificent oceans, mountains, valleys and nature that one could imagine. Fortunately, the high end of the market is better than ever, and despite the large amount of inventory for sale, in the bigger picture, the inventory is small. If you know of anyone looking for a piece of this Kauai paradise, I'd be delighted to share my insights of the kauai real estate market, and provide the quality service that you would expect from an Accredited Buyer's Representative. And of course, we love referrals.

During the holidays i often wanted to post to my blog but never seemed to find the time. I spent Christmas in California with my four delicious granddaughters. One of my goals for the year is to buy a small condo near my granddaughters and spend a little more time with them. They are so dear. As i look back on 2007, it was a very full year and despite the downturn in the national real estate industry, Gwen and I had a great year, our companies numbers were up and I feel quite blessed to be selling Kauai Real Estate on the beautiful island of Kauai. Reflecting back on 2007, here are some highlights:

In February we switched offices from our dear friends at Hanalei North Shore Properties to CENTURY 21 All Islands in the Kapa`a office. We enjoy the team spirit and all the wonderful resources and tools that our current company provides. The owners are constantly providing training and inspiration and statewide, our company did almost 1 Billion in sales this year. Not bad for a small state. In the spring, I played in the pit orchestra for Thoroughly Modern Millie and thoroughly enjoyed the show. Summer began with the Taste of Hawaii, the Rotary Club of Kapa'as island-famous event that brings together 53 chefs from throughout the state for what we call the "Ultimate Sunday Brunch". Gwen's brother and niece visited in the summer along with two beautiful children and we always have fun when guests arrive. Later in the summer, i took a trip to the East Coast to visit my Dad in Fl., my Mom in Philly, and my wonderful friends in Philadelphia who i always carry in my heart. Gwen took a mainland tour in August visiting both her sons, and I went back to CA to perform at a wonderful benefit concert at the Claremont Hotel in Berkeley. That was big fun and I got to spend time with my newest granddaughter Rebecca. We call her "Boo".

In the fall, we went on retreat to Australia to get recharged and in October Gwen went back to see our fourteen year-old Mya perform in High School Musical. Most of our business happened April through August and we are so grateful for our clients and new friends. It is such a joy to help people to find a home on Kauai.

The holidays were wonderful, although some of the progress I made on the Abs Diet certainly got reversed during December. I got to perform with a wonderful Christmas Choir in CA and celebrate Christmas with four of my granddaughters. Very sweet.

Looking forward to the new year, I plan on spending more time blogging and building Gwen and my web presence. Our sales goals for this year are quite exciting, 15 Million in closed transactions. We continue to educate ourselves and gather more designations so we can better serve our clients. One of our focus areas is retiring in Kauai. Many folks are interested in that and there is a lot to learn to determine if Kauai and Hawaii are the right place for you. We've begun using Top Producer to automate our business and our goal is to earn more per hour by becoming more and more efficient. We also are building our referral business through networking at various conferences and here at AR. Though the volume of transactions for Kauai Real Estate was down 43% for 2007, this is a special place and buyers, especially baby boomers, will continue to purchase to have their piece of paradise. More on the market in future posts.

We are looking forward to spending some more time this year off island with our granddaughters. Of course, I will be performing in various venues from the local theatre groups production of Hello Dolly, to the Kauai Community College Jazz Band, and many more gigs around the island. I also plan to ramp up my studio and record several songs this year.

On a more personal level, my goal is to lose thirty pounds by summertime, and of course if I could knock off a few strokes from my golf handicap, that would be delightful. That, however, is a goal that I am not very attached to.

I wish each and every one of you a successful new year with the fulfillment of your dreams. And may good health bless you daily.