On Top of the Aloha Beat BLOG

In this buyer's market with uncertaining lending conditions, it's really a good idea to get pre-approved. Standards for debt to income ratio's have gotten more stringent, and if you are at all leveraged, best to know what you can qualify for. Read this simple list below of eight benefits of pre-approval. Aloha from Kauai...

I just read a pretty provocative article about the GMO efforts happening on Kauai's west side and how much of our food on island is chemically processed and imported. Did not make me feel too good although we buy most of our produce from locally held farmer's markets. Read this compelling  story about Kauai and some of the research that happens here. The author is clearly passionate but i felt there was enough good info here to link to it. THis little snippet below is taken from the article. I'm fortunate to have a good friend who grows organic dwarfed apple bananas and papaya on Kauai's NOrth Shore and shares them with me every week.

Kauai's  North Shore is a lush place of almost heartbreaking beauty with a vibrant, racially mixed local culture. There, the Waipa Foundation hosts a weekly farmers market selling organic local food to support its work reviving traditional foodways. Like many Native Hawaiian organizations, they have a Hawaiian-language immersion school that integrates traditional food, farming, and fishing into their curriculum. They connect local farmers with schools, which are getting young people out of the classroom and into the mud of the taro patch. Activists on the island and throughout Hawai‘i are working toward food security. They achieved a ban on genetically modified coffee and are bringing back the original “gift economy” of exchanging traditional varieties of taro.

Just up the road from the Waipa farmers market, Limahuli Garden is restoring the traditional Hawaiian land-use system called an ahupua‘a. Kawika Winter, an engaging young ethnobotanist, Native Hawaiian, and the garden’s director, says the name lima huli means “turned hand.” It refers to a Hawaiian proverb which, roughly translated, says, “If your hand is turned up, you will be hungry; if your hand is turned down, toward the soil, your belly will be full.” The up-turned hand, Winter says, is not a positive symbol for Hawaiians. It is a sign of supplication. The down-turned hand, however, represents the hard work of cultivating the land.

Winter explains that the work they are doing there is all about remembering that the land is our ancestor. “We know that the way to get through difficult times is to use what was left to us—our land and our traditional knowledge. That will carry us into the future,” he says. “This is also our gift to the world.”

Visit Kauai's Sunshine markets to procure some of the locally grown and organic food available on the Garden Island

On April 8th, The Garden Island published an article about a new value allocation approach being applied to Kauai condo's. According to the article, "After conducting site visits to all condominium properties on the island, the real property assessment office determined that the allocation of values between building and land for these properties needed to take into account differences in view planes and location within each project to better mirror their market values". This, according a a county news release.

Additionally, I received an email sent to all Realtors from the Real Property Review Officer further explaining, "For 2009, there was a major shift in how the total market value was allocation between land and building.  Since land tax rates ($6.90 per $1,000) are lower than building tax rates ($7.90 per $1,000), it made sense - in lieu of a single assessed value and/or single tax rate - to reevaluate this means of allocation.  The method utilized in prior assessments is known as “building extraction”, which places enormous weight on the improvements.  In trying to be more equitable, the relationship between land values (as derived from vacant comps) and building values (as determined from the replacement cost less depreciation) was examined and applied proportionally to the overall values.  The City & County of Honolulu began using these ratios to allocate total value between land and building before they eventually switched to single values.  With the Real Property Tax Initiative before the Kauai County Council, albeit deferred for the time being, it is imperative to appropriately account for the value contribution between land and buildings since the recommended tax rates for land and building may have a 3:1 relationship (i.e. $9.00 for buildings and $3.00 for land). Naturally, with the current market conditions continuing to deteriorate in 2009 , I’m sure it is difficult for property owners to see their assessed values above what they believe they can now sell their properties for.  Unfortunately, I am required to render the valuations as of a specific point in time using empirical data that was available to me prior to that date.

"In the Garden Island article, there was a small column stating that active listings not subject to distress situation were utilized as collateral data AND that the short sales, real estate owned properties and foreclosures were regarded as indicators of liquidation rather than market value. HELLO! Are these people serious or totally out of touch? The liquidation value IS the market value. Between 30 to 40% of the actual sales are distressed sales and it's the great bargains on Kauai that are finally moving the market. How the assessor can disregard this fact is completely beyond me. I have clients with a lot for sale at $995,000. We have not yet received offers after four months on market, YET, their assessment went up 35% percent for 2009. Adding to the confusion, many appraisals done for lenders are now coming in LOW. Appraisers and assessors are obviously working from a different playbook.

Walter Lewis, a frequent contributor to the Garden Island, published an article entitled, Not a Fair Fight, where he detailed the "kangaroo court conditions" that appear to be the modus operandi of the Kauai County Council and their tax constituency. We would like to see the county taxation reflect the reality of our realty market, not what was true several years ago. Unfair taxes have a way of hurting everyone.

What are the tax assessors doing in your community? If you live in a market that experienced great appreciation, are your assessed values reflecting the current market conditions? Let me hear from you...

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Ken Stokes reports on his SuSHI  sustainability blog about the ag forum that happened on Kauai this weekend. Read all about  Kauai Ag Forum and Sustainability

Be sure to check all of the links in Ken's posts. They are each little pearls of wisdom unto themselves. I saw Ken for coffee last week and he mentioned a community in Toronto where a group of people are growing food in people's back yards. In other words, the property owners let this group manage their garden because they know how to, and perhaps the owners are too busy. Then, this food is distributed amongst the 500 folks who are participating in this system. And that's in Toronto.

Imagine what would be possible on an island like Kauai, where everything grows whether you want it to or not!

Spring is here and our market is definitely picking up. Hooray. There were 49 transactions that either went into escrow or went into escrow and sold in the month of March. That's a pickup in activity for kauai real estate. That is far more volume than we've seen in January or February. Buyers are sensing the good values to be had and are making their moves. Interest rates are still at historically very low levels. This week I heard rates of 4.75% on a 2nd homes (better rate than a pure investor rate), and 5.25 on a jumbo loan with 30% down on the jumbo loan. Jumbo loans(non-conforming) for Kauai are under $722,000.

Of the 53 sales, over 80% of the sales were under $500,000. As our affordability index improves, owning a property in the islands becomes more doable all the time. And with the first time home buyer's tax credits and great FHA programs, first time buyer's have a better chance than in a long time to purchase their first homes on the Garden Island.

Take a look at the chart below which tracks the number of sales of Kauai real estate the first quarter of 2009 as compared with sales in 2008

While the sales volumes are down from 2008, and the prices may still be retracting, it's clear that there are more and more buyers out there when properties are correctly priced. Some listings sit on the market for a year and never sell, but others are sold in less than a week when the deal is attractive. Notice in the graph below that while numbers of transactions are down from last year (when credit was easier to get and lenders were more flexible) there is a spike upwards in March and i suspect April and May will demonstrate more of the same. You may also notice that the residential segment, single family hoes, makes up the largest percentage of sales, while land sales make up the smallest number of sales.

If you've been thinking that the pricing is getting attractive on Kauai, well it is. Let me know what type of properties you wish to monitor and you can receive an update whenever there is a change in the portion of the market that most interests you.