Agricultural zoning on real estate in North Kohala April 22, 2009
Posted by brobinson in : Community Development Plan, For Buyers, North Kohala Homes, Sustainable Agriculture , add a commentIt is Earth Day today, but on the west side of the Big Island April has officially become “Earth Month” and up in North Kohala last Saturday and Sunday’s 3rd Annual Trash Bash events clearly made it Earth Weekend in Hawi.
The overwhelming majority of North Kohala lands are zoned for agriculture: 84.6% according to County zoning, and 80.5%
in the State Agricultural district. Aside from the areas immediately surrounding the towns of Hawi and Kapaau, the property you buy is likely to be zoned “ag”. In celebration of Earth Day, let’s talk about the implications of agricultural zoning on the Big Island and on your purchase of real estate here.
On the level of the state land use planning guidelines, the primary implication is that “Important Agricultural Lands shall not be rezoned to parcels too small to support economically viable farming units.” In other words, you won’t see the area from Hawi to Pololu Valley turn into a major metropolitan area—or even into another Kailua-Kona. The recently enacted Community Development Plan re-affirmed that residential development should be limited to a small radius immediately adjacent to the existing towns. The limitation on the growth of existing housing stock can in principle contradict another goal of the plan related to affordability of housing, but that’s not a concern under current market conditions.
If the Big Island home or land you are buying is zoned ag, you will want to familiarize yourself with section of the Hawaii County Code having to do with zoning, and especially with Division 7 regarding agricultural zoning. One of the biggest misconceptions I encounter with prospective buyers is the idea that since they are buying a large acreage, they could build more houses on it than if they bought a smaller acreage. That is not necessarily the case. Whether your parcel is zoned A-5a (minimum building site 5 acres) or A-40a (minimum building site 40 acres), these are the general rules:
(b) One single-family dwelling or one farm dwelling shall be permitted on any building site in the
A district. A farm dwelling is a single-family dwelling that is located on or used in connection
with a farm or if the agricultural activity provides income to the family occupying the dwelling.
(c) Additional farm dwellings may be permitted in the A district only upon the following conditions:
(1) A farm dwelling agreement for each additional farm dwelling, on a form prepared by the
director, shall be executed between the owner of the building site, any lessee having a
lease on the building site with a term exceeding one year from the date of the farm
dwelling agreement, and the County. The agreement shall require the dwelling to be
used for farm-related purposes.
(2) The applicant shall submit an agricultural development and use program, farm plan or
other evidence of the applicant’s continual agricultural productivity or farming operation
within the County to the director. Such plan shall also show how the farm dwelling will
be utilized for farm-related purposes.
(d) An ohana dwelling may be located on any building site in the A district, as permitted under
article 6, division 3 of this chapter.
The other thing to keep in mind if you want the larger acreage for privacy and quiet rather than for agricultural purposes, is your neighbor may engage in any of the uses permitted by zoning, including raising livestock or operating a nursery. If you want more of a “gentleman’s ranch” atmosphere, you might investigate subdivisions with CC&Rs such as Puakea Bay Ranch or the Ranches at Puakea in North Kohala or Waikii Ranch in South Kohala. Although they are zoned “ag” the agricultural uses will be restricted according to the subdivision documents and homeowner association rules.
Overnight accommodations (bed-and-breakfast, guest houses or lodges) on ag-zoned lands require a special permit. There was a strong sentiment expressed during the Community Development Planning process that the county should be very reluctant to grant any additional permits, as an important goal of the plan is to decrease the district’s economic reliance on tourism in favor of increased agricultural production.
Your real estate agent should be able to answer many questions about the zoning of a property you’re considering, or direct you to the appropriate resources during your due diligence period.
Happy Earth Day!
Beth
Beth Thoma Robinson R(S)
Cell: 808-443-4588
Specializing in the Kohala Coast and vog-free North Kohala- “We Know This Market by Heart!”
FOLLOW ME on Twitter: www.twitter.com/alohabeth
READ MY BLOG:: Hawaii Island Real Estate Blog
Golden Opportunities in the Hawaii Real Estate Market April 16, 2009
Posted by brobinson in : For Buyers, Real Estate Market , add a commentThe most popular blog post I’ve written over the past year turned out to be my musings on Warren Buffett and real estate. It continues to get hits and comments. That encourages me to write about another seemingly unrelated business story to offer a fresh perspective on the real estate market in Hawaii.
According to the April 20th issue of Time magazine, “With prices down, Chinese firms are snapping up stakes in mining and oil companies to lock in raw materials.” Above that line is a photo of a mine owned by the British company Rio Tinto, in which China is increasing its ownership interest. Although some analysts think the Chinese company will be over-paying if commodity prices continue to fall, the Chinese counter that compared with where prices were six months ago, and given their long term strategic objectives, they need to act now rather than miss the opportunity.
Reading the article took me on a trip down memory lane, to the period 1984-87 when the China International Trust and Investment Company (CITIC) and RTZ (Rio Tinto before its re-branding) were both on the hunt for bargain-priced mining assets at a time when mineral prices had fallen below the cost of production at mines for which oil companies had paid top dollar during the previous boom in natural resource prices. At the time I was working for Morgan Guaranty Trust (before its re-branding as JP Morgan and before Chase bought the company and took the name). My job in the Financial Advisory/Mergers & Acquisitions department was specifically to use my skills as a mineral economist to win and work on mining industry transactions—and both CITIC and RTZ were clients of mine.
Perhaps because I’ve followed commodity prices over these cycles for 25+ years, I’m equally skeptical when people claim (always in a boom market) that ongoing price increases are inevitable, and when people fear (always in a bear market) that prices will never recover. Unlike most manufactured goods, where supply can be more easily balanced against demand in the short term, mineral and housing markets tend to cyclical extremes. Mining operations, like new housing construction projects, require a lot of permits and infrastructure and consequently have long lead times. Those factors create shortages and price spikes as demand rises. They also make big lumpy additions to supply, usually around the time demand is leveling or waning, which can create rapid price declines.
Both CITIC and RTZ were forecasting out economic trends for future decades and making their decisions over a very long time horizon. At my very first meeting with CITIC, I asked their executive Min Yu why they were interested in buying copper mines when China was already a large producer. Mr. Min replied that population growth and economic growth would make them a net importer, and although it wasn’t clear when that would occur, they also recognized that even high cost mines would be profitable when demand and prices rose again. Similarly, RTZ understood that the time to buy is when sellers are distressed. They saw assets for sale that complemented their portfolio and fit with the mining environments and markets in which they had expertise.
The parallel for real estate is: whether you are a first-time home buyer, planning for your future retirement in Hawaii, or diversifying your assets with a vacation home, when you find the right home or land in a buyers’ market, don’t hesitate to make your move. Don’t agonize over whether the market has hit bottom. And if your advisors tell you the property you want is priced near its market value, don’t insist on a low-ball offer at the risk of someone else getting there with a reasonable offer first.
Whether lending to a business or a home buyer, the principles according to which lenders have to operate are quite different than the calculus that applies to buyers/owners of the asset. At least the principles are supposed to be more conservative. It is incredible that virtually the entire mortgage industry could rationalize away the risk in financing 90% or 100% of the purchase price in a boom market without even documentation indicating the buyer had sufficient cash flow to pay the mortgage.
RTZ had never been a client for Morgan’s lending side. They believed leverage was not appropriate for a mining company due to the cyclical nature of the industry. However, when they decided to take advantage of the strategic opportunity to buy British Petroleum’s mining assets, they couldn’t pay cash and asked us to lead the financing. Now I had to switch to my credit analyst hat. The mineral price forecasts we and they would use for valuing the acquisition were way too high to use for calculating how much it would be prudent to borrow or lend—and that came as a complete shock to the executives at RTZ. It fell to me to explain that banks needed to feel comfortable that the borrower could service the debt even during the down phase of the market without compromising the health of the enterprise. Luckily their brilliant Chief Economist Philip Crowson understood how low prices could fall (although he was quite correct in his assessment of how high they would eventually rise) and for debt service scenarios we settled on copper (the key commodity) at 65-70 cents/pound. They ended up with a $3 billion loan for a $4 billion acquisition.
By the way, I can’t tell you how many clients later told me they were glad we’d insisted on copper at 65 cents/lb or gold at $200/oz. Put back into mortgage terms, if lenders had asked for full documentation and required a higher down payment two or three years ago, there would not be so many sellers in our market under water today.
So while you as a real estate buyer can gloat about low prices, don’t complain about tougher loan requirements! I hope this helps explain why lenders today are trimming appraisals, returning to full documentation, and requiring borrowers put 20% or 25% down (the RTZ analogy isn’t precise because we were not lending against the acquired mining assets per se as in the case of a mortgage). Remember– lenders are overwhelmed between short sales, foreclosures, refinancing and special government programs. It is easier to simply err on the side of caution by asking for higher credit scores, higher down payments, higher rates, and/or higher points for categories of properties that common sense tells them are riskier and less fundamentally important to the buyer than a primary home in a stable market. Eventually the pendulum will swing—but normal and prudent is closer to today’s standards than to the “there is a loan for every buyer” standard of a few years ago.
With so much inventory on the market, searching for the right property can be like panning for gold. If you’ve been researching on line and think you’ve found a nugget, a good local agent can help you tell whether it’s fool’s gold or the real thing.
A hui hou,
Beth
Beth Thoma Robinson R(S)
beth@hawaiipalmproperties.com
Cell: 808-443-4588
Specializing in the Kohala Coast and vog-free North Kohala- “We Know This Market by Heart!”
FOLLOW ME on Twitter: www.twitter.com/alohabeth
READ MY BLOG:: Hawaii Island Real Estate Blog
Tough news for sellers of Kohala Coast real estate April 7, 2009
Posted by brobinson in : For Sellers, Foreclosures, General, Kohala Coast Resorts, Real Estate Market , 2commentsThe preliminary statistics for the 2009 winter selling season are telling: to date more than three-quarters of the condos sold or currently in escrow on the Kohala Coast–Waikoloa Beach Resort, Mauna Lani Resort and Mauna Kea Resort–have been developer sales. The developer percentage—and in fact the overall number of sales for the past three months–was given a big boost by the 30-40% off sale at Wai’ula’ula.
After developer sales come distress sales (foreclosures and short sales). The bad news for sellers: I count only TWO condos sold that were ordinary resales (more details).
I have yet to run the numbers for Waikoloa Village and Waimea, but back in January when a local appraiser spoke at a “power lunch” for agents, her statistics clearly showed that developer and distress sales were virtually the entire market in those neighborhoods as well
The attractiveness of developer-owned condos began with the price. With only a small amount of built inventory remaining, these developers were not willing to risk holding on for another year until the winter crowds arrived. And forget about the kind of incentives I’ve seen in resale listings. Throwing in the surfboard in your garage or offering a bonus to the buyer’s agent just isn’t enough to matter when buyers have it stuck in their minds that the market is falling another 20-25%. Besides cutting prices, developers offered special financing outside of the resorts, and prepaid HOA fees, leasebacks, furnishings, and other significant concessions on resort properties.
From the standpoint of appraisers and lenders, all those incentives count as reductions to the sales price. Those developer sales and distress sales have set the new market values. And because of the large overhang of listed properties relative to the number of sales, appraisers will continue to be forced to check that “declining market” box and buyers will continue to expect to buy the best properties at bargain prices.
Wehilani in Waikoloa, Lualai in Waimea, as well as most of the resort developers with standing inventory, will soon have sold out. Even with the developers out of the market, we are poised for an increase of the number of active listings as properties that are off the market but in some stage of foreclosure proceedings end up as REOs.
That change is not necessarily good news for individual sellers. Once the lender owns a property, they have no ego or other considerations about getting it sold. They will continue to reduce the listing price until a qualified buyer comes forward.
In light of that scenario, here’s the conversation I’ve been having with prospective sellers:
• If you don’t have to sell right now and aren’t willing to sell at today’s prices, please don’t list your property. It actually has a depressing effect on the market. I can’t figure out what sellers are thinking when I see condos showing over 1000 days on the market with no recent price reductions.
• If you are serious about getting your property sold, look at the comparable listings and make sure you are priced among the lowest three. When I have ten similar condos to choose from to prospective buyers, I will show no more than three. The higher priced listings won’t even get showings.
• If your property is already on the market and not getting any action, a nominal price reduction will just be ignored. A large one might get attention, especially if you’ve been getting showings and there are buyers out there watching the market for a good deal in your neighborhood.
• If you are in a position to offer seller financing, do so. With lenders today requiring higher down payments and higher points or rates for second homes and resort properties, seller financing might make yours the most attractive.
• The condition and staging of your property is the one advantage you have against foreclosures, which typical are stripped of furnishings and appliances and have deferred maintenance.
Sellers, you agent is working hard for you. Help turn the odds in your favor.
Agents, any other tips you’d like to share?
Beth Thoma Robinson R(S)
Cell: 808-443-4588
Specializing in the Kohala Coast and vog-free North Kohala- “
FOLLOW ME on Twitter: www.twitter.com/alohabeth
READ MY BLOG:: Hawaii Island Real Estate Blog
The Smart Way to Buy Kohala Hawaii Real Estate March 31, 2009
Posted by brobinson in : For Buyers, Kohala Coast Resorts, North Kohala Homes , 1 comment so farThere’s a new study out by the National Association of Realtors based upon interviews with second-home buyers. The key finding is unsurprising to those of us who primarily work in the Kohala Coast market: today’s buyer is looking for a place primarily for personal use rather than investment. That would be true of nearly every buyer I’ve worked with in the past 15 months. Not to say they don’t think their new purchase might have long term investment potential. That’s just not their primary motivation for buying.
According to the study, 84 percent of vacation homebuyers were most interested in owning a “family retreat”. Nationwide 25 percent bought with the intent to rent to others and 26 percent are looking to help diversify their investment portfolio. The study also found 30 percent expect to use their vacation home as their principal residence in the future. I’d say my personal experience is that on the Kohala Coast a much higher percentage will rent at least occasionally to help cover holding costs—which make sense because unlike many vacation homes, we’re not an easy drive from home! Most of my clients who look at purchasing in the North Kohala/Hawi area are “future retirement” buyers.
The study is cited in an interesting article on CNBC’s website that also quotes a retired university professor of real estate analysis (I had no idea such a thing existed!) who has written a book on investing in vacation properties. He cautions first-time second-home buyers: “You need to look at it with cold steely eyes and be as business-like in your approach as possible,” says Boykin. “Otherwise, you’ll realize that after a year of eating peanut butter and jelly sandwiches you went about this all wrong.”
Here’s what some akamai clients of mine did recently, that fits this professor’s advice down the line.
First, they began researching before they even arrived here on the Big Island. They came with an idea of some areas they wanted to see in person, and they were already working with a local agent who could help them sift through hundreds of properties in their price range to set up a productive day of previews.
They planned a long enough trip to allow for plenty of vacation fun and time to digest what they were seeing in between property viewings.
They had a grounded idea of their budget before they left home, and they got prequalified with a local lender during their visit.
Based upon all their research and number-crunching back at their rental condo at night, they put a “lowball” offer in on their property of choice before leaving for home. It wasn’t accepted, but they now know the market and are willing to wait. And here’s the smartest strategy I’ve heard so far: now that they are back home, they are pretending their offer was accepted! Each month they are setting aside the amount they calculated they would spend in carrying costs for the property. That way they can make sure they are comfortable with the price point they have chosen, and will have even more in the bank for the down payment when they are ready to pounce.
And because we spent the time together, I have a very clear handle on their criteria. I know exactly what they are looking for and what price will interest them. They are perfectly positioned to act quickly when the stars align for them.
A hui hou,
Beth
Beth Thoma Robinson R(S)
Cell: 808-443-4588
Specializing in the Kohala Coast and vog-free North Kohala- “We Know This Market by Heart!”
FOLLOW ME on TWitter: www.twitter.com/alohabeth
READ MY BLOG:: Hawaii Island Real Estate Blog
The serenity of North Kohala real estate March 25, 2009
Posted by brobinson in : For Agents, For Buyers , add a commentWest Hawaii Today has a new real estate insert called “Live Big”, which comes out twice a month in the Wednesday newspaper. Today’s issue spotlights the small town spirit of North Kohala, and I was pleased to be interviewed for the Featured Community article.
The feature writer was surprised to hear of the range of properties available in our corner of the Big Island….homes are listed from $200,000 to $15 million in North Kohala. We advised the writer to focus on real estate near the towns of Hawi and Kapaau, as the communities such as Kohala Ranch and Kohala By-the-Sea closer to Kawaihae and the resorts offer a different lifestyle and are deserving of their own feature.
A couple of days ago the NY Times real estate section had a feature article on a Connecticut community entitled “Opting for serenity over interaction” and that is as good a way as any to describe why a second home or retirement buyer might choose to look at luxury homes and estates in the small subdivisions around Hawi.
The WHT article mentions a $15 million 
oceanfront estate. That’s located at Puakea Bay Ranch, and although if you just search for it on line you will think the property is 11000+ sq ft and 9 bedrooms of residence on just short of 5 acres. In fact the property includes two adjacent parcels for a total of around 25 acres…plenty of room to add equestrian facilities to the tennis court, pool and private gym. In other words, with prices negotiable you could probably buy this entire estate for the same price as the one-acre oceanfront lots at Kukio recently listed in the MLS! The choice would be serenity…versus the interaction one would get taking advantage of the Kukio amenities.
If 7,000 sq ft of serenity is enough, a bit farther from the ocean within the Puakea Bay Ranch community is a home with a 
gorgeous, wide-open approach to the sweeping ocean and Maui views, just reduced to $3,650,000 with possible seller financing. Three lots away is another recently completed home with almost 5,000 sq ft of Hawaii Green Design features and those same sunset views, now reduced to $3,750,000 with furniture included. [update: within hours of this post the price on this home was dropped to $2,599,000. That is not a typo! Call me for more info…] Both of these homes are selling absolutely below replacement cost. The smallest home available, 2100+ sq ft on 4.4 acres, is only $895,000 and a possible short sale. The community has CC&Rs but is light on house rules, preferring to let owners enjoy their privacy. And unlike some other communities, there are not dozens of homes on the market at Puakea Bay Ranch.
In the $750,000 - $ 1.7 million range in the Hawi area are homes on acreage outside of subdivisions altogether (although each neighborhood has a name and tradition in North Kohala). The inventory on the market at the present time offers a much wider range of choices than a year ago. You have ocean view residences and secluded homes in the woods, at elevations from 500’ above sea level to 1500’ where a fireplace is comforting (ask me about the home with central heating!). Nothing is cookie-cutter about these homes. By the way, there have been two closings in that price range so far this year, both at Maliu Ridge above Hawi, so yes, homes in North Kohala are selling.
In the $400-500,000 range, newer or renovated homes with character are a good choice for the buyer who doesn’t want or can’t afford the challenge of a fixer-upper.
Two years ago you would have found nothing under $350,000 near the towns of Hawi and Kapaau. Today there are ten 
listings: from a foreclosure at $199,900 (the only foreclosure in town!) on up…and double that number where the asking price is still above $350,000 but the sales price would likely be below. Stop by our office on April 18th when we’ll be featuring the affordable side of the North Kohala market during the Earth Day/We Love Kohala festivities.
A hui hou,
Beth
Beth Thoma Robinson R(S)
Cell: 808-443-4588
Specializing in the Kohala Coast and vog-free North Kohala- “We Know This Market by Heart!”
FOLLOW ME on Twitter: www.twitter.com/alohabeth
Another Kohala Coast oceanfront best buy pick March 20, 2009
Posted by brobinson in : For Buyers, Kohala Coast Resorts , add a commentAt the beginning of February, I singled out homes at Kohala Waterfront as a “best buy” in the $3 million range. Sure enough, the pick of the litter went into escrow shortly thereafter, and it closed at the beginning of this month for $2.7 million cash, about 10% below asking price. Although the listing showed as 16 days on market at the time of sale, this house had been on the market most of the time since mid-2005, when it was originally listed at $5,950,000.
If you check out my February post, I didn’t call this one as a best buy because it sold for less than half its original asking price. Rather, I consider it a best buy because these homes are selling for less than replacement cost and at a discount to what the same home would sell for if moved to a better-known (and higher-amenity) location.
One of my homeowners at Kolea in the Waikoloa Beach Resort recently walked into an open house and was told that another of the available single family homes was a best buy because its price had been reduced from $13,995,000 by a smoking $6.5 million to $7,500,000.
Excuse me? The house in question is a newly-constructed 5,733 sq ft 4BR/5.5BA with finishes comparable to other homes in this beachfront gated community of only 17 lots fronting beautiful low-rise condominiums. Only two houses have been sold at Kolea, both in 2006 (arguably the peak of the recent price boom). The smaller one, 3,763 sq ft 3/3.5, sold in 2006 for $6.6 million. A beautiful home looking across the historic fishponds to the beach at Anaeho’omalu Bay sold for $7,500,000 in 2006. In other words, there are no comps at Kolea to support a listing price of essentially $14 million in a market that has declined since these sales. [update: four days after this blog post was written, the house mentioned went into escrow. Luckily, it isn’t the only great buy at Kolea! But I think in the future maybe I’ll save my best buy picks for my own clients…]
In fact, only two houses sold in 2008 on the Kohala Coast for over $5 million. Both similar in size and finish to the houses at Kolea, these were a newly constructed house at Ke Kailani in the Mauna Lani Resort sold for $5.5 million, and a beachfront Puako house on a Puako-typical lot of 1/3 acre, for $7.1 million.
As with any location, there are lifestyle considerations that will make Kolea a fit for some buyers and not for others. The downsides to Kolea: condominiums are also a part of the community, and there is little cachet to owning at Waikoloa Beach Resort. On the plus side, there are few locations on the Kohala coast where owners have ocean view, a one-minute walk to the beach, AND easy stroll to shopping and fine dining, while enjoying the security of a gated community.
Where you find homes of this caliber at Mauna Lani, although a beach may be within walking distance, shopping and dining require a drive or at least a good hike. For this price at Champion Ridge, for example, you might get only a golf/mountain view. Bigger house, bigger acreage and Kolea-close to the beach…at 49 Black Sand Beach the asking price is in the $20 million range. Driving up the coast to Mauna Kea, houses Kolea-close to the water rarely come on the market. Currently listed houses are at Mauna Kea Fairways South/North or just above the highway at Wai’ula’ula.
The comps support my contention that among the six houses currently on the market at Kolea, with asking prices starting at $5,495,000, the buyer in this price range can find a “best buy”. I have my personal favorite, but the serious prospective buyer should probably view them all.
Why foreclosures aren’t selling March 15, 2009
Posted by brobinson in : For Agents, For Buyers, Foreclosures, Kohala Coast Resorts, North Kohala Homes , 3commentsI promised in an earlier post to blog about why foreclosures aren’t selling in North and South Kohala. This is a kind of a new topic, as for a long time I was blogging about how bad I felt when people called looking for foreclosures in the Kohala Coast resorts or the Hawi area and I had to tell them we didn’t have any. Those people probably thought I was either too lazy to search for them or just trying to sell them on a more expensive property. The fact was, there weren’t many bank-owned properties, even though there were sellers in distress and sellers who had decided to let them go and cleaned out the furnishings and sometimes more. It just takes a heck of a long time for the lender…or the homeowners association…to go through the foreclosure process.
But now the first wave of foreclosures has broken over our North Hawaii beaches. In some cases, I have been amazed that they are still unsold after one, three, even six months on the market. In other cases, I’ve shown the properties several times to prospective buyers who insist on looking at them, only to have them be disappointed and decide to look elsewhere—and do you think the banks don’t ask what’s wrong?
Let’s start with the “I am amazed” category. I have a couple of favorite lender-owned resort properties…one direct oceanfront, another with panoramic views. I’ve shown them to clients along with the comps to demonstrate that the pricing is a steal relative to recent sales. And here are some of the reasons they haven’t sold:
–Buyers sometimes can’t seem to distinguish between what’s already extremely well priced and what’s priced well above market. No matter what the asking price, they want to offer 20-25% less. Banks know better and will just say no.
–Buyers think that maybe something they like even better will go into foreclosure if they just wait long enough. If it’s a 2 bedroom condo, they’d prefer the 3 bedroom and they’ll wait for one. Even if there isn’t one on the horizon.
–Buyers’ eyes are bigger than their stomach. They aren’t paying cash, and when I send them to get pre-approved, they don’t have or want to commit the larger down payments banks now require—or are shocked to find the higher interest rates lenders put on resort and investment properties. They shouldn’t be shocked, of course, because the existence of foreclosures means the lenders have a higher loss experience with that category…
There are also bank-owned properties that aren’t even getting offers. Some of the reasons include:
–>The photos in the MLS look great, but they aren’t showing the true condition of the condo, the neighborhood of the house, or all the other undesirable reasons that might be why that particular property had problems to begin with.
–>In some neighborhoods like Waikoloa Village, I can show you two homes, literally next door to each other and nearly identical floorplans, that are priced alike. One is a foreclosure, with an overgrown yard and deferred maintenance—and the other has a neatly trimmed lawn and a clean, inviting interior.
–>The listing agents are in Kona or on Oahu. They aren’t there to answer buyer’s questions—and don’t know the local market to sell prospective buyers on the property anyway.
–>The listing agent hasn’t yet changed the listing to be searchable as a foreclosure or REO in the MLS, so it doesn’t even come on the radar screen of prospective buyers or agents who aren’t doing the homework.
On the other hand, some foreclosures ARE selling. We have had two REOs come on the market in the Hawi-Kapa’au area this year, and both of them went into escrow in a short period of time. Both of them were teardown/fixer-uppers, but they were priced appropriately and we have knowledgeable local agents and buyers who understood the opportunity.
Remember the mantra: never turn your back on the ocean. You might miss a whale breach…or the next wave of foreclosure opportunities.
A hui hou,
Beth
Beth Thoma Robinson R(S)
Cell: 808-443-4588
PS–Friend me on Facebook or follow me on Twitter
What’s hot and what’s not in Kohala March 4, 2009
Posted by brobinson in : For Buyers, For Sellers, Kohala Coast Resorts, North Kohala Homes, Real Estate Market , add a commentI’m trying to keep up with all the new “social media” options and so far today I’ve read comments on both Facebook and Twitter telling me that “buyers are back.” These were from Mainland real estate agents, one on the East Coast and the other on the West. I asked them why, and they cited seasonal factors (spring typically being a better market than winter), the first-time buyer incentives, and the perception that maybe prices were finally at or close to bottoming out in their markets.
We also have a flurry of transaction activity in the markets I follow, relative to the previous 3-6 months. Some of it is surely seasonal, as the winter and early spring is when we have the most visitor traffic. In Waikoloa Village and Waimea, first-time buyers are a factor. But as most of the North Kohala and Kohala Coast purchases are for vacation, second home and future retirement use, I thought today I would analyze what’s currently in escrow to see if there are patterns of what is selling that might illuminate why it is selling.
Starting with North Kohala, the “thumb” of the Big Island heading north from the Kohala Coast resorts, there are six properties in escrow. One is a foreclosure that at $199,900 lasted only 10 days on the market. A house needing TLC in a sweet location that will go to a local first-time buyer.
Of the remaining five properties, three of them are direct oceanfront, at asking prices ranging from $2,995,000 for a house in Kohala Waterfront (my “best buy” pick a month ago) to two fabulous land parcels at $2,650,000 for 17 acres and $3,590,000 for a parcel of almost 26 acres that happened to be featured on last Friday’s caravan. The two final properties are a house in Kohala By The Sea and a parcel makai of the highway near Hawi, both with whale-watching ‘kine ocean views. There is also a house at Puakea Bay Ranch that doesn’t show up in the statistics yet, but is another stunning ocean view property with an offer on it.
This is the lot at The Ranches at Puakea that just went into escrow. The adjacent parcel is still available!
I still hear it being casually said that “land isn’t selling”, but in my review of the first six months of North Kohala real estate sales for 2008, I found that it was…and if these properties manage to close, it looks to be the case this year as well. But unfortunately for the 69 sellers with lots on the market at Kohala Ranch and nearby communities in North Kohala, the unique large parcels right on the ocean are what’s attracting the attention. If size doesn’t matter to you, go for one of the lots in Kohala Waterfront across the road priced from the $600,000s.
In South Kohala, there are only four land parcels in escrow. One is a 10-acre parcel in Waikii Ranch (one of the few true equestrian communities), one is a residential lot in Waimea and two are lots in Waikoloa Village. Little for sellers to compete on in these locations other than price.
There are twenty condominium/townhouse properties in escrow. Five of them, in Waikoloa Village, are likely first-time buyers at prices from $175,000 - $315,000. Down at the resorts, there are nine condo sales in process at Mauna Lani, five in Waikoloa Beach Resort, and one at Wai’ula’ula in Mauna Kea Resort.
What’s surprising is the concentration in particular projects. The action within the Mauna Lani resort is all at the newer projects close to the Fairmont Orchid and the Shops. No views, but a nice quality of construction and finish. The relative winner is the Villages: with four condos in escrow and two sold already this year, the other 26 sellers must be breathing a sigh of relief. There were only four closings for all of 2008, so the pace of sales there is picking up. Similarly, next door at the Fairways, there are three in escrow, compared with two sales in 2008…and 15 on the market. Geez, only 4 or 5 years of inventory remaining!
At Waikoloa Beach Resort, the action seems to be all about price: $399,000 to $529,000 asking prices. Not surprisingly, the Waikoloa Beach Villas have just announced lower prices on their remaining developer units. The developer of Halii Kai has chosen not to compete on price. I do hear that the foreclosure on the oceanfront there has an offer on it, but the developer has nothing in escrow.
The 28 residential properties in escrow in South Kohala break down between eight in Waimea/Kamuela (and surprisingly, REOs and developer units which have dominated that market are not among them); 19 in Waikoloa Village, about half in the REO and developer categories; and one at the Villages at Mauna Lani.
The conclusions and surprises from this review:
1. It is great to see prices and interest rates giving a boost to home ownership for Island residents.
2. The reopening of the Mauna Kea hotel has not translated into property sales within the resort. Might it be the source of some of the sales farther north?
3. Condo buyers are extremely price conscious, as they should be given the level of choice. But with so much available, I can’t imagine how anyone could sort through the inventory without the help of a well-informed agent.
4. Land and residences at the Kohala Coast resorts are not selling. Oh boy, another buying opportunity as motivated sellers begin to drop prices below replacement cost!
5. I have an opportunity for a great blog post on “why foreclosures aren’t selling”.
6. Location, location, location. Direct oceanfront or beautiful home with a panoramic view? Now is your chance to sell if you are a seller, or to buy your dream property for a dream price.
Readers, what do you conclude?
A hui hou,
Beth
Beth Thoma Robinson R(S)
beth@hawaiipalmproperties.com
Cell: 808-443-4588
Hawaii Palm Properties, Inc
Office in downtown Hawi near Bamboo restaurant
808.889.1295 phone
808.889.1296 fax
PS–Friend me on Facebook or follow me @alohabeth !
North Kohala Caravan on Friday February 25, 2009
Posted by brobinson in : For Agents, North Kohala Homes , 6commentsI blog in hopes that there are prospective buyers and sellers of Big Island real estate reading, but I suspect my readers are primarily other Big Island agents. So, this one’s for you!
This coming Friday the every-other-week North Hawaii Broker’s Caravan comes to North Kohala.
Two weeks ago it was on the Kohala Coast and attendance was pitiful. Sitting in the listing I had open, I saw more whales from the lanai than I did agents coming to preview it. I’ve been pondering why. Perhaps people felt the listings on the caravan were not exciting. I personally was curious to see the first listing—a foreclosed house at the Mauna Kea Resort priced under $2 million—and my friend’s sweet oceanfront lot listing at Puako. But I do understand, if you are already familiar with the floorplans and site maps at the Villages at Mauna Lani or Waikoloa Beach Villas or Hali’i Kai, you might not bother to preview the 20th condo on the market there.
The story is different when you creep north of Mahukona. There are some exceptional new listings on this Friday’s caravan, but none of them are cookie-cutter. And yet, I predict that once again attendance will be sparse, and that’s a shame. There are plenty of good agents with offices in Kailua Kona, the Kohala Coast resorts, and Waimea who will have buyers for these listings. Really, it happens, an agent from Kona brought the buyer for the recently closed escrow at Maliu Ridge above Hawi.
Maybe you aren’t coming for the same reason I skip caravans in Kona. Although a rare client becomes so firmly attached that I bend my own rule and show them a house they found on-line that happens to be in Holualoa or Honoka’a, usually I refer prospects whose buying target area or property for sale is more than 45 minutes from my office. I’d rather put them in the hands of someone who is an expert in that area, knows the comps by heart, has pocket listings, and remembers the withdrawn and expired listings to find just the right match. If that is also your philosophy–no problem. Don’t come to Friday’s caravan. I’m happy to serve your referrals (shameless self-promotion acknowledged).
Or maybe you just feel the same way I do about caravans on the Hamakua Coast. My own ignorance intimidates me. You look at the schedule and think, “I don’t know Puakea from Puuepa, Hanaula from Halaula, Ainakea from Ainokea. I’d just be lost.” In that case, please call or email. We’ll be happy to have you ride along with one of the locals.
What can you expect to see on caravan? (for the record, none of these are my listings, just some of my picks)…
I’m taken with several beautiful new land listings. For example, a stunning 17.55 acre oceanfront parcel adjacent to Puakea Ranch for just under $ 3 million (the price of 1/3 acre at Puako!) and a charming, accessible and yet private, wind-protected acreage with level areas and a gulch for $575,000 with a garage and a tiny cottage (just listed by our office).
There are homes on caravan with ocean views and beautiful finishes on 1-3 acres at prices from $795,000 - $1,300,000.
And I understand that the caravan will finish, as it did last year, at a distinctive oceanfront residence of 13,143 sq ft on 21 acres. Offered a year ago at $17 million, it has come on the market again at $9.9 million. Put on your thinking caps. Those of you with international real estate designations must have a client in Europe, Asia or South America whose tastes are more Venetian-crystal chandelier than tiki torch. A prospective buyer from Hollywood or Bollywood? Again, this is not my listing. I’m just a huge fan of the North Kohala ‘hood.
See you on Friday!
Beth
Beth Thoma Robinson R(S)
beth@hawaiipalmproperties.com
Cell: 808-443-4588
Hawaii Palm Properties, Inc
Office in downtown Hawi near Bamboo restaurant
808.889.1295 phone
808.889.1296 fax
The Snowboarder on Hawaii Real Estate February 21, 2009
Posted by brobinson in : For Buyers, General, Kohala Coast Resorts, Real Estate Market , 2commentsIn my previous post about Warren Buffet, his recent biography The Snowball, and his investing advice to begin your snowball with wet snow, I commented that he does not invest in real estate, let alone in Hawaii real estate. By the power of free association, I started thinking about a friend of mine who was a great investor in real estate (although also not in Hawaii). Let me introduce George, expert on snow and real estate.
I first met George Vicenzi in 1977, when a man I was dating took me on a romantic getaway to visit his college fraternity buddy who lived in Aspen, Colorado. George became a dear friend and mentor about “the business of life” for over 30 years, until his unexpected death a couple of years ago.
George went to Aspen as a ski bum, before Aspen was ASPEN, so to speak. He worked as a real estate agent, and bought a little property, both residential and commercial. As Aspen grew, he spent more of his time on his other passions—hiking, climbing, skiing, and the Aspen Music Festival. As I used to say, his occupation had become “rent collector.”
George is the investor from whom I first learned about 1031 tax-deferred exchanges, as his real estate investments expanded beyond Aspen. Although passionate about life, he had a dispassionate attitude towards how he made money. “Don’t make your fun thing your work life,” he told me once as we biked up towards the Maroon Bells (he was the kind of natural athlete who could bicycle uphill at 9,000 ft and carry on a conversation the whole time). Similarly, he never let his emotional response to a property compromise his business sense.
Aside from buying in bear markets rather than in strong ones (another Warren Buffett rule!), George had two other criteria for his real estate investments. I think these should apply to investing in Hawaii real estate, because he likewise invested in island, second home, and vacation property locations (e.g. Manhattan island; Moab, Utah; and that perfect New England lighthouse). Just a reminder–if you are looking for one of the above as a home for your own use, please stop reading this blog post and return to the previous one! You are making a “fun thing” decision, not an exclusively business one.
The first George real estate investment rule is: among available options, buy a property that has some unique quality that won’t be easy for other competing properties to replicate in the future. In real estate appraisal terms, this is the principle of scarcity. For example, in the 1980’s he was looking for an apartment on the upper west side of Manhattan. Someplace close to Lincoln Center, Carnegie Hall and the Theatre District where he could indulge his passions on twice-a-year trips. George only wanted to look at corner units with a view. In a large high rise building, most of the units will be on the interior. In a dense urban setting, at least two of the sides would likely have another skyscraper as their view. Hence within that building there would always be a scarcity value or premium for a corner unit, and a view unit, relative to the exact same floorplan in the middle. He was willing to pay that premium, knowing the scarcity factor would protect the value of his investment.
The second George real estate investment rule is: use your budget to buy a smaller property in a great neighborhood rather than a larger property in an average (or worse) neighborhood. Appraisers refer to this as the principles of regression and progression. Back to that that Manhattan investment. George could see that his chosen neighborhood had desirable characteristics, and that other savvy investors were making big plays there that would upgrade the neighborhood even further. As new exclusive buildings went up, the average price per square foot of the neighborhood would likewise progress. He bought a charming one-bedroom, renovated it perfectly, and rented it always to a single professional person for a slightly-below market rent with the specification that he could use the apartment twice a year for one week during his visits.
Here’s an example. In the MLS today, there are something like 280 condos listed in the Kohala Coast resorts, including Waikoloa Beach Resort, Mauna Lani Resort, and Mauna Kea resort (this does not include developer inventory outside of the MLS so the true number is over 300). Even in the high end resort residential market, there are 29 Kohala Coast homes priced above $3 million (up to $24 million). Whether your investment price point is $500,000 or $2 million or $7 million, with the help of a real estate agent knowledgeable about those markets, you can sift through the options pretty quickly using George’s two investment rules. And that takes us back to Warren Buffett. Wouldn’t you guess that those are exactly the properties that will get purchased first by some savvy real estate investor who has “cash and courage in a crisis”?
A hui hou,
Beth
Beth Thoma Robinson R(S)
Direct: 808-443-4588 or email me