Coronavirus Puts the U.S. Economy on Life Support

Unprecedented times calls for unprecedented action. You could have definitely made an argument for unprecedented times long before COVID-19 swept the globe in 2020 but oh my, the ride had merely begun. The new decade ushered America into another year of an embattled culture war that has seen us divided by generations, ideologies, and most obviously; political parties.

The year 2020 would mark the nation's fourth year under the leadership of President Donald Trump; perhaps the most polarizing political figure in American History. Trump, the real estate tycoon and former reality TV star, found himself at the helm of a flourishing economy and record unemployment despite his very public transgressions, controversial policies, and mounting investigations lead by House Democrats that would ultimately devolve into impeachment proceedings. Just when it seemed the American economy was unstoppable, a foreign virus knowing no borders, leapt to pandemic proportions and brought the world economy to its knees. 

The economic effects of Coronavirus in Hawaii echo what we're seeing across the upper United States. Children are out of school, families are out of work, and uncertainty creeps into every American household as the world quarantines in place, patiently waiting for the coronavirus to retreat or better...a vaccine shaped messiah.

A coronavirus vaccine would not only bring relief to the infected and the overwhelmed medical system, it could very well be the "shot in the arm" that, if administered early enough, raises the U.S. Economy like Lazarus. However, experts say we could be looking at 12-18 months before we have an approved vaccine, a daunting timeline for the sick and/or economically impacted.

What is the CARES Act?

Thankfully, our elected officials were able to come together in the passage of The CARES Act; a bipartisan bill that aims $2 Trillion in stimulus money at individuals and small business under siege from the coronavirus led economic free-fall. While it's definitely no Messiah, think of the CARES Act like the Tamiflu and Ventilator that helps us more comfortably manage the severe economic symptoms of the virus until a vaccine is found, and full recovery is reached. You can read the full scope of the bill HERE, but we've boiled things down to highlight some of the "meat and potatoes" below, and how you might benefit from them:

• Unemployment relief: the stimulus package expands unemployment insurance in providing an additional $600 per week for four months on top of the standard state unemployment insurance policy. Guidelines have also expanded to provide coverage to independent contractors, self-employed, and gig economy workers(rideshare, food delivery companies, etc). Read up and file a claim for Hawaii Unemployment Insurance HERE.

• Mortgage Relief: Homeowners with federally backed mortgages can now request loan forbearances with their mortgage servicers which could effectively delay mortgage payments for 180 days, with extensions to that term available on a case by case basis. It's important to note that you cannot just stop paying your mortgage, you must contact your mortgage servicer directly to discuss repayment options. Most banks will require a balloon payment of all deferred mortgage payments at the end of the forbearance term, while they're may be an option to tack delayed payments on the end of loan term.
  
  
• Direct cash payments: Depending on your income levels, tax-paying Americans should expect to receive up to a $1,200 direct deposit for single individuals, or $2,400 for married couples. Have kids? Expect an additional $500 per child. The stimulus cash is reserved for individuals earning $75,000 or less, or $150,000 for married couples.
  
  
• Small Business Loans & Grants: Of the $2 Trillion, small business will receive $350 Billion in funding to help businesses sustain their employee payroll through the outbreak via programs like the Economic Injury Disaster Loan and the Paycheck Protection Program. If you're self-employed, an independent contractor, or a small business owner looking for more information, visit sba.gov/.
  
  
• Delayed Payroll Taxes: Employers may now defer payment of their 2020 payroll taxes to the following year, or 2022.
  
  
• 401k Loans: Loan amounts have been expanded from the $50,000 limit to $100,000.
  
  
• Suspension Minimum Distributions: Retirees with IRA's and 401k's, and at least 72 years old no longer have to take required distributions.
• Charity: Limits on charitable contributions of changed and there is now an above-the-line deduction for the contributions.
  
  
• Net Operating Losses: The Net loss rules of the The Tax Cuts & Jobs Act have been modified with the 80% rule suspended. Losses can now be carried back five years.
  
  
• Excess Loss Limitations: The excess loss limitation(ELL) rule for passthrough entities is also suspended.
  
  
• Coronavirus Testing: Hawaii Coronavirus Tests and potential vaccines will be administered at no cost.
  
  
• Health Care: The CARES Act will appropriate $140+ Million to support the U.S. health system with $100 Million given directly to hospitals. The funds will be purposed towards providing masks, gowns, testing supplies, training, workforce, and other supporting needs of medical personnel. 
  
  
• Corporate Bailouts: Airlines and other large corporations will receive bailouts in the form of loans that total $500 Billion. The loans are said to not exceed 5 year terms and cannot be forgiven.

It will be interesting to see the how the CARES Act performs, and how much life support it will offer to struggling Americans and small businesses. The COVID-19 pandemic will be forever etched into our minds and what the longterm impacts of the Coronavirus on the Hawaii Real Estate Market and economy are still unknown. In the meantime, sharing information while staying safe and staying healthy is the tide that lifts all boats, and it's important that we tether those boats together.

As I write this, we are without question in the thick of the greatest public health threat to the modern world. A moment in time that will see 2020 go down in infamy and to what extent is still unknown. What feels like every hour of every day brings a new swath of statistical unfathomables as it pertains to new coronavirus cases, unemployment filings, and stock market swings as a nation pleads with it’s citizens to “social distance” from one another in an attempt to "slow the curve" and starve the virus. According to Worldometer, the current count of coronavirus cases stands at over 1 million people infected worldwide, with approximately 53,000 deaths. The number of Hawaii Coronavirus cases is highlighted by county below.

What is COVID-19 and the Coronavirus?

COVID-19 a disease caused by the coronavirus which is believed to have originated from animal to human transmission in China. Rumblings of a significant outbreak were first reported out of the Wuhan province of China in late 2019 and in a matter of months the virus swept the globe, reaching pandemic proportions. Varying symptoms are reported across those infected with some cases exhibiting very light, cold like symptoms including but not limited to sore throat, dry cough, fever, and chills. The most severe cases result in pneumonia, permanent lung damage, and tragically; death. 

The global medical community is scrambling to coalesce data points from across the globe as a means to provide the public with the most accurate and real time preventative measures and risk factors as they hunt for treatment options and a vaccine. Further coronavirus updates, guidelines for testing, and how to protect yourself can be found on the CDC website.

Living in Hawaii During the Coronavirus Pandemic

I saw our "new normal" best described in a meme(what would we do without the coronavirus memes) that compared our current environment to the iconic Alanis Morissette song, "Ironic," and it couldn't be more fitting. Isn't it ironic that we now have all the time in the world to gather with our friends family, but we can't. Oh the irony of wide open freeways with nowhere to go. How about the fact that you may for once secure an entire row to yourself on a flight to Hawaii but upon landing in the most beautiful place in the world, you're are confined to the four walls of your hotel room for the duration of your stay, with disobedience resulting in risks of fines and/or jail time.

As far as the coronavirus effects on our psyche, I think it's safe to say we're all experiencing an underlying angst and distraction as we adjust our lives around the virus.  A cloud of uncertainty now looms over aspects of our lives that we once deemed certain. I was certain that toilet paper “grew on trees,” that grocery stores would always had food, and that in times of crisis, I would always have my family to gather and interact with. I was certain that in a first-world’s view of worst-of-the-worsts, losing cell service or WiFi for example, that I could always revert to enjoying the simpler things in life; the constant, natural amenities of Hawaii beaches, hiking, and premier BBQ weather to host social gatherings. Hawaii's rich tourism economy was arguably certain, planes flocking in from all over the world was certain, crowded Waikiki streets; absolutely certain.

The coronavirus has taught us that nothing is certain. Our civil liberties sequestered by state-level "stay-at-home" mandates that drop all movement, activities, and professions into "essential" and "non-essential" buckets. Those deemed essential may operate their day to day businesses with extreme caution and limitations on physical contact whereas all non-essential activity is prohibited.  Governers Ige recently made his 3rd proclamation to the evolving Hawaii State COVID-19 Mandate and real time updates can be found and subscribed to via the Hawaii Health Department COVID-19 Newsletter.

Perhaps the most bittersweet component of this all; being able to drive to and from Honolulu during peak rush hour traffic hours with the cruise control ON at 60mph. On Oahu, we reserve this type of anomaly for Christmas Day where roads are traversed only by those carrying gifts to and from family Christmas parties. If you commute to work in Honolulu from Central and West Oahu neighborhoods like Koa Ridge, Mililani, Hoopili, Kapolei, then you know that the lack of traffic feels damn near apocalyptic. You also know that that the only gifts being transported on Honolulu streets today come by way Ol' Saint Sick himself; Corona Claus.

How is coronavirus affecting Hawaii Tourism?

What's interesting is that my wife and many of my clients are Hawaiian Airlines Pilots and Flight Attendants. With that, I get a front row to seat to all the tourists that are not coming to the islands right now. Empty airplane seats means empty rental cars, restaurants, and hotel rooms in Hawaii. Adding to the aforementioned irony detailed above, coronavirus finds itself hot on the heels of the Honolulu Vacation Rental Bill 89, a recent piece of legislation that's stifled the Oahu vacation rental market. The bill was a huge success for the Honolulu Hotel industry as it took aim at pulling thousands of visitor units away from Hawaii AirBnb operators, a move that would undoubtedly see increases to Oahu's average hotel occupancy of roughly 80%. But now that Hawaii has nearly closed its doors to all visitors, Hawaii hotels now see their occupancy in free fall. 

Hawaii Visitor Data on April 2, 2020 Courtesy of Hawaii Tourism Authority

The vacation rental market is no different. According to Nicole Linke, Vacation Property Manager with TurtleBayCondos.com, her managed units were "booked solid until the virus hit. Myself and other property managers have been able to salvage some bookings by delaying them to later in the year but the rate of cancellations has been pretty sobering as of late."

Nicole specializes in vacation rentals at Kuilima Estates in Turtle Bay on the North Shore of Oahu; widely considered as the mecca for Oahu vacation rentals.  Kuilima Estates is currently one of the few vacation rental hotspots to survive Bill 89, as it falls within Turtle Bay's resort zoning jurisdiction. If there's any bright spot in all of this for the former Hawaii vacation rental operators, it's that they got a head start at repositioning their rental units to long-term, and/or coming to grips with the implications of the rental income loss as a result of Bill 89 before the coronavirus brought Hawaii Tourism to it's knees.

How will Coronavirus Affect Hawaii Real Estate?

Given the fluidity of the rapidly evolving economic implications of the virus, it's still too early to make any real responsible assessments as to the long term affects on Hawaii's real estate inventory and prices. Much will depend on how quick we are to contain the virus so that we can fire up the engines of Hawaii's economy again. There's much we don't know, but here's a few things we do know as it pertains to the immediate affects:

• Interest Rates are low. Buyers are seeing major decreases in interest rates. If Hawaii's economy and unemployment can bounce quick, a "V-dip" of sorts, we may see more sales as a result. If you already have a mortgage, you may be looking at the most opportune time in history to reduce your mortgage payments by refinancing into a near record low interest rate. 
  
  
• Unemployment is climbing. People out work equals less qualified buyers in the market. The longer we take to rebound and get people back to work, the more distressed homeowners we'll see, which could result in more inventory coming to market. More inventory coupled with less demand by qualified buyers is a recipe for a cooling real estate market. Combine this with record low interest rates, we could see buyers securing "quick wins" in what's otherwise been a frustratingly competitive market.
  
  
• Lending restriction are tightening. With vast amounts of homeowners starting to apply for mortgage relief and forbearances by way of the The CARES Act, the $2 Trillion Economic Stimulus Bill, lending companies are becoming more discriminating on who they lend money to. Stay conscious of your credit score and keeping debts low as to not create any obstacles for yourself should you look to refinance or purchase a home should stricter guidelines persist.
  
  
• Longevity is the key to wealth in real estate. Despite the immediate impact of coronavirus on the Hawaii real estate market, real estate is a long term investment. Oahu has historically been one of the safest places to hold real estate, having doubled in price three, going on four times in the last 40 years. When all is said and done, Oahu will inevitably rebound as one of the most desired tourist destinations in the world, and shall maintain its place atop the most desirable place to live and own real estate in the world. 
  
  

Where do we go from here?

It's business as usual for our team, minus the meetings in our brick and mortar office space. Real estate services have been deemed "essential" and since having immersed our systems and processes into the digital pool long ago, we haven't skipped a beat. Schedule virtual Buyer, Seller, VA, Investor Consultations with us HERE, stay up to date on Oahu New Homes & Lotteries.

Rest assured, we're keeping a firm pulse on the market and despite the uncertainties, we're here to equip you with all available information to help you approach your next real estate move with confidence. "Is now a good time to buy or sell real estate" is a question best answered by your real estate doctor. The proper prescription requires a careful diagnosis of your short term and long term goals and it's important to stay close to those closest to your investments in these times; be it your financial advisor, mortgage lender, and/or realtor. 

The Koa Ridge Oahu 2020 Update

The public has been on pins and needles waiting for the long awaited commencement of Koa Ridge home sales, and it's no secret that the project has been plagued with delays. I was cautiously optimistic about the "Late 2019" estimated sales launch date that was first dangled in 2018, but 2019 came and went and here we are! While I encourage my clients not to put ALL of their eggs in the short term Koa Ridge basket, the most recent Koa Ridge update has shifted my sentiments towards confident optimism. This is due mostly in part to the heavy machinery on site that's currently moving rusty-red earth near Kamehameha Highway in Waipio. Finally, a sign of life!

For those salivating over the impending release of Koa Ridge homes for sale, the sight of dozers and excavators is undoubtedly "breaking-necks" of passerby's that commute in and out of Waipio and Mililani via Kamehameha Hwy. Recent communications with developer indicate that this will the be very FIRST site of Koa Ridge homes so if you're a prospective buyer, be ready to plant your flag and stake your claim. Reference the pin drop on the photo below for reference.

Will Koa Ridge Be Sold by Lottery?

It safe to say a land-grab at the project won't be easy. The sheer amount of inquiries I've received on Koa Ridge since my tenure in the Real Estate business points to this being an intensely competitive project. The Hoopili and Kakaako neighborhoods rise to similar levels of "buzzworthy" as it pertains to Oahu new home projects and the Lottery-styled sales strategy exhibited by those developers are probably a good indication of how we should expect the Koa Ridge Sales to be rolled out.. At least I hope so.

Lotteries are definitely the most humane. I've personally spent a few nights camped outside of new development Sales Galleries where homes were offered on a first-come-first-serve basis after a Sales Launch Announcement. You learn a few things:

• Aloha Spirit is REAL. Despite dozens of people competing for shelter, everyone more or less looks after each other. Friendly conversation with the person behind you in line may result in a bowl of beef stew, just when you needed it most.
•  The bigger your family the better. 4-6 hours shifts split up amongst your cousins beats 72 hours straight, any day. You're not Bear Grylls.
• Mosquitos are the real winners.

So cross your fingers for a Lottery, unless some new innovative way of fairly offering homes to dozens of eager buyers has been concocted. Say your prayers, cross your fingers, and be nice to the homeless(as you should), because you're going to need some good will on your side.

Yay-Big by Yay-Tall

The activity we're seeing at the build site is a definite point of optimism. This is most likely a sign of the mass-grading and infrastructure stage of the project and you'll know things are really getting hot and heavy once you see foundations and framing starting to go up. So what is the timeline now? I am sure that Koa Ridge sales team is being inundated with this question every day, which is why you likely won't be able to get them on the phone nor will your receive a quick response by email.

My last communication with them indicated that Castle & Cooke Hawaii is now aiming for a 2nd Quarter sales launch, so let's call it LATE 2nd quarter to be conservative. The sales rep also mentioned that they plan to start sales off of Floor Plans and Renderings alone, meaning the first buyers will be have to make a decision without having seen a Koa Ridge Model Home yet.

They don't expect to have available model homes until the end of the year which means you better have a good imagination. So over the next few months, might I encourage that you practice visualization techniques to help you cope with the decision you'll have to make come 2nd quarter. Close your eyes, and imagine yourself handing over hundreds of thousands of dollars to someone telling you, "Your house will be roughly yay-big, by yay-tall, and OMG...you're going to love it!"

Koa Ridge Prices, Floor Plans, and Insights

- We still don't have any details on pricing or floor plans and don't expect that information will be available until the sales launch in Q2. Check back with us in a few months as we continue to harass the developers for more information and be sure to sign up on the Koa Ridge Interest List and follow our @dwell_hawaii to be the first to know about Developer News, Future Sales Releases, Floor Plans, and Pricing as we receive it.

- We do know that there will be Affordable Housing options will be made available by a state-run Affordable Housing Agency but majority of sales will be featured at Market Prices for townhomes and single family homes.

- I'm often asked about the availability of Koa Ridge Rim Lots or Ridge Homes and I believe we will see these options as well; although limited. Take a look at the northern most part of the Koa Ridge site as this is my best guess as to where perimeter lots will be located.

- You will be able to use your VA Loan to purchase a home at Koa Ridge. For most new project sales like Ala Moana and Kakaako condos, this isn't the case. 

- If you already own a home and hope to sell that home in order to purchase at Koa Ridge, be sure to let us know when joining the interest list so we can explain how home sale contingencies work(or don't work) as it pertains to purchasing a new construction home. It's important to have a game plan ahead of time and we're here to help equip you with all the info need to approach your future real estate plans with confidence.

Disclaimer: As with all Oahu New Home Projects, the developer reserves the right to change any and all information at anytime. While we expect most of above to hold true, it's all speculation at this point!

The groundbreaking of Ililani condos comes on the heels of the project's Affordable Housing sales campaign, and marks the genesis of the Ililani's Market Priced unit release. The Affordable Housing sales campaign saw over 560 applicants vying for the opportunity to purchase one of the building's 165 one and two-bedroom units.

With starting prices at $312,000, Ililani looks to make significant contribution to providing affordable home ownership to a city that's long been plagued by low housing inventory and record high housing prices. Eligibility for the Ililani Honolulu Affordable Housing program requires that prospective buyers be owner occupants, with incomes below the 140% area median income limit. This is one of the few affordable housing programs on Oahu with Sky Ala Moana being the only option in Honolulu, and Hoopili in Ewa Beach.

Some of the applicant were denied eligibility for the program because of their incomes were too high, but those were not deemed eligible for the affordable housing component may now apply for the Market Unit release. The market-priced Ililani condos for sale will feature two-bedroom two-bathroom floor plans priced between at $700,500 - $905,000.

Each unit will feature usable lanais, split air conditioning, and while the majority of the units will offer two parking, the Ililani condo project will be the first new condo in Honolulu to offer an "in-house" rideshare program. This program will provide 13 Hui Cars to the condo building, 10 of which will be for the exclusive use of Ililani owners at discount rates, whereas the remaining 3 cars will be available to the public. Developer, Kenneth Kai Chang of Los Angeles, sees the program as a big stride in providing alternative means of transportation to owners while simultaneously relieving the congestion of urban Honolulu.

1/23/19: Ililani developer launches brand new renderings, a lifestyle video, and a major price improvement to it's remaining inventory. Current 2 bedroom, 2 bath, 1-parking units start at $665,000.

The Impact of Bill HR 299 on VA Loan Limits & Funding Fees in Hawaii

It's no secret that Hawaii has one of the highest costs of living in the nation and for Oahu residents, this is due largely in part to the island's staggering home prices. A new record high median home price of $835,000 was set in July 2019. Oahu, the "Gathering Isle," sees roughly 2/3 of the state's population at 953,000 people according to the 2010 U.S. census and the pressure of the island's staggering home prices spans the entire demographic; VA Home Buyers included. With all 5 branches of the U.S. Armed Forces on the island, Oahu sees a substantial amount of housing demand from service members utilizing their Base Housing Allowances in both the rental and ownership sectors.

2019 BAH Charts
Oahu VA Resource

As Oahu Real Estate Market Appreciation Rates continue to outpace Honolulu County incomes and BAH, we see both a strain on affordability and buying power, as the Honolulu VA Loan Limit is currently capped at $726,525 for 100% financing. As of 2019, any VA Loan above $726,525 would require a 25% down payment but that may all change due to the recent passage of Bill HR 299, also known as the Blue Water Navy Vietnam Veterans Act of 2019.

What is Bill HR 299?

The bill was passed in order to raise additional funds to extend medical coverage to veterans of the Vietnam war that weren’t previously covered. Veterans who previously were denied for an Agent Orange related medical condition can now file a new claim under the change to this law. Eligible survivors of deceased Blue Water Navy Veterans also may also find benefit from Bill HR 200 and may file claims based on the Veterans’ service. 

The caveat? VA Loan Funding Fees are going up, and VA Loan Limits are going away.

“Due to the recent passage of a new bill, starting January 2020, VA funding fees are going up. The good news is that the VA Home Loan benefit can be offered by lenders without a loan limit and requiring zero down payment in some cases,” explains Rylan Maddox | Homebridge Hawaii HI FIVE Team (NMLS# 973196)  “For example, starting in January of 2020, a first-time VA homebuyer could purchase a home for up to $826,525 with zero down payment, but the funding fee would be based on the new, first-time use of 2.3% of the loan amount. So this equates to about $1,200 more in VA funding fees the buyer has to pay than currently.” (In the past, for Honolulu County, any loan over $726,525 would require a 25% down payment based on the overage amount.)

Key Insights into the Bill's Impact on VA Loans & Funding Fees:

• If the Veteran has 100% of entitlement available, guaranty is 25% of Loan Limit (no money down, no limit).
• If the Veteran has ANY entitlement used currently, guaranty will still be based on 25% of Freddie Mac Loan Limit, adjusted per year (remains the same as now).
• The VA funding fee you pay in 2020 will depend on your down payment amount and whether you’ve ever had a VA-backed loan before. If you haven’t, it’s a “first use” loan, and if you have, it’s a “subsequent use” loan. You can pay the fee upfront or roll the cost into the loan.
• The fee for first-use, zero-down loans will be 2.3% of the loan amount in 2020, up from 2.15% for regular military in 2019. The fee for subsequent use loans will be 3.6% of the loan amount, up from the current 3.3%. These fees will stay in place for two years, return to current levels from 2022 to October 2029 and drop further after that.

“We service many VA loans in Hawaii and essentially these changes have a silver lining,” Preston Sims | Homebridge Hawaii (NLMS# 928229) concludes. “Also keep in mind that just like the VA has no credit score requirement, but most lenders do, it remains to be seen which lenders will follow these new guidelines.”

Bringing it full circle, eligible VA purchasers will see higher funding fees, but may see a significant boost in their buying power with no required downpayment, allowing them to compete with Oahu's heightened home prices. If you're interested in exploring your Hawaii VA Loan eligibility, Buying Power, & Oahu Homeownership options, contact Koa Cassady at 808.777.0588 | koa@hawaiihomeboys.com.

Top 6 Oahu Neighborhood Picks for VA Home Buyers:

Ho'opili, Koa Ridge, Mililani, Ewa Beach, Kailua, Kaneohe

It's official folks. We may have just entered into a new era of Honolulu's long controversial vacation rental, or "TVU" climate. Honolulu Mayor Kirk Caldwell officially signed Bill 89 into law on Tuesday June 25, 2018, while simultaneously vetoing Bill 85. The two bills were initially advanced by the Honolulu City Council Planning Committee on April 29th to be voted on by the full counsel on May 8, 2019.

Following the hours of protest on May 8th by homeowners, Realtors, and other opponents of the bill, the committee sent both bills back to the council for further review. Some were relieved to see the City Council table the bills, allowing for more diligence, but others feel remedial action on controversial short term rental climate is long overdue.

There are roughly 800 legal vacation rentals on Oahu, and according to city estimate, the headcount on illegal vacation rentals could be as many as 8,000. The city has long had restrictions and penalties in place to combat the operation of illegal vacation rentals but enforcement is where the rubber rarely ever met the road.

The city believes that Bill 89 will now provide the City the ability to take large strides toward not only provide the means for identifying illegal units, but towards enforcement as well. The steeper penalties enacted by the bill should also provide deterrence in the way of would-be vacation homeowners considering the operation of illegal short term rentals as well.

Major components of the new law:

• Allows a limited number of new B&Bs, roughly 1,700 in non-resort areas under a new registration process, with annual renewal required.
• Continues to prohibit TVUs, or “unhosted” rentals, in non-resort areas, unless the dwelling has a Nonconforming Use Certificate (NUC).
• Regulates hosting platforms, such as Expedia or Airbnb, requiring monthly reports to be filed with the Department of Planning and Permitting, which will share the information with City Council.
• Makes illegal any form of advertising short-term rentals which are not in compliance with zoning regulations as provided in Bill 89.

Those who operate vacation rental homes will now be required to register their permit number on notable home sharing advertising platforms like AirBnB, VRBO, and HomeAway. Mayor Caldwell mentioned that the city could embark on "digital stings" as early as August 1st, leaving those without an advertised permit number exposed to fines as high as $1,000 for the first offense, $5,000/day for any offense thereafter, and upwards of $10,000/day for serial offenders.

The Fallout

Bill 89 has been a hot topic around the water cooler for many Oahu real estate and property management offices, with many speculating on the potential fallout or remedy as it pertains to local economies, businesses, real estate prices, and long term rentals. While no one has the "crystal ball," I think it's safe to say that Oahu short term rental hotbed communities like the North Shore, Kailua, and Waikiki will surely feel the brunt of Bill 89. 

Will we see host platforms like AirBnB dig their heels in and oppose the bill? More homes for sale in Kailua and North Shore as a result of the bill, and will home values retreat with the influx of inventory? How about the long term rental market -- will Oahu residents finally see some pressure released from the housing shortage that's long plagued the island, keeping upward pressure on rent prices? Will local business owners suffer as tourists are pulled out of these communities?

As a Kailua homeowner, investor, and socially conscious on-looker myself, my curiosity has peaked! I'm as anxious as anyone to know what the long term ripple effect of Bill 89 will be. Weigh in with your thoughts on the comments and for more information, read the Q&A's Prepared by Honolulu's Department of Planning & Permitting below!

The answer is, it depends. Allow us to explain.

As new homes on Oahu continue to emerge in communities like Ewa Beach, Kakaako, and Midtown Ala Moana, many prospective home buyers are faced with a level of confusion as to what financing options are available to them when purchasing a new home, directly from a developer. Leading the Oahu development charge at the moment are master planned communities like:

• Ho'opili by D.R. Horton Hawaii: sales currently underway in Liko at Ho'opili, Kohina, A'ulu, & Ilima phases.
• Kakaako: available units at Ward Village, and a new condo project named Ililani hot on the horizon.
• Central Oahu: Koa Ridge is currently in the grading stage, with sales hopeful for 2020.
• Midtown Ala Moana: Sky Ala Moana, Hawaii City Plaza, The Central Ala Moana, Azure Ala Moana 
• Leeward Oahu: Recently announced Cottages at Mauna Olu Estates in Makaha.

The truth is, each development has their own unique financing requirements and due to the luxury price points of some of these buildings, certain financing programs have maximum loan limits that just won't fit the bill. But should you purchase a "resale" home, meaning a home being sold from an owner rather than brand new from a developer, you can bank on nearly all mortgage financing options being available.

In today's market, most Hawaii mortgage lenders offer conventional financing programs requiring only 3-5% downpayment options to owner-occupant homebuyers, as well as government backed loans like the ZERO Down Payment USDA Loan(location and income restrictions apply) FHA loans, and finally the VA Loan. Be sure to reference your Hawaii BAH in 2020 so you know what budget you have to work with.

So which Oahu New Home Projects Accept VA Loans?

When residential developers embark on the planning, permitting, and approval process of their projects, they take a hard look at the "Buyer Profile" for the specific neighborhood and price point that their product will serve. To allow VA financing, the developer must apply for "VA Approval" of their project which adds yet another layer to the already lengthy development process. That being said, if a developer believes they can sell their units without applying for the VA Approval, they won't bother taking the extra step.

This is why you see don't see VA financing available on new high-rise condo buildings in Kakaako and Ala Moana -- the buyer profile doesn't justify the need for it. 

On the other side of the coin(or island) is West Oahu, which has proven to be an extremely "Military Friendly" market place for Oahu VA buyers. This is due in part to it's proximity to Military Bases like Schofield Barracks, Joint Base Pearl Harbor Hickam Air Force Base, and Kaneohe Marine Corp Base.

This is why we see developers like D.R. Horton Hawaii and Castle & Cooke securing VA Approval for their Ho'opili & Koa Ridge projects; the buyer profile calls for it. These developers have much more exposure to not selling their inventory if they restrict VA Buyers from purchasing at their projects.

For more information on your Hawaii VA Loan Benefit, check out the VA Resource we created specifically for our prospective military clients!

The highly anticipated Kohina at Ho'opili phase has officially release it's first 10 homes! The Ho'opili Master Plan was devised and developed by D.R. Horton Hawaii, the same developer that brought us the Mehana project in Kapolei and a Highlands at Kehalani in Wailuku, Maui.

These new homes in Kapolei will be the first of the Kohina, but represent only a small portion of the nearly 12,000 homes planned for the entire Ho'opili project. D.R. Horton Hawaii aims to offer a dynamic product with this phase, providing 7 different home types spread over 40 different floor plans in hopes to appeal to nearly every family dynamic and size.

This specific release will feature 10 homes total; (5) 2- bedroom 2- bathroom townhomes and (5) FLEX Homes; a unique and widely popular home style that allows for a storefront below the living quarters of the home. If you're familiar with the Mehana project in Kapolei, you may have seen a number of these FLEX Homes anchored by dentist and eye care offices, as well as Shave Ice & Acai Bowl venues. We expect the majority of floor plans to offer 1- and 2- car garage options, but not all. It's always recommended to verify this with your Ho'opili Sales Team member. 

One of the key features of Kohina at Ho'opili homes is the premier convenience of the phase, relative to the rest of the neighborhood. Kohina will be the closest to phase to the H-1 Freeway, the Ho'opili planned future rail station, University of Hawaii West Oahu, and since it features 3 different access points to Ho'opili, the developer is coining this phase as the "Gateway" to Ho'opili. 

Lottery Applications will be due at 5:00PM on February 22nd, with the Lottery Drawing taking place at 10:00AM on February 23rd. 

CLICK HERE to learn more about this unique project, to schedule a private tour of the Kohina at Ho'opili Sales Office, How to Apply, or to see Official Pricing & Specific Unit Specs!

Kailua's Pali Lanes bowling alley has been deemed a "Historical Place" by the Hawaii Historic Places review board. For some, the designation is a victory as it may stall redevelopment plans proposed by landowner Alexander & Baldwin.

In December 2017, A&B vocalized its plans to end the lease of Pali Lanes in 2019 and was immediately met with community opposition. The bowling alley has been a staple in Kailua for nearly 58 years and rumblings of redevelopment have left the community torn. 

Pali Lanes' Hekili Street location represents key real estate in the heart of Kailua Town; a redevelopment hotspot that's seen a swath of new retail and dining venues emerge in the last decade. Lau Hala Shops, formerly Liberty House and Macy's, is right across the street and will soon see Down To Earth and Maui Brewing Company added to the tenant list of UFC Gym and the Roy Yamaguchi inspired, "Goen" restaurant.

A&B recently sent out surveys to nearly 16,000 homes, asking for the community's input and ideas on what to do with the 1.7 acre site. Many Kailua residents would like to green, gathering spaces added to an area that's dense with brick, mortar, and parking lots. The vision would provide a new home for the Kailua Farmer's market, concert spaces, and other community spaces.

Opposition to A&B would prefer to see Pali Lanes preserved as the iconic, inexpensive entertainment venue that's its been for nearly 60 years. Community group, Our Kailua, leveraged social media to rally it's voice in support of keeping the bowling alley in place, including petitioning the state for the Historical Place designation and subsequently receiving it.

A&B asked the Historical Places Review Board not to make a decision until the developer had more time to continue efforts with the community to find common ground. The company had been put all development plans on hold since initial community opposition to its plans, even extending Pali Lane's lease until 2020 while they work to provide more options for the site.

Alexander & Baldwin will now face a stringent review process by the state's Historic Preservation division, should they decide to move forward with redevelopment.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             

The UFC Gym franchise officially opened its Kailua location on November 17th. Located on the second floor of the newly developed Lau Hala Shops(formerly the Macy's building at 573 Kailua Road), UFC Kailua marks the 4th location in Hawaii for the rapidly growing franchise. The facility is touted by UFC staff as being the largest and most innovative to date, and as a member myself, I was impressed upon my first visit on opening day.

While fitness has always been an inherent part of the Kailua lifestyle, comprehensive fitness options have been limited to date. A small boutique gym here, a Crossfit box there, but definitely no premium full-service facilities to serve the masses. Up until opening day, many Waimanalo and Kailua residents found themselves traversing over the hill to 24 hour Fitness in Kaneohe to get fit.

Me personally, I hate driving. I drive for a living(sort of). So tell me I have to drive more than 5 minutes to a gym and you've isolated my biggest excuse NOT to workout.  That being said, my workouts often consisted of running Kainalu and Kalaheo Drive like everyone else, or running, pushups, and pull-ups on my favorite tree branch at Kailua Beach. Now I don't take the scenery for granted for a second and there are definitely worse places to find your fitness. However, monotony is de-motivating nonetheless and it only takes one passing rains shower to drown my workout aspirations for the day.

No excuses now. The facility boasts 20,000 square feet of workout space featuring something for everyone. Pick your poison...or antidote?:

• Group fitness studio for Yoga, Zumba, Circuit, MMA, Jiu-jitsu, Kickboxing classes, etc
• State of the art weight machinery & free weights
• Wide array of treadmill, elipticals, stairmasters, stationary bikes
• Plyo-metric & functional fitness area
• Kids center for drop-off and youth classes
• Full Amenity Locker Rooms

What I like most about this facility is the WINDOWS. If you've been to the Honolulu or Waikele locations you'll know that these are red and black caves. I'm as much a meathead as the next guy but for God's sake, let there be light! UFC Kailua put the red to bed did it right with light.

Prospective members can also call (808) 800-2958 or visit UFCGYM.com/Kailua.

CLUB HOURS

Monday 5AM - 12AM

Tuesday 24 Hours

Wednesday 24 Hours

Thursday 24 Hours

Friday 12AM -11PM

Saturday 6AM - 9PM

Sunday 6AM - 9PM