|
|
Money flows
to every facet of
real estate market
Developers, sellers and agents
are making money, of course,
but so are thousands of other
people in related lines of work
When Eric Sacks left his job as an attorney with the city prosecutor's office to go into real estate, friends and colleagues in law enforcement shook their heads.
|
|
"Everyone thought I was crazy," Sacks recalled.
It turned out to be one of Sacks' more profitable decisions.
Sacks' first foray in the market -- a $400,000 purchase of his next-door neighbor's four-bedroom house in 2001 -- netted him a $300,000 profit less than a year later. He used the proceeds to help bankroll a modest portfolio of apartments and single-family homes which now provides him with an annual income that is several times what he earned at the prosecutor's office.
Sacks is one of thousands of local residents who are reaping the benefits of Hawaii's soaring real estate market.
Robust job growth, near-record low interest rates and a shortage of homes for sale have combined to lift real estate values to record highs for both single-family homes and condominiums.
The days of unattended open houses have been replaced with sellers receiving multiple offers, above-asking-price offers, all-cash purchases and accelerated contracts where prospective buyers agree to pay thousands more than the next-highest bidder.
The boom-town atmosphere is not only reflected in the bottom lines of Hawaii's big developers, lenders and real estate investors, but also is trickling down to many of the service industries and labor groups that rely on real estate, including architects, appraisers, title companies, Realtors and carpenters.
Gail Mar, a Realtor at Coldwell Banker Pacific Properties, said she left her job as a special-education teacher in 2002 to sell real estate because she "couldn't afford to teach anymore."
Mar, an educator for more than 10 years, said she had to augment her $32,000-a-year salary at McKinley High School with outside tutoring jobs.
Since changing careers, she has boosted her salary to the point that she was able to purchase her own home in Makiki in a relatively short period of time.
"I wished I would have switched sooner," she said.
Three-year-old Nickolus Peterson manages a smile after eating some ice cream. Nickolus lives with his mother, Gloria, his grandmother and three siblings in a second-floor Hale Umi unit owned and maintained by Eric Sacks.
He said his business volume increased 20 percent in 2002 and another 20 percent in 2003 before dropping to 2002 levels last year due to a slip in refinancings.
"Residential appraisers typically are in the same boat," said Chun. "We're all busy at the same time, and we're all slow at the same time."
Ron Taketa, financial secretary for the Hawaii Carpenters Union, said the increased real estate activity has led to a tight labor market in which homeowners now "have to wait two or three times longer than previously" to get someone to work on their homes.
Drywall and framing workers are in short supply, prompting the union to launch a newspaper and radio advertisement campaign to recruit carpenters who have either left Hawaii or left the field for more stable work during the past decade.
Taketa said the booming real estate economy is underscored by the membership in the carpenters union, which has swelled to 6,000 from about 4,700 during the mid-1990s recession. At the height of the late-1980s bubble, the union's membership was about 9,000, he said.
"We had the problem of no work, and now we have the problem of a lot of work. This problem is a lot better," said Taketa.
Hawaii's largest residential builders also are struggling to keep up with demand.
At a recent lottery held for one of D.R. Horton-Schuler Homes' Makakilo projects, 50 to 60 buyers showed up to place reservations for 15 homes.
Mike Jones, division president for D.R. Horton, said the developers do not have a model home ready, and the prospective buyers had only the site plans and drawings to go on.
"It's a very amazing market right now," Jones said.
Stanford Carr Development Inc. is building about $270 million worth of residential homes that have already pre-sold to the public.
Eric Sacks tinkers with a corroded sink pipe in one of his units at Hale Umi in Kalihi. He owns five units in the complex.
More than 300 buyers have placed $5,000 deposits to reserve the project's 132 three-bedroom units, where prices started at $190,000, said Carr.
The company's Hawaii Kai condo project, the Colony at the Peninsula, pre-sold all 111 units in its second phase on the first day it went on the market, said Carr, who noted that his company now sells about 40 homes a month compared with about six during the 1990s recession.
"These days, whatever you release you end up selling," said Carr.
That seems to be the story in the high-end condominium market as well.
The Moana Pacific luxury condominium project, which sits at the long-vacant Rainbow Motors site on Kapiolani Boulevard near McKinley High School, has pre-sold all but five of the project's 700 units, and most of those sales have gone to mainland buyers.
Allen Leung, Moana Pacific's director of operations, said there are about 50 backup buyers who have deposited $20,000 on the chance one of the initial purchasers drops out.
"After so many years of no inventory at all, demand is blossoming," said Leung. Construc- tion likely will be completed in 2007.
For Karl Heyer that demand is beginning to bear fruit.
Heyer's company, Heyer and Associates, is the exclusive project broker for the Hokua at 1288 Ala Moana in Kakaako and Capitol Place downtown, which are being developed by a group that includes the MacNaughton Group and the Kobayashi Group.
Heyer noted that the previous generation of high-end condos developed by Japanese builders in the late 1980s and early 1990s had few if any pre-sales, but today's projects require substantial pre-sales before construction can begin.
Hokua, one of the first luxury projects since Hawaiki Tower in 1999, was nearly sold out within months of hitting the market in December 2002, Heyer said.
The Kakaako project, where units range between $570,000 and $5 million, is scheduled for completion in December, just as the Capitol Plaza project is expected to begin construction, said Heyer.
Heyer said he is confident that Capitol Plaza, where units will go for $350,000 to $1 million, will continue to benefit from "a structural shortage" of housing available for sale.
"There's a built-in precaution that you aren't building something that there aren't buyers for," Heyer said.
Inherited homes often
sold for the profits
When your ship comes in, it could be in the form of a house, left to you by your parents. For some an inheritance opens the possibility of living in a neighborhood that is otherwise unaffordable.
But such an inheritance can also bring with it the burden of repairs or remodeling to bring the home up to date, not to mention rising property taxes.
Those taxes are increasing for the home Honolulu police officer Mark Kawasaki inherited from his grandfather, but "it's not a burden," he said. His cousins live in the home.
Far from being on easy street, the home is more than 50 years old and is on agricultural land in Waimanalo -- adjacent to other properties purchased long ago by his grandfather and his grandfather's two brothers.
Kawasaki, his wife and children live in Pearl City, where they plan to stay.
"I don't think I plan on living out there," Kawasaki said. "We both work on this side of the island, and it's more convenient to live where we work."
They do not get out to the Windward side often and are weighing their options, undecided about what to do with the property.
Most of the time when a houses passes to the next generation, there are multiple children.
"If a house is involved, they have to sell the house in order to divvy things up among the kids," said Scott Makuakane, a Honolulu trust and estate planning attorney. "I think that more often than not, the family wealth gets fractionalized, divided up.
"If it's a $750,000 house, three kids have to share, and they're $250,000 richer but none of them owns that house," he said. "But that's not a bad thing."
Sometimes the house is not sold by its inheritors, but is still shared by the family, said Mary Robb, a partner in Prudential Locations LLC.
One such Kailua home is shared by siblings and other family members for vacations. "Each has it for one month during the year," Robb said. It is a relatively common scenario in the Kailua and Lanikai areas, she said.
Some homes are inherited by children who have moved away from the islands and who will choose to keep it as a rental property to generate revenue or to keep it occupied until they can retire and come home.
By the numbersThe number of residential resales on Oahu has steadily climbed:
Source: Honolulu Board of Realtors |
Tonight on KITV 4 News at 10 ...
 |
... Paul Udell introduces you to two people who love Hawaii's super-charged housing market. For them and many others, it spells opportunity; it spells challenge; it spells money, sometimes big money. But for them it also means hard work, a shrewd sense of timing, and a million possible complications that come from a flood of people trying to find the pot of gold. We'll meet a Realtor whose work life now is dawn to dark and more, seven days a week, on the phone, on her computer and at open houses. We'll also meet the man who is building the $7 million spec house he is trying to sell.
|
 |
[News] [Business] [Features] [Sports] [Editorial] [Do It Electric!]
[Classified Ads] [Search] [Subscribe] [Info] [Letter to Editor]
[Feedback]
