No "Double Dip" Recession
Paul Brewbaker, former chief economist for Bank of Hawaii and definitely the authority in terms of economic trends in Hawaii had a presentation only several days ago, discussing Maui real estate market and economy.
Here are a few of the key ideas presented by Paul Brewbaker:
- There is plenty of data to confirm that this recession was not the deepest or the longest in US history;
- Despite what the media says or how some may choose to interpret the statistics, there is no double dip recession, nor another recession. For the next couple of years we will see a lot of small and frequent oscillations up and down, part of the market's tendency to stabilize;
- Three years from today, we will all look back and be sorry that we did not invest in real estate; the opportunity is NOW!
- Although Neighbor Islands were hit by the recession much harder than Oahu, it is just a matter of time before unemployment rates go down and income will increase as well.
ACT 48 Update
ACT 48 was approved by Governor Abercrombie on May 5th 2011 and it was meant to protect consumers against faulty foreclosure procedures and to force banks to consider loan modifications.
One of the key elements of this bill is that owner residents can be foreclosed on only via the judicial system. Until now, most banks preferred to file non judicial foreclosures, whereby after due notifications, a property would be auctioned on the steps of the Court House. The bank would have its own bid, usually in the amount of the defaulted loan, which would happen to be the highest bid.
Going through a non-judicial foreclosure would take up to a year, depending on bank, borrower and property. With the new laws, having to go through a judicial foreclosure, the timeline has increased dramatically and anecdotal evidence shows that the Courts are already clogged up.
While this may bring relief to some owners, the impact on the real estate market is still to be determined. Some claim that the new law will not change anything, nor the rate or the speed of new REO listings on the market. Others claim that this law will increase the existing "shadow" inventory, not available to buy or rent yet. The rental market in West Maui is already very hot and there is high demand for 3bd + homes or condos.
MAUI Property Tax Changes- Going UP, of Course!
As of July 1st 2011, we have new property tax rates in Maui.
As you already know, Maui County estimates the value of your property every year. This represents the tax basis. If you are an owner resident, the tax basis is decreased by $200,000 (used to be $300,000).
To determine the yearly amount of tax, a certain tax rate is applied, depending on the use of the property.
Owners of residential homes pay $5.55 per $1000 of estimated value. If the owner is also a resident of the property, the tax rate goes down to $2.5/$1,000.
Owners of condos that are used for vacation rental purposes pay $9.00 per $1,000, while owner residents of condos are taxed as "apartments" at a rate of $5.50 per $1,000.
In the (very frequent) event that the Tax Division miss categorizes your property, applying a higher tax rate, you need to contact them as soon as possible, while you would have to wait to appeal until April next year.
There have also been many discussions at County Council level involving more strict conditions for granting the home exemption (now at $200,000, down from $300,000).
If you would like to know what your property is currently estimated at by Maui County, please contact me via email and I will look it up for you.
Hope you are enjoying the summer,
A Hui Hou!