Hawaii Real Estate
Hawaii Real Estate
Revisiting Lahaina
In this episode, we revisit Lahaina, one year after its tragic wildfires. We describe new federal funding available to help modernize Hawaii’s electrical grid and detail effective measures homeowners can take to fortify their homes against wildfires.
And, as always, we provide the most recent Hawaii real estate data.
REVISITING LAHAINA
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Introduction
E komo mai. Welcome to Hawaiʻi Real Estate, a podcast on the buying, selling, and leasing of property in Hawaiʻi. Each episode of our podcast consist of a Real Data Report, which analyzes Hawaiʻi’s most recent real property data, and a Focus Piece, which provides legal and other special insight into a matter of major and contemporary concern for Hawaiʻi real estate transactions.
In this episode, we revisit Lahaina, one year after its tragic wildfires. We describe new federal funding available to help modernize Hawaii’s electrical grid and detail effective measures homeowners can take to fortify their homes against wildfires.
Today is Wednesday, August 7, 2024. Welcome to Hawaiʻi Real Estate.
Real Data Report
Price
First up, let's talk about median listing prices. In June 2024, the City and County of Honolulu, had a median listing price of $725,000, essentially the same as the prior month, but a notable drop from the prior year.
Hawaiʻi County’s median listing price in June 2024 was $641,000. Compared to last month, that’s a 1.65% decline, but compared to last year, that’s a 5% increase.
Median listing prices in Maui County are declining. In June, the median listing price for a home on Maui was $1,277,000, down about six percent from the prior month and about eight percent from the prior year.
Like listing prices on Maui, listing prices on Kauaʻi have basically fallen since the start of the year. Unlike Maui, though, the rate of that decline on Kauaʻi has slowed to almost 0%. Median price for a home in Kauaʻi now stands at about $1.4 million.
Inventory
Now, let's shift our focus to inventory and how long properties are staying on the market.
Homes that sold in the City and County of Honolulu in June 2024 stayed on the market a median 57 days, which is about 5% longer than homes that sold there last month, but essentially the same time on market as homes that sold there last year.
Hawaiʻi County’s inventory reflects an opposite trend. Homes that sold there in June 2024 were on the market a median 75 days, 2.6% less time on market than homes that sold there last month, but 7% more time on market than homes that sold there last year.
Time on market for homes in Maui County are down month-over-month by 2.67%, although compared to the prior year, time on market there remains essentially the same.
In Kauaʻi County, homes are simply selling faster and faster. Homes that sold there in June sold 2.6% faster than homes that sold there the prior month, and a whooping 15% faster than homes that sold there the prior year. If you’re interested in a home on Kauaʻi, get your offer in quickly.
Mortgages
Now to mortgages.
The weekly 30-year fixed mortgage rate average in the United States is 6.73%--the lowest rate since February.
And rates are likely to fall still further. Mortgage rates are tied to the federal interest rate. As the federal interest rate falls, so too do mortgage rates.
The Federal Open Market Committee, the group of government bankers responsible for setting the federal interest rate, met last Tuesday and Wednesday to decide whether to change the federal interest rate’s target range. They concluded that, although the worst inflation in years was coming to an end, a likely strong jobs report to be released the following Friday was reason enough to hold the target federal funds rate between 5.25% and 5.50%.
But that strong jobs report didn’t come. The unemployment report released by the U.S. Bureau of Labor Statistics last Friday showed a cooling labor market. “The unemployment rate [in the United States] rose by 0.2 [percent] . . . to 4.3 percent . . . and the number of unemployed people increased by 352,000 to 7.2 million. These measures[, as the bureau noted], are higher than a year earlier, when the jobless rate was 3.5 percent, and the number of unemployed people was 5.9 million.”
Seeing a cooling economy without a falling federal interest rate, investors reacted severely and quickly. The Dow Jones Industrial Average dropped more than a 1,000 points.
Many investors, policymakers, and other professional observers believe that the Fed. waited too long to lower the federal interest rate’s target range. The Federal Open Market Committee next meets September 17-18th, when it will release a summary of economic projections and decide whether to maintain the current federal interest rate target range. Unless there is a major change in the data before that meeting, expect the federal interest rate to fall next month, and so too expect the cost of housing to fall next month.
Focus Piece
Introduction
This week, we mark a somber anniversary. It's been one year since the devastating fires that ravaged Lahaina, a tragedy that has left an indelible mark.
On August 8th, 2023, a series of wildfires attributed to a power line operated by Hawaiʻian Electric swept across Lahaina and surrounding areas. The fires claimed lives, destroyed homes, and left hundreds of businesses in ruins. The economic impact was immediate and profound—over 800 business were destroyed and over 10,000 jobs were lost.
The Maui tourism industry, in particular, a critical component of the island’s economy was devastated (Lahaina’s Wildfire Dest…)(Tolmie, Utility Liabili…). Many resorts were forced to shut down or repurpose their facilities to house displaced residents and emergency responders (Lahaina’s Wildfire Dest…).
According to the Maui County Police Department’s Preliminary After Action Report, the Lahaina fires “claimed 100 lives . . . .” They burned 1,200 acres upcountry, 3,200 acres in South Maui, and 2,100 acres in Lahaina.” Dozens of homes upcountry and over 3,000 dwellings in Lahaina were destroyed.
The Role of Utilities
From 1992 to 2020, electrical transmission and distribution lines have been responsible for igniting over 32,000 wildfires in the U.S. Much can be done, though, to mitigate risks posed by electrical transmission and distribution lines.
Utility companies can develop plans to preemptively shut off power during dangerous weather conditions, cover electrical conductors and construct stronger or fire-resistant utility poles, or move power lines underground.
Although consumers may bear some of the cost of these improvements through higher rates, recent federal funding can help. The Infrastructure Investment and Jobs Act, for example, provides substantial funds to increase grid resilience. Hawaiʻi will receive $95 million to strengthen its power grids.
The Role of Homeowners
Homeowners in wildfire-prone areas can themselves take several proactive steps to defend their properties against wildfires. One of the most effective strategies is creating a defensible space around a home. This involves clearing vegetation, dead plants, and other combustible materials from the immediate vicinity of a home, typically within a 30-foot radius. By removing these potential fuel sources, homeowners can significantly reduce the risk of fire spreading to their homes.
Maintaining a well-watered and trimmed lawn, planting fire-resistant plants, and ensuring trees are pruned and spaced appropriately can further enhance the defensible space.
Incorporating fire-resistant building materials into a home can also be critical. Homeowners should consider upgrading to materials such as Class A roofing, which includes options like metal, clay tiles, or asphalt shingles that are less likely to ignite under intense heat. Siding made from stucco, brick, or fiber-cement can also provide better fire resistance compared to traditional wood siding. Installing tempered glass windows, which are more resistant to breaking under high temperatures, and sealing any gaps or openings around the home can help prevent embers from entering and igniting the interior.
Proper home maintenance is equally important in wildfire defense. Regularly cleaning gutters, roofs, and eaves of leaves and other debris can prevent these areas from becoming ignition points. Ensuring that chimneys and stovepipes are equipped with spark arresters can also reduce the risk of sparks and embers causing fires. Homeowners should also create an emergency plan, which includes having an evacuation route and keeping important documents and belongings in a fire-safe location.
Finally, homeowners can invest in additional fire protection systems. Installing an external sprinkler system designed to wet the roof and surrounding areas can help defend against approaching flames. Some homeowners also opt to install fire-resistant shutters or screens over windows and vents. Engaging with local community fire safety programs and staying informed about wildfire risks and alerts are also crucial steps.
By taking these comprehensive measures, homeowners can greatly enhance their ability to protect their homes and families from the devastating effects of wildfires.
In the meantime, for those considering buying property in Lahaina, it's essential to be aware of the risks and to invest in homes that are located away from or designed to effectively withstand future wildfires. Work with knowledgeable REALTORS® who understand the local market and the importance of building resilience into your valuable investment.
Conclusion
And that’s our episode. Thanks for listening.
Out next episode will air September 15th. We hope you’ll join us then for the most recent Hawaiʻi real property data and for a discussion of a major issue of contemporary concern in Hawaiʻi real estate.
Mahalo, a hui ho.
