Eco Design Resources and Real Estate

The Big Island of Hawaii, often referred to as Hawaii Island, has been seeing generally improving but sluggish economic signals in the last few months. The Big Island real estate market saw mixed home sales data in the month of November, with condominium sales moving in one direction and home sales moving in the other. According to an early December report by Pacific Business News, the number of single-family homes sold on Hawaii Island declined by eight percent compared to year-ago levels, while the number of condominiums sold on the Big Island inched upwards by eight percent relative to November 2009. The median price for a single-family home in the Big Island real estate market was $255,500, a decrease of approximately ten percent from $285,000 in November 2009. For condominiums, the average selling price was $295,000 in November 2010 an increase of eleven percent from $265,000 in November 2009.

Hawaii Island homes for sale and condos for sale should get a boost from the positive trend of the overall economy of the Big Island and state. According to the state Department of Business, Economic Development and Tourism (DBEDT), the statewide economy will likely continue to post modest gains for the next several months and possibly years. DBEDT’s fourth quarter report projects that visitor arrivals will increase into 2013, which is great news for a state that counts tourism as its largest economic sector. This will likely be accompanied by a continuing overall recovery, as seen in the projected gross domestic product. DBEDT forecasts that in 2010, real gross domestic product will grow by 1.4 percent, up from the 1.2 percent forecast in August. The projected number of visitors has been forecast at a 7.7 percent increase relative to year-ago levels, an increase from the 3.1 percentage points predicted in August. DBEDT also projects visitor expenditures to increase by about fifteen percent, also a substantial increase over the numbers suggested in August. Although the number of jobs in Hawaii is forecast to decline, the decline is less steep than previously feared.

The Big Island will soon be seeing a considerable infusion of capital with the investment of a Texas firm called Hunt Cos. After faltering under the pressure of the recession, a luxury housing project on the Big Island will be bought out by the Texas company. The Honolulu Star Advertiser reported that the Texas real estate development was likely to buy out a number of unsold segments of a luxury home subdivision. This subdivision, found on the Big Island of Hawaii, was the brainchild of former HBO Chief Executive Michael Fuchs. Before Hunt Cos. Stepped into the picture, the property was set to be foreclosed on by the three lenders that financed the Mauna Lani Resort, called Ke Kailani. The foreclosure auction on the property was originally set for the end of November, but it was formally delayed until early January. Most likely, however, the deal will be settled by the Hunt Cos. buyout well before then. It is also possible for investors to wait until the foreclosure auction occurs and then bid on the property as an ordinary buyer would. As of the publication of the Star Advertiser article, it was not clear which strategy Hunt Cos. intended to pursue. Ke Kalani includes 25 single-family home lots, as well as land planned for eight condominium units and two completed condo units. Although the majority of the project is slated for foreclosure, fourteen single-family home lots and two condos which had been previously sold are not a part of the auction. One of the reasons for the foreclosure is that only the fourteen properties, out of the originally planned fifty-one were sold by Fuch’s compay.

The idea of Ke Kailani was originally a plan by the former HBO CEO to fund a massive 65-acre parcel for his own estate. The plan, which was created during the strong real estate times of the early 2000s, proposed using other developments to offset the cost of Fuchs’ mansion. Although Fuchs sold 14 lots and two condos for a combined $38 million, the onset of the recession prevented any further sales and doomed the remainder of the $100 million project. Fuchs’ lenders, Bank of Hawaii, Central Pacific Bank and Finance Factors Ltd. filed a foreclosure lawsuit last year, claiming that owed them millions of dollars in both principal and interest. The failure of Ke Kalani is a large example of a trend that often occurred in microcosm across the United States – an individual would purchase an expensive property in hopes of turning a profit and taking advantage of favorable conditions, only to see the market fail and their investment collapse.