Kathy Becklin

Recently an old boss of mine contacted me and asked the following questions:

Can I ask you some questions about your thought process and decisions in HI? I’m thinking in the back of my mind about having a place in HI. My choices would be between Maui and the Big Island. Why did you pick Maui? What are your thoughts about Maui vs. the Big Island? Are there more tourists going to Maui? How do the prices of real estate compare between the two? Job opportunities?

First, whenever I talk to my family, I am reminded that many people don't know Hawaii very well. So first a mini-primer.

• Oahu is the most populated island but is the 3rd in size. It is where the capitol city of Honolulu is. The County of Honolulu encompasses the island. It has an approximate population of 910,000 and average daily visitor count of 88,000. If you like freeways and traffic, go to Oahu! The tourist to all people ratio is just 9%.
• Hawai'i or "The Big Island" is the largest and second most populated island with >170,000 residents and average daily visitor count of 28,000. Tourist ratio is 14%
• Maui is the 2nd largest island and has about 130,000 residents. The county of Maui includes the islands of Moloka'i and Lana'i which have about 12,000 residents combined. The average daily visitor count for the county is over 50,000. Tourist ratio is 26%.
• Kaua'i is the 4th largest island with about 65,000 residents and average daily visitor count of 21,000. Tourist ratio is 24%.

And here is my answer to the Maui vs. Big Island question.

We had been visiting the Big Island for vacations for many years. For us, it was the best tourist place because it wasn't as touristy and had the best scuba diving. There are many times that my husband Peter still wishes we had moved there.

When we came here, it was because my husband had a job that sounded appealing. We both knew that we needed out of Silicon Valley for our health and sanity. As it turned out, the job was not an opportunity. He worked there about 3 months. Our mortgage broker warned us "You gotta kiss a few frogs before you find your prince when working in Maui".

Here is my favorite report for comparing counties. The first page summarizes all of Hawaii, then one page for each County. Maui County includes Lanai and Molokai. It includes unemployment, number of jobs by industry, tax info, building permits, real estate info and visitor summaries.

If I were making the decision today, here are a few Pros and Cons for your consideration:

• Con Big Island: The Big Island is really suffering right now. The Vog is literally killing it. This started really bad less than 2 years ago. We were over there in May and couldn't believe how terrible it was. The residents don't "adjust" to it. They just suffer with breathing and lung issues; I can't imagine what the long term effects are. The farmers there have lost most their crops and are appealing for federal aid. Of course there are many areas that are better due to the wind patterns. I know that the Kona area is bad.
• Con Big Island: Due to VOG, their tourist industry has fallen even more than the other areas. I suspect this will impact more over the next few years as people decide not to go back to Big Island.
• Pro Maui: We have occasional VOG but actually have the lowest levels of any of the main Hawaiian Islands due to the winds.
• Statement Big Island: The median real estate sales prices are down 14% for single family homes (SFH) and 3% for condos. Number of sales is down 33% for SFH and 29% for condos. (YTD comparison from 2007)
• Statement Maui: The median real estate prices are down 8% for single family homes and up 2% for condos. Number of sales is down 19% for SFH and 30% for condos. Latest trends are definitely DOWN. I'm not sure we've hit bottom or not. Sales may start going up but prices will stay down until 2010.
• Pro Big Island: Because Big Island industry is not 98% tourism, their economics often track closely with Oahu.
• Statement: According to the Hawaiian Economic Development Board, in real estate, the Big Island and Oahu real estate actually follows Maui by 6-8 months. Maui normally tracks most closely with San Diego.
• Con Big Island: They have high crime rate due to drug use. Crack/cocaine/ICE has penetrated everyone's lives. I don't know any recent numbers but my friends on the Big Island talk about it constantly and don't see it getting better. There are some issues on Maui but not totally prevalent.
• Pro Big Island: The economy is not driven totally by tourism. It's major products are agricultural and this was a great growing industry before the VOG issues.
• Pro Big Island: You can actually get in your car and go somewhere! On Maui nearly everything (sans Hana) is within a 45 minute drive.
• Statement: To me it appears that mix of ethicities is about the same on both islands. There really isn't an anti-Haoli (white people) feeling very much. Even many of the Hawaiian culturists state that haolis are often more in tune with native cultures and protecting the 'aina (land) than natives. New comers sometimes find it difficult to integrate with native Hawaiians and long-term residents (mostly of Japanese, Chinese, Filipino and Portugese descent).
• Unemployment is higher on Big Island. Both places have a lot of transient jobs where people often have 2-3 part time jobs. Finding and keeping good help is a challenge in both locations.
• Both islands offer many different communities for living. Most people coming from the mainland choose to live in beachside communities. After living here 3-5 years, they often tend to move upcountry (cooler climates, away from tourists, etc.)
• Both places have very high costs of energy. Our electrical bills for a 1800 sq ft house run $250-$700 depending on use of Air Conditioner which we only run when we are home and temperature gets above 82 F. We have solar hot water which saved at least $200/month.
• Maui's growth is limited by water resources. I don't know how big of an issue this is on Big Island but I suspect it is less of one.

If I were on the mainland today and choosing based on what I know now, I would choose Maui. My biggest issue here is that the economy here is so heavily driven by tourism.

Here is the Real Estate Trends Report that I get my numbers from for your reference.

Here is a great report by Bank of America on overall economic trends in Hawai.

Here are all the reports by the Dept of Business, Economic Development and Tourism

Interested in High Tech on Maui? Find more here

Questions / Comments -- Please ask!

• Condominium
• Pros:
• Don't have to do yardwork, as much of the maintenance handled.
• Some condos have as much living space as a single family home.
• Amenities such as pools, workout rooms, etc.
• Locations are often close to shopping areas and beaches.
• Cons:
• Close proximity to neighbors.
• Maintenance costs.
• Rules and regulations
• Often limited outdoor living space.
• Some older condo's have special assessment costs to cover items such as roof replacement and elevator upgrades.
• Single Family Residence
• Pros:
• More flexibility in features.
• Ability to make change and upgrades easily.
• More outdoor living space.
• In Hawaii, many residential homes have attached or detached Ohana units (extra space for guests, offices, rental units, etc.)
• Cons:
• Responsible all maintenance and yardwork.

Aloha from Maui!

I'm sitting at a Open House in Wailuku. It is almost new 3 bedroom, 2 bath townhouse with a small fenced backyard. Large kitchen, nice bamboo laminate floors and staged very nicely. When I started sitting opens here 2 months ago, it was priced at $424,000. Now it is down to $396,000. There are 15 active listings and 5 pendings in this same complex. Similar units are priced from $385K-465K. I'm sure the owner is asking, "Why isn't my house selling?"

In the central area of Maui, prices have stayed strong with 8% increase in last year in median condo prices. So what is wrong? The median condo price in this area is about $282,000 so these condos are "higher end". Why should that impact this market? If you think of basic segments of a market you have:

1. Low end condominiums
   
2. Middle condominiums
3. Starter homes
   
4. High-end condos, 2nd homes
5. High-end homes

Starter homes have come down in price enough to be competition with the middle condominiums. Median home price in this area is $542,000. Home prices have come down in most area of Maui but in the central area (influenced by large home developments) where they are up 3% from last year.

Assuming a conventional 20% loan, a person could buy a home for $470,000 and have about the same monthly payment as they would with the association payment at this condo. It's not an apples to apples comparison but it's close enough. And yes, there are homes in Maui you can buy for <$470,000.

Know your market, and you'll understand why some segments get hit harder than other!