Gary's Blog

Wednesday, May 12, 2010

April was a Very Encouraging Month!

The U.S. economy got what it needed in April: A burst of hiring that added a net 290,000 jobs, the biggest monthly total in four years! These job gains came mostly from private employers, surprisingly. Also, a separate survey by the National Federation of Independent Business found smaller companies were more optimistic in April about future economic trends than the previous month. That optimism index rose to 90.6 from 86.8, the highest since September 2008. Optimism leads to new jobs. New jobs leads to more disposable income, which leads to better vacations in gorgeous destinations like Maui! Those of us in the Maui real estate business like that kind of news, for sure.

A real encouraging month, April saw existing homes and condominiums on Oahu selling like hot cakes. The numbers were an increase of 52.9% for homes and an increase of 48.3% for condos, compared to t he same month last year. The median price paid for single-family homes in April was $563,000, down 6.2% from April, 2009. The median price for condos fell 2.2% in the past year, to $308,000.

Nationwide, the Pending Home Sales Index (PHSI) forward-looking indicator based on contracts signed in March, rose 5.3% to 102.9 from 97.7 in February, and is 21.1% above March 2009.

More flights to Hawaii are being offered by Delta Air Lines, American, Continental and Hawaiian. Many new flights are coming from Tokyo Haneda airport in Japan, which has been off limits to U.S. carriers since 1978. Also, Korean Air recently announced that it will add additional service from Seoul to Honolulu beginning on June 12, 2010. The carrier plans to add three additional weekly flights every Tuesday, Thursday and Saturday, around 780 additional air seats per week, to supplement its existing daily service from Incheon International Airport to Honolulu International Airport. More Asians to Honolulu means more Asians to Maui. And more Asians to Maui means good things for the Maui economy, and the Maui real estate economy. Halelujah!

Alaska Airlines made two announcements on additional routes, adding a second year-round, daily service between Portland, Oregon and Honolulu starting September 20th ( the airline currently flies between Portland and Maui) and a nonstop daily flight between Kahului, Maui and San Diego, California beginning October 1st.

I have always been a proponent of letting free market take care of challenges. Such as when two airlines went out of business two years ago here on Maui. See what happens? The free market moves in, and fills the void, as needed. Are you listening, Mr. President? (oops, sorry for the political commentary... I couldn't help myself.)

Also Notable:

  • March Pending Home Sales increased 5.3% from February.
  • Nationwide foreclosures in April down 2% from April 2009.
  • The ISM manufacturing index rose to the highest level since June 2004.
  • As expected, the European Central Bank (ECB) made no change in rates.
  • Oil prices declined more than $10 per barrel to $75 per barrel.
  • The Canadian dollar is back to almost par with the U.S. dollar. We who work the higher-end market (like Wailea Real Estate) love to see the Canadian dollar strengthen. That brings the conservative, all-cash buyers into our market. This plays a big part in the huge volume increases we have seen in Maui real estate sales.
  • Cruise ship passengers for year-to-date 2010 increased 6.8% to 59,690 from 55,908.
  • Maui led the statewide first quarter 2010 resultswith an 8% increase in arrivals due to substantial April 2010PAGE 3Cgains for both Canadian 20.1% and U.S. Westvisitors 9.5%, which drove Maui occupancy up8.5 percentage points to 72.5%.
  • Maui saw substantial increases for March 2010from U.S. West 15.6%, U.S. East 10.6%, Japan5.3%, and Canada with 21.4% more visitors.March 2010 was especially strong with 14.2%more visitors, the third consecutive month of increase.
  • Maui’s visitor spending was up 25.2% over lastMarch to $257.7M, and spending per person perday was up 9.4% to $175.20 for the sameperiod.
  • The foreclosure auction of the Makena Resort was postponed until May 28th due to new
    background information to be provided to potential bidders. Deemed the most complex foreclosure auction in Maui County history, the former Maui Prince Hotel involves 1,800 acres, golf courses and other developments.

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