Sakamoto Properties

Maui News & Real Estate
October 1st, 2013

Betty Sakamoto: Aloha and welcome to Betty's Real Estate Corner brought to you by Sakamoto Properties, where prestige is our business, reputation our foundation. Today in the studio is none other than Dean Otto who is just returning from a trip to the Portland area, which we want to talk about a little because a lot of our friends, are much younger friends like Dean, are sending kids off to college for the first time. You know, we did that a long time ago, been there done that, but it really is a powerful moment, I think, in anyone's life, so in a little while we're going to talk about that. But I think to start with how about a quick hello and talk a little about real estate and stuff.

Dean Otto: Hey Betty thanks for having me today, good morning.

B: Good morning!

D: What are we talking about today? We're talking about government shut down, all kinds of happenings that are out there in the news this morning as, you know, I came back from a great trip to Oregon as you mentioned and back into the real world of you know--

B: Government shut down?

D: --Politics.

B: You know what is hard for me on that? is there's so many things that it's hard to get into them on a show like this. But it's hard to totally get it. I mean, I can't totally understand it. You know, whether this is right or that is right. You want to believe that we've elected some powerful representatives in our government and that there is a way to make things work. But it does seem like we've hit an impossible situation and we've got a couple of factions warring against one another.

D: Right, that is a bit of a crazy situation. I think, I mean, we could also put as both sides, I think, is part of the problem. You know, I don't think anyone denies that everyone having health care is a good thing, but I think on the other hand too, I think there is a real question about how do we pay for all of this and it's two good opinions and the resolution you know, I'm not sure exactly how it's going to be worked out. I think part of the problem, really, is the politicking going on. And I think that working towards a resolution should be the primary goal and should hopefully get away from the politicking soon and move forward.

B: Well, I agree with you. there are so many things that have gone on in the government that, I think, we don't understand totally. I mean just take the logic of the national debt. It's huge, huge, huge. Other countries hold huge amounts of debt for us. Well, that doesn't seem good to me. I don't like the idea that China or any other country holds these millions, billions, of dollars worth of debt. And I don't see how we're ever going to pay for it if we keep going in some of the directions we're going in except that we keep creating more debt. And we all know with our own little personal checkbooks you go along and there comes a point that if there's no money coming in and there's no money to go out and you can only borrow so much money until you're in total danger and bankruptcy.

D: Well we're definitely in the danger zone. Next week we have a debt ceiling expiring, well you know, I guess expiring is a good way to put it. And the need to raise the bar again and I think that just brings to life the fact that we're fairly irresponsible, I would say, as a country. In a sense that we're not managing our check book like all of us and anyone else who has a business is required to do. I think there should be demands made to be able to operate this country like a business and just continuing to write checks and borrowing more money really is not a solution and I think it's time and I think there's a lot of people out there who also believe it's time to become a little more responsible and start looking at how we pay for all of it.

B: Well, I'm with you. I don't see, I certainly am not one sitting here saying I've got some great answers, or great ideas or great thoughts. I can't say that I do. But again I think it's the simplistic--remember the movie Dave? Where they bring in the little accountant from Minnesota or somewhere that actually just takes the budget and goes through it, no, we don't need this, we don't need that, it almost seemed, that was more realistic than what we see going on. We need Dave.

D: We need Dave. And I think Dave and his short pencil would be a greater deal and a great time because I said we're sort of snowballing here and I think a lot of people are concerned about this.

B: Well I think that's probably enough said. We can probably just make somebody angry feeling we're taking one side or the other. And at the moment I am not specifically taking a side just the logic of I can't run my checkbook that way and as a country I think we've got to stop running our checkbook that way. Let's make it simple.

D: And I think both sides have good points, as I said I don't think anyone denies that everyone having healthcare is a bad thing. Everyone, I think, would like that. I don't think that's the issue, the issue is that we're looking to our politicians to sit down and resolve the situation not to be politicking for future votes.

B: Well, I think you're right. So let's find something easier that nobody will get mad at us for talking about.

D: Oh, and taking a kid to college is easy?

B: Oh, gosh. Oh, actually maybe we should hit that now. Because that is interesting. I can't even imagine Dean right now, has a son who is probably now a few inches taller than he is, an amazing young man that anybody, there's nobody who wouldn't be proud to have Troy Otto your son. He's absolutely amazing, powerful kid. Sings, plays a guitar, does a little bit of everything, and all of a sudden he steps out of your house. That's got to be dead quiet there.

D: It is pretty quiet, well I still have a 13-year old at home, but it's all surreal not to have him in the house. But we're very excited about his future and The University of Oregon we feel like it's a great choice. A little bit of bias from my side having gone to the university myself and my wife actually went as well. So we had a ball dropping him off and visiting with our friends and we still have a lot of friends and connections over there that we always look forward to going back to Eugene to visit. So it was a great time. You know, Troy comes from a little island in the middle of the Pacific, to this big 30,000 student university. His graduating class was 17 and he's arriving at a school of 30,000 kids. You'd think it'd be overwhelming but he seems to be doing fine. It's an interesting time the first couple days in the dorms he had a ball and I'm just hoping he'll make it to class. But he's definitely settled in and seems to be enjoying life.

B: Well he's a bright kid and I think he will settle in and enjoy it. He was top of his class at Maui Preparatory Academy at West Maui, which is a fabulous school and he's done amazing things with the kids they excel in so many things, they excel in sports and music, obviously in their school work. So, great school. And I do say Cassidy, Ms. Cassidy I'm sure she can take over and satisfy the noise of two kids in that house.

D: I don't think there's any problem with that.

B: No, I think that's good.

D: She's quite the singer. So she definitely keeps the noise level up.

B: Yeah, she's also Maui Prep and I think it's been a great school. Dean is the chairmen or president of the board there and he's worked tirelessly. It is something that Sakamoto Properties we've all worked at having something in our lives and the community that we really get attached to and Dean, you know, was one of the people that was formulative in making the school happen, getting it to actually where it is. I mean now the school starts at Pre-K and goes to graduating from high school. So having said that, I mean, your kids are in a fabulous school and I think they are prepared even though mentally and the number of people, and the kids, and the competition will be different I would say Troy is prepared.

D: I agree, I think Maui Prep has done a great job for Troy. He's very mature, he's had a great education, his grades are really good, he did good on his SAT scores. But I think more than anything Maui Prep is a unique culture, too. Maui Prep I think is very interesting. We're not purely academic, we really are concerned about growing the character of the kid, creativity, critical thinking, 21st century skills. These are all skills that we teach at Maui Prep. And it's not just about getting a great education, and it's not just about getting your kid into college, it's about getting your kid graduated from college and there's a maturity that comes along with that experience at college that needs to be grown in those early years and so it's not just about memorization and regurgitation. It's about developing the character and preparing kids for life and not just for university.

B: Well I think that's totally true. But I also do think that the part, the preparation for university, is vital and it is something that all our schools need to work on. Because the kids want to get into the university but they also need, what you kind of, I think what you referred to as the life preparation, that will make them able to step into the school and be able to excel because they have been taught. They've been taught how to behave with people, what to do. I think there is something special that you guys at Maui Prep are doing.

D: Yeah, things like public speaking, and then communicating is clearly something we focus on. The school is going through an interesting time. All non-profit and all private schools have gone through difficult period with the economy down. And Maui Prep has been fortunate to be able to grow during these difficult times and we're continuing on planning our future and more so planning our campus. And we will be getting into boarding which is a really big change in direction for us. But what it does is allows us to bring kids in from the other islands, from the mainland, from Canada, from China. We're looking into developing high performance golf and tennis programs, so we have a pretty ambitious plan and there were great people supporting us so you can look forward to Maui Prep going through a major growth phase within the next five years or so. It's a very fun and exciting time.

B: It really is great, I mean, it'll be really interesting to see how they work it all out. You know, Lahainaluna has always had a boarding program that's been really great for the kids that have utilized that and I think that it is primarily Hawaii kids, I think there have been very few mainland kids that have ever utilized the program but I think what they're planning at Maui Prep will be amazingly interesting for all of us as we see it happen. Well, Dean-o, what about a little real estate here?

D: Oh, real estate that's right.

B: You've got some statistics we were talking about. What have you got to us out there?

D: As usual I'm always watching the statistics very carefully and Maui's actually going through a pretty strong phase here. We're clearly in a very positive upward trend. If you look at the results for the end of August, it's pretty interesting to see that's, you know, we've had some good successes were mentioned as far as residential, Maui homes are up, the number of sales at least, are up by 11% and the average sale price is up by 12% that's a strong, strong year so far this year. Maui condominiums sales were up 6% the average sale price is up 18%. That is one of the biggest numbers we've seen in a long time. Lands sales which have been lagging somewhat also up by 30% and the average sale price is up 14%. And as we mentioned those are really strong numbers. This is the first time in five years that all of these categories have shown strong upward trends and we're pretty excited about it. It's early and it's early progress but it's clearly heading in the right direction there's no question about that.

B: You know, one of the things that is going to help us all in the real estate market here is that tourism keeps going up and up. So I think that our visitor count has been higher than it's been for a long time, visitor spending is higher. So again, I think a lot of the people here are going to be making more money because obviously a lot of the jobs are in the tourism industry, being room rate and the hotels across the island are definitely up, occupancy is up, and I think that what people are able to do here just gets better and better every year. But I think that is going to help with so many things. I think that we are going to see more people able to come over here, that want to have a child in a prep school like Maui Prep, and are going to be able to move here, that for the last many years were not able to do that because they wouldn't to commit to any of the schools. You know, a lot of those people do want to live in West Maui because that's what they know. They come, they visit all the time. But I think we are going to see some great things and I think the rise in prices and the number of sales, etc. partially has something to do with the fact that tourism is so up.

D: No question, tourism is critical to our entire economy, obviously, but it's also really important for real estate. Most of our buyers originate in a hotel at some point that are ready to live here, you know. They stay in the hotels they eventually graduate to condos and they spend more and more time and every year they come back, and they're more likely to consider purchasing. You know, things like schools are already an important part of the consideration. I know for us, we were able to draw in 42 new kids to our school this year. It's a school of 200 kids. You know, it's like 40 new kids every year coming to this island is meaning that their family is moving over here. And Maui Prep has been a good introduction for them to the island. School is obviously an important consideration. Public schools get such a bad rep through the media that everyone comes over with a tainted opinions of our schools. Both Betty and I are big supporters of Lahainaluna and we know a bunch of kids that go there, and my son's friends go there and I think it's a great option. Unfortunately it gets a bit of a bad rep when you see the results in the media and people really on the mainland are really paying attention to that. But I think you're right. Tourism is critical, it introduces people to our island and it results ultimately in people moving out here. People that could live anywhere in the world. And internet based businesses or retired are looking for places like Maui to come and live and choose this lifestyle.

B: Well, I agree with you on Lahainaluna High School ,and it is worth saying. Ok, maybe it isn't the same academic record as you would have at Maui Preparatory Academy but I think that it is a great school and there's great teachers. I think the sports programs are fabulous. I think what the kids get out of it personally, in pride of school, etc. I think, are very amazing things. There was a Lahainaluna-Baldwin game recently in Wailuku, there were over 8,000 people there. We tried to get to the game, we could never find a parking space and we finally gave up. I mean, not just there, we drove all around and we could've walked. You know, I said finally, "Why don't we just go to the airport, park, and take a taxi back." But I got to say we got lazy and didn't do that, but the games are fabulous, the kids have a ball and I think that it is a great school. And I think academically, there's some great scholarship programs that the kids are getting when they go on to college. A pretty large number of the kids go on to college. I think at Maui Prep everyone went to college except one person who had a professional athlete plan in place. But Lahainaluna: a large number of the kids are going on to school. I think it's probably a little more difficult. I don't think they're quite as prepared as the other kids, but you're right it's a good alternative. It's a good school, Dean.

D: Yeah, I think it depends on the kids and what their ambitions are. We always tell people that we try to get kids into their best fit for college. And the college that best fits the students and not everyone's going to Harvard and that's fine. You know, we lose a lot of kids at Maui Prep every year to Lahainaluna because they want to be able to play the sports and they want to be part of a larger social experience and go to, you know, large events and dances and there's a social aspect to that school that I think is really important in the development of the child. And let's say, we lose kids to Lahainaluna every year because of it. And I don't think it's a Lahainaluna-Maui Prep thing, too. I think it's great to have an alternative. Seabury, I think, is another good example of how you can have a private school thrive in a community like Maui because that's a very, very well supported school as well.

B: Absolutely. Well I think we're, a couple of things. I don't know if we have time get into all sorts of specific listings but a couple of things that I think are important right now, is that mortgages are still amazingly great. You know, we all know that isn't going to go on forever, so I think we should really be paying attention. I think one of things I haven't said so far is that you can call us at Sakamoto Properties at 808-669-0070, check out our website at SakamotoProperties.com, our hashtag is #Betty Radio. So you can check us out on any of these different methods and we can get information back to you. But mortgages, I think, are key, we would like you to be talking to a lender sooner than later. And I think whether you're working with us or working with somebody else, if you have even a glimmer of trying to buy something within the next year, you got to be on it right now. So again, call us: 808-669-0070, you can ask for Dean Otto or Betty Sakamoto or any of our agents that happen to be there. But I still think, Dean, people are missing out. You know, people that are here, residents that need to buy a place or the visitor. We've had some amazing people recently that have come here for the last 10-30 years and are suddenly all over the idea of, "It's time" and they've seen it go up and they've seen it come down and they're watching it now just edging back up at maybe too quick a rate, so they're getting on it today.

D: You're right, interest rates are a major factor. When you consider the impact of a higher rate of your mortgage over 30 years or however long on a property it's clearly one of the biggest factors that you should be considering. And even the rates have ticked up just slightly, they're still very low and I think it's certainly a great opportunity. Especially when you consider that inventories is down, sales are up, prices are up, and rates are low. I mean, that really is ultimately the ideal situation to be buying property. I think that, you know, a good question is, you know, what's driving the recovery here? And it's been an interesting recovery, because even though we've seen progress we have such limited inventory, that we're having a hard time really realizing progress just because we don't have enough maturity in the market to be able to drop the pricing any further. It's an interesting time and the market is clearly being driven by a reduction in inventory which is causing this market to edge up a little bit. And I was just looking at some of these statistics. If you're looking at inventories, which I think is probably the key to anticipating the market is to watch inventories. By the time we show an increases in prices it's sort of too late but if you're someone who tries to anticipate the market you pay careful attention to inventory. Right now, when you look at remaining inventory or the absorption rates, for residential real estate on Maui we have a remaining inventory of 7.4 months. 2 years ago, in 2011, that was 10.4 months. Right now for condominiums we have 6.7 months of remaining inventory. And 2 years ago, we had 13 months, that's almost twice as long, twice as much inventory. For vacant land, right now we have about 16 months of remaining inventory. 2 years ago, we had about 48 months of remaining inventory. So you can see there's been this dramatic reduction in the amount of inventory currently available. Those are really, really low inventory rates and typically we wouldn't see such low rates until much further into the cycle. So it's somewhat limiting for us, but it does, to me, mean that, you know, it's time to get active in the market because you're not going to have as many options to choose from as you would have had, typically, in a market like this.

B: You know, Dean, one of the things that is being talked about is the time, the very best time to buy, is when you actually hit a market that's starting to rise. You don't want to go into a market that might be more like, let's say, Las Vegas, I think even Arizona, although that might be changing right now, too. Some of those markets were still pretty flat or it's way down, it looks like it's really inexpensive, yeah that would be a great place to buy. But not so. The economist say, that the time you really want to step in and buy is when, on the market, you can actually see it start to come up again. Because it will keep going. You know, you don't want to step into a market that's at the bottom and may never even start to budge up again for the next 3 or 4 years. So again, the time is now. Give us a call: 808-669-0070.

D: And if you think about it, you know, trying to target the bottom of the market really is impossible, because you would have to get beyond the bottom to look back and go, "Oh, there was bottom." So, you know, it's impossible to predict and I think that typically you want to see some improvement in the market before you jump in. And that means that you're not the only one out there buying and that's incumbent to knowing that everyone else is in the market that's active again and things are progressing, as I said, the ideal time is small, slight progress, and I think that's where we are right now.

B: I think so, too. We're at that point, we're seeing progress, things are starting. Good time, get in there.

D: The other thing, though, I think is really important to note, and I think it's a really great statistic to talk about, is the reduction in the number of distressed sales in the market. And if you look at 2011 again, you'll see that for residential sales in 2011 45% of the sales were either shorts sales or bank owned sales. That's unbelievable that's 45%. Right now, that's down to 23%, that's 2 years later. So there's a pretty big reduction there. Also, condominiums are seeing a huge change in distressed sales. They were at 34% in 2011, and right now we're down to 11.2%. So part of the progress is eliminating the distressed from the market and I think that's clearly taking place.

B: It has. You know, believe it or not, Dean, we are at the one minute warning. I always love that. I think of that as a football game. So I think we're going to end up here, Danny Couch is going to be coming back on. But call us, I mean, one of the reasons we're here is for real estate. We want to sell some of our listings or help you find the property of your dreams whether it's our listing or someone else's. So call us 808-668-0070, ask for Dean Otto, ask for Betty Sakamoto, or talk to whoever agent happens to be in the office. But let us help you and we want you to have a place. We got Danny Couch back here, and I do love Hawaii, so I'm a Danny Couch supporter. He wrote that, too. Nobody knows that.

D: Aloha, Betty!

B: Aloha, Dean!

D: Thanks for having me.

B: Thanks for being here.

Mailing Address:
Sakamoto Properties
P.O. Box 10068
Lahaina, HI 96761
Contact:
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Office Address:
Sakamoto Properties
Napili Plaza
5095 Napilihau Street #203
Lahaina, Maui, HI 96761
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