The AI-GRS Designation: Review Theory – General Course in Hawaii

September 12, 2014

The Hawaii Chapter of the Appraisal Institute is hosting the Review Theory – General course in Honolulu in November 2014!  Register here: http://www.myappraisalinstitute.org/education/add2cart.aspx?id=32296

Diamond Head Hawaii

AI-GRS Designation

According to the AI website:

The AI-GRS membership designation is held by appraisers who are experienced in general appraisal review.

To become an AI-GRS member of the Appraisal Institute, an individual must:

  • Have good moral character;
  • Meet standards and ethics requirements;
  • Hold a bachelor’s degree or higher;
  • Meet special education requirements;
  • Pass a comprehensive examination; and
  • Possess experience in general appraisal review that meets specific standards.

These review appraisers possess special experience and knowledge that give them the tools to address the issues unique to general and commercial real property review appraisals. AI-GRS Designated members agree to adhere to the Appraisal Institute code of professional ethics and standards of professional appraisal practice, underscoring their commitment to sound and ethical professional practice.

These review appraisers must stay informed of developments pertaining to review of general and commercial real property appraisals, enabling them to provide review appraisals reflecting the latest in professional practice.

The Review Theory – General class is required coursework for the AI-GRS review designation and will be taught in Honolulu by Joseph C. Magdziarz, MAI, SRA (“Joe Magz”) on November 3, 2014 through November 7, 2014.  More information is here: http://www.myappraisalinstitute.org/education/more_info.aspx?id=32296

 

The following course description is taken from the AI website:

Review Theory—General is the fundamental review course that all reviewers should have in their education background. It is a required course for individuals pursuing the Appraisal Institute General Review Designation.  Participants embark on an in-depth journey of the seven steps that are outlined through the review process, which is at the core of this course. To be a reviewer, an appraiser must learn how to develop opinions of completeness, accuracy, adequacy, relevance, and reasonableness relative to the work under review. These opinions must be refined through tests of reasonableness in order to develop opinions of appropriateness and credibility. By taking this course, participants may gain invaluable confidence on the fundamentals of review.

Upon completion of the course, participants should be able to:

      • Define review.
      • Distinguish between appraisal and review.
      • Evaluate the necessary knowledge and skills required to complete reviews.
      • Distinguish between trivial and material errors.
      • Identify types of review assignments and the process employed in the reviewer’s scope of work.
      • Recognize regulatory compliance issues for review appraisers
      • Identify the steps necessary to effectively communicate the review.

The Review Theory – General course is required for individuals pursuing the Appraisal Institute General Review Designation (AI-GRS – Appraisal Institute General Review Specialist ). For more information regarding the requirements for the review designation, please click here.

If you are currently designated, click here for more information on the alternative path.

If you are currently a candidate for designation, or wish to become a candidate, click here for the specific designation requirements.

Please read my disclaimer.

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Current Kakaako Development Projects

September 10, 2014

The Hawaii Community Development Authority has just posted an updated list of project activity in the Kaka’ako Community Development District (KCDD).

Kakaako - Ward Neighborhood Master Plan Phasing Diagram

Four Kakaako projects totaling 1,541 units are under construction, including Waihonua (A&B), 801 South Street (Downtown Capital LLC), Symphony Honolulu (Oliver McMillan), and the Waiea tower at Ward (Victoria Ward/Howard Hughes).

Nine additional projects totalling 2,587 units have also been approved.

A PDF copy of the list can be downloaded here (Current Kakaako Project Activity).   Project information is updated at this link: http://dbedt.hawaii.gov/hcda/projects/

Please read my disclaimer.

Filed under Hawaii Real Estate, Honolulu Luxury Condos, Statistics Tagged with , , , , , , , ,

The Appraisal of Real Estate, 14th Edition – New AI Video

November 6, 2013

The Appraisal Institute recently published the 14th edition of The Appraisal of Real Estate, the premiere textbook in the real estate valuation field.

The Appraisal of Real Estate - 14th Edition

2013 Appraisal Institute President Rick Borges, MAI, SRA discusses the new book in this video:

Appraisal research and reference are now much more efficient when using the PDF version of the book.  Words and phrases are easily searchable and citations from the text are straightforward.

Thank You Rick!

The Hawaii Chapter of The Appraisal Institute was honored to host Mr. Borges and Fred Grubbe, MBA, CAE (CEO of The Appraisal Institute) in Honolulu earlier this year–it was a wonderful event that will be talked about for years to come.   A shameless photo-op with the 2013 President and yours truly:

Richard L. Borges, II, MAI, SRA and Chris Ponsar, MAI

Richard L. Borges, II, MAI, SRA and Chris Ponsar, MAI, SRA

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Replacement Cost vs. Reproduction Cost: What’s the difference?

October 29, 2013

Even seasoned appraisers can sometimes confuse the terms “Replacement Cost” and “Reproduction Cost”.  What do these terms mean and why do they matter?

Moana Pacific Under Construction

Moana Pacific Under Construction

replacement cost
The estimated cost to construct, at current prices as of the effective appraisal date, a substitute for the building being appraised, using modern materials and current standards, design, and layout.

Source: Appraisal Institute, The Dictionary of Real Estate Appraisal, 5th ed. (Chicago: Appraisal Institute, 2010).

reproduction cost
The estimated cost to construct, at current prices as of the effective date of the appraisal, an exact duplicate or replica of the building being appraised, using the same materials, construction standards, design, layout, and quality of workmanship and embodying all the deficiencies, superadequacies, and obsolescence of the subject building.

Source: Appraisal Institute, The Dictionary of Real Estate Appraisal, 5th ed. (Chicago: Appraisal Institute, 2010).

The key difference is the type of improvement being considered.  Are we looking at a new building with modern materials, or an exact replica?

The main idea is to use one or the other consistently throughout the analysis.

Questions or comments?  Please leave them in the comment  box below, I would be happy to clarify and/or expand.

Aloha, Chris

Please read my disclaimer.

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Big Island Sales Data: Hualalai Resort – Velocity / Absorption

October 18, 2013

Hualalai and Kukio Membership Communities

Hualalai and Kukio Membership Communities – Photo Source: Bing Maps

The Hualalai Resort is a 625-acre membership community that includes a world class hotel, the renowned Four Seasons Resort Hualālai at Historic Ka‘upulehu, and two golf courses: the Hualālai Golf Course, designed by Jack Nicklaus, and the Ke‘olu Course, designed by Tom Weiskopf.

In addition, the project district is entitled for eventual development of up to 700 residential units, and has been selling single family homesites and luxury low-rise condominium units since 1996.

This graph tracks the number of single family, condominium, and vacant lot sales at Hualalai Resort since the onset of the worldwide financial crisis in late 2008 .

Hualalai Resort Sales Per Year

As shown, absorption in the early part of the recovery period 2009-2011 was relatively stable, with a total of 25 to 28 sales per year.  2012 saw a meaningful bump up to 34 sales, and as of October 1, 2013, the 2013 calendar year is on pace for more than 50 sales in the prestigious community–nearly one a week.

Questions or comments?  Please leave them in the comment  box below, I would be happy to clarify and/or expand.

Aloha, Chris

Please read my disclaimer.

Filed under Hawaii Real Estate Data and Analysis, Hawaii Resort Real Estate, Honolulu Luxury Condos Tagged with , , , , ,

Maui Million Dollar Home Sales ($1.0M+) – Day 9 of 10 – “How Long Did They Take To Sell?” (Days On Market)

September 26, 2013

From January 1, 2012 through September 16, 2013, a total of 231 “million dollar plus” homes sold in Maui County, generating total volume in excess of $525 million.  There are many ways that Hawaii real estate appraisers analyze sales statistics for luxury homes.  Because a proper market study for this segment would run many pages, I am posting one article per day for ten days.

Day 9 of 10 – Maui Million Dollar ($1.0M+) Single Family Homes By Days On Market (DOM)

Consider the following graph and chart, which categorize Maui million dollar home sales by the amount of time they were on the market before being sold (converted to months):

Maui Million Dollar Home Sales By Days On Market (converted to months)

Maui Million Dollar Home Sales By Days On Market (converted to months)

Maui Million Dollar Single Family Homes By Days on Market
Sold From 1/1/2012 through 9/16/2013
Days On Market # of Sales % of Total
0-6 Months 114 49.4%
6-12 Months 74 32.0%
12-18 Months 23 10.0%
18-24 Months 5 2.2%
24-36 Months 3 1.3%
36-42 Months 7 3.0%
42-48 Months 1 0.4%
48-54 Months 3 1.3%
54-60 Months 1 0.4%
Total 231 100.0%

I was a little surprised by the results of this analysis.  My experience with the high end residential market is that marketing times of over one year are not uncommon (and at 18.6 percent, its not exactly unheard of, but certainly not the norm).  I suspect two elements are at play: (1) the “under 3.0 million” market is probably responsible for the majority of quick sales, and (2) the Maui luxury market has been heating up, especially since January 1, 2013–fueling absorption.

Bottom Line: Price your Maui million dollar+ home right, and it should sell in under a year.

Questions or comments?  Please leave them in the comment  box below, I would be happy to clarify and/or expand.

Aloha, Chris

Bonus: Marketing Time

marketing time
An opinion of the amount of time it might take to sell a real or personal property interest at the concluded market value level during the period immediately after the effective date of an appraisal. Marketing time differs from exposure time, which is always presumed to precede the effective date of an appraisal.

Source: Appraisal Institute, The Dictionary of Real Estate Appraisal, 5th ed. (Chicago: Appraisal Institute, 2010).

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Maui Million Dollar Home Sales ($1.0M+) – Day 5 of 10 – Price Per Square Foot

September 22, 2013

From January 1, 2012 through September 16, 2013, a total of 231 “million dollar plus” homes sold in Maui County, generating total volume in excess of $525 million.  There are many ways that Hawaii real estate appraisers analyze sales statistics for luxury homes.  Because a proper market study for this segment would run many pages, I am posting one article per day for ten days.

Day 5 of 10 – Maui Million Dollar ($1.0M+) Single Family Homes By Price Per Square Foot Of Living Area

Consider the following graph and chart, which measures each of the million dollar sales divided by their respective living areas in square feet:

Maui Million Dollar Sales By Price Re Square Foot

Maui Million Dollar Sales By Price Per Square Foot

 

Island of Maui Million Dollar Single Family Homes By Price Per Square Foot Of Living Area
Sold From 1/1/2012 through 9/16/2013
Price Per Square Foot # of Sales % of Total
$0-$250 2 0.9%
$250-$500 81 35.1%
$500-$750 77 33.3%
$750-$1000 36 15.6%
$1000-$1250 14 6.1%
$1250-$1500 7 3.0%
$1500-$1750 4 1.7%
$1750-$2000 2 0.9%
$2000-$2250 2 0.9%
$2250-$2500 2 0.9%
$2500-$2750 1 0.4%
$2750-$3000 1 0.4%
$3000-$3250 0 0.0%
$3250-$3500 0 0.0%
$3500-$3750 1 0.4%
$3750-$4000 1 0.4%
Total 231 100.0%

More than 90 percent of Maui’s million dollar home sales in the study period fall in the “price per square foot” range of $250 to $1,250, with the $250 to $1,000 range accounting for 84 percent of the transactions.

Maui real estate agents that are active in the luxury sector report that the high-end/luxury market typically begins at the $1,000 per square foot level.  The sub-$1,000 data shows how raw demand for Maui residences generates a great number of high dollar ($1.0 M plus) sales for “less-than-luxury” homes.

The two sales that cleared the $3,000 per square foot level did so for different reasons: one was a prime white sand beach home on South Kihei Road that sold for $23.0 million.  The other was an older/smaller cottage on an amazing 1.1 acre oceanfront lot near Paia–the high price per square foot of living area was due to the largely insignificant improvements on a very valuable piece of land.

Bottom Line: At least on Maui, a million bucks doesn’t go as far as it used to.

At these prices, it is easy to see how a Maui real estate appraiser could be regularly confronted with homes that sell for prices that easily exceed Fannie Mae, Freddie Mac, and FHA conforming loan limits.

Questions or comments?  Please leave them in the comment  box below, I would be happy to clarify and/or expand.

Aloha, Chris

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Maui Million Dollar Home Sales ($1.0M+) – Day 4 of 10 – “Who Sold Them”?

September 21, 2013

From January 1, 2012 through September 16, 2013, a total of 231 “million dollar plus” homes sold in Maui County, generating total volume in excess of $525 million.  There are many ways that Hawaii real estate appraisers analyze sales statistics for luxury homes.  Because a proper market study for this segment would run many pages, I am posting one article per day for ten days.

Day 4 of 10 – Maui Million Dollar ($1.0M+) Single Family Homes By Agent

Consider the following graph and chart, 24 agents have sold four or more “million dollar homes” in the study period (ties sorted by first name alphabetical order):

Maui Million Dollar Home Sales By Agent

Maui Million Dollar Home Sales By Agent

Maui Million Dollar Single Family Home Sales By Agent
Sold From 1/1/2012 through 9/16/2013

Rank
Agent Name		 # of
$1.0M+ Sales
1 Wendy R Peterson 11
1 William B Moffett Jr. 11
3 Robert H Dein 10
4 Mary Anne Fitch 8
5 Lori L Powers 7
5 Robert R Myers 7
5 Tom Tezak 7
8 John H Page-Papazian 6
8 Steve Blackington 6
10 Bob Hansen 5
10 Debbie Arakaki 5
10 Dennis Rush 5
10 Jeremy Stice 5
10 Martin Hauen-Limkilde 5
10 Nancy J Callahan 5
10 Vincent Palmieri 5
17 Courtney M Brown 4
17 Cynthia Warner 4
17 Dano Sayles 4
17 Diane K Pool 4
17 Jeannie Kong 4
17 Josh Jerman 4
17 Kathy Ross 4
17 Riette G Jenkins 4

Bottom Line: This is the big time.

No analysis required.  This data speaks for itself.  We’re talking about real estate professionals at the top of their game here.  They all deserve aloha and praise!

Questions or comments?  Please leave them in the comment  box below, I would be happy to clarify and/or expand.

Aloha, Chris

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Maui Million Dollar Home Sales ($1.0M+) – Day 3 of 10 – “How Big Are They?”

September 20, 2013

From January 1, 2012 through September 16, 2013, a total of 231 “million dollar plus” homes sold in Maui County, generating total volume in excess of $525 million.

There are many ways that Hawaii real estate appraisers analyze sales statistics for luxury homes.  Because a proper market study for this segment would run many pages, I am posting one article per day for ten days.

Day 3 of 10 – Maui Million Dollar ($1.0M+) Single Family Homes By Living Area

Consider the following graph and chart:

Maui Million Dollar Sales By Living Area

Maui Million Dollar Sales By Living Area

Maui Million Dollar Single Family Homes By Living Area
Sold From 1/1/2012 through 9/16/2013
Living Area in SF # of Sales % of Total
0-999 5 2.2%
1000-1999 32 13.9%
2000-2999 68 29.4%
3000-3999 75 32.5%
4000-4999 28 12.1%
5000-5999 17 7.4%
6000-6999 2 0.9%
7000-7999 2 0.9%
8000-8999 1 0.4%
9000-10000 1 0.4%
Total 231 100.0%

Luxury homes having between 2,000 and 4,000 square feet of living area represent the “sweet spot” of the Maui luxury market, comprising more than 60 percent of the Valley Isle’s million dollar home sales since the beginning of 2012.

Bottom Line: Bigger Isn’t Necessarily Better

97.4 percent of all “million dollar plus” single family homes sold on Maui since 2012 have 6,000 square feet of living area or less.  While it is certainly possible to build larger residences, and some very wealthy individuals have, if you’re building much larger than 5,000 square feet, you might be going beyond what the market prefers.

Questions or comments?  Please leave them in the comment  box below, I would be happy to clarify and/or expand.

Aloha, Chris

Bonus  – Superadequacy

The data above suggests that building much larger than 5,000 square feet may not be consistent with market preferences.  If true, real estate appraisers refer to this phenomena as a “superadequacy”, which is defined below:

superadequacy

An excess in the capacity or quality of a structure or structural component; determined by market standards.

Source: Appraisal Institute, The Dictionary of Real Estate Appraisal, 5th ed. (Chicago: Appraisal Institute, 2010

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Maui Million Dollar Home Sales ($1.0M+) – Day 2 of 10 – Sale Prices

September 19, 2013

From January 1, 2012 through September 16, 2013, a total of 231 “million dollar plus” homes sold in Maui County, generating total volume in excess of $525 million.

There are many ways that Hawaii real estate appraisers analyze sales statistics for luxury homes.  Because a proper market study for this segment would run many pages, I am posting one article per day for ten days.

Day 2 of 10 – Maui Million Dollar ($1.0M+) Single Family Homes By Sale Price

Consider the following graph and chart:

Maui Million Dollar Homes By Sale Price

Maui Million Dollar Homes By Sale Price

Maui Million Dollar Single Family Homes By Sale Price
Sold From 1/1/2012 through 9/16/2013
Sale Price # of Sales % of Total
$1.0 M to $1.9 M 157 68.0%
$2.0 M to $2.9 M 31 13.4%
$3.0 M to $3.9 M 18 7.8%
$4.0 M to $4.9 M 9 3.9%
$5.0 M to $5.9 M 5 2.2%
$6.0 M to $6.9 M 2 0.9%
$7.0 M to $7.9 M 1 0.4%
$8.0 M to $8.9 M 4 1.7%
$9.0 M to $9.9 M 3 1.3%
More than $10.0 M 1 0.4%
Total 231 100.0%

The data shows a predictable trend, with more than 80 percent of the “one million plus” sales on Maui being in the “under $3.0 million” price range.  Although a handful of high profile Maui luxury homes have sold in the past few years for prices in excess of $20.0 million, MLS records show only one residence eclipsing $10.0 million since January 1, 2012.

Bottom Line: Price Matters

There is healthy market activity in Maui’s “million dollar plus” category, but the overwhelming majority of sales (nearly 90 percent) sold for less than $4.0 million.

Questions or comments?  Please leave them in the comment  box below, I would be happy to clarify and/or expand.

Aloha, Chris

Filed under Hawaii Oceanfront Real Estate, Hawaii Real Estate Data and Analysis, Hawaii Resort Real Estate, Statistics Tagged with , , , , , ,

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