We didn't know that Maui Electric's generating plant in Ma'alaea uses biodoesel to start up and shut down its generators. Now the next step is taking place. A refining facility which will turn palm-oil into fuel for Maui Electric's generators is going to be built across from the Maui Landfill on Pulahu Road.

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The real estate market in South Maui has generally been very, very slow since the first of the year. But the real story is more complex than that.. Top-tier oceanfront homes and new oceanfront condominiums are still being heavily sought. Four large beachfront homes have closed so far this year for a total of nearly $50 million and per square foot averages of over $2500.. New oceanfront condominium projects like Wailea Beach Villas and Maluaka have obtained very good receptions. Lower-end homes in Wailea have been relatively busy with seven in escrow thus far this year. Those are the bright spots. Condominium sales in Wailea and Makena in established complexes have been very, very slow. Less than ten condominiums have gone into escrow this year, approximately half of last year's numbers. Inventory is over 100 units for sale. That represents 12 months of sales at 2006's sales rate and considerably more at the sales rate thus far this year. We are seeing an increasing number of price reductions in Wailea. But the news is worse in Kihei. There is simply way too much inventory for the sales pace. Units in escrow now have frequently accepted prices below recent comparable sales. We suspect that trend may continue. Wish we had better news.

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Federal Reserve Chairman Ben Bernanke testified before Congress today. Here are some high points in his prepared remarks:

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In our last post, we discussed buyer's markets, "showing fatigue" and the implications for sellers. We argued that being one of the top five values in a given property type was critical to obtaining offers and showings. So what can a seller do to obtain "mindshare" in the real estate community? We believe three steps must be taken.

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In a buyer's market, sellers frequently are at a loss as to how to market their property. They wish to sell their property but also to obtain maximum price and struggle to reconcile the two. Let's begin with a definition. A buyer's market exists if there is more inventory of a given property type and price than is likely to be sold in a period of time at current absorption rates. For example, if one owns a two bedroom, resort community condominium valued in the $750,000 range, twenty similar properties sold in the last twelve months and thirty are on the market? That's  a buyer's market. In combatting a buyer's market, sellers must understand the process of showing property. When a real estate agent shows a client property, they know that "showing fatigue" sets in after 5-6 showings in a day. What happens is that people here on Maui looking for a given property type get tired of the process and confused by a series of similar properties after they see five or six in a day.. The effectiveness of a given showing falls as the number of properties viewed increases. Good agents know this and don't show eight or ten properties because they know it is counterproductive. This has significant implications for a seller. In short, your property MUST BE WIDELY BELIEVED TO BE ONE OF THE FIVE BEST VALUES IN THAT PROPERTY TYPE TO OBTAIN REGULAR SHOWINGS! If one doesn't obtain regular showings? One will not obtain offers, it is that simple.

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There has been a good deal of scuttlebutt regarding a possible "credit crunch" being on its way. It is way to soon to say that is happening, but with several sub-prime lenders facing financial trouble, many lenders are tightening their requirements for mortgages. At this point, much of the focus is on the stated income segment of the market. We'll see if it stays there. Should credit standards be materially tightened, we are likely to see the impact first in the lower end of the market.

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367 Kualono Place in Pualani, listed for $1.895 million has gone into escrow after one hundred days on the market.  Several lower end Wailea homes closed last week. 3088 Manu Hope in Wailea Kai has sold for $1.03 million. That home is 1900 square feet, three bedrooms and sold for less than $600 per square foot. 3235 Pikai Way in Wailea Kai sold for $1.595 million. That freshly remodeled home had been on the market for less than 60 days. That leaves over fifty home for sale in this market. At current absorption rates, that is nearly two years worth of inventory. The sellers who price their homes to be a value will be the ones who sell this year. The rest? They'll be on the sidelines watching.

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Well we all knew it was coming and it was announced today. Local developer Everett Dowling, Trinity Investments of Honolulu and Morgan Stanley are buying the Makena Resort from Seibu Group of Japan. The purchase includes the Maui Prince Hotel, the two Makena golf courses and 1317 acres of vacant land. Dowling is already building the Maluaka condominiums near the Prince and was the developer of One Palauea Bay among other local properties.

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Things keep changing quickly in this market. The Rennaissance Hotel will be operating unit June of 2007 then will be demolished. In its place will be the Wailea Beach Resort. Though the St. Regis has bowed out, Barry Sternlicht will be heading this project. Approximately 100 one-bedroom units will begin at $2 million and 90 or so larger units will run from $3-$7 million. The developer will begin taking names at any time and we can get you access. Nobody has an "exclusive." Let us know quickly on this one.

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In today's Wall Street Journal, a story outlines how the combination of declining prices, prepayment penalties and tighter credit standards are catching some owners in a trap:

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