Highlights:

• Welcoming luncheon with Sacramento Mayor Heather Fargo (invited) and Presentation on the Blueprint Project by SACOG Executive Director Marty Tuttle.

• Mobile Workshop Friday afternoon of new downtown housing by John Dangberg, CADA, and a presentation by the Millennia Associates of the Railyards and tour of the Sacramento Terminal Central Shops.

• Foundation KeyNote dinner Friday evening. KeyNote speaker - Bob Smiley, professor and emeritus dean, Graduate School of Management, University of California at Davis on the Economics of the California Wine Industry. KeyNote speaker sponsored by LAI Land Economics Foundation.

• Napa Valley tour beginning Saturday afternoon featuring Copia – American Center for Wine, Food and the Arts, a tour and wine tasting at the Regusci Winery, and before dinner we will have a wine and cheese reception followed by dinner at the acclaimed Ristorante Tra Vigne in St. Helena.

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Larry Lund standing by Richard T. Ely's family home, Fredonia, NY

It has been a busy summer but during the last week of August, Mary and I took our annual trip to Stratford, Ontario for the Shakespeare Festival. This year we came back to Chicago the long way driving through Niagara and stopping at Fredonia, NY. Besides being the mythical nation of the Marx Brother’s comedy movie Duck Soup, it is the boyhood home of Richard T. Ely. Ely has many of you know was the person that influenced the founding of Lambda Alpha International. With the help of local Fredonian historian Doug Shepard, I learned that the farmhouse where he was raised was demolished for Interstate 90. However, the family moved into town around 1872 when Richard went off to college at Dartmouth. The accompanying photo was taken in front of their home at 35 Cushing Street (formerly 35 Green Street). I do not know when they sold the home, but the current resident is the third generation to have lived in the house, which they reported to have purchased from the Ely’s. Next month I will talk about my visit to Chautauqua where Ely lectured and wrote during the summer months.

This history is just a reminder that Lambda Alpha International will be celebrating its 75th Anniversary next year. We are in the planning stages for the celebration and I would like to hear from our members on how to celebrate this anniversary.

In the meantime, we have another outstanding Weekend Experience coming up in Sacramento-Napa November 12-13. The Sacramento Chapter has developed an outstanding program that will feature regional planning efforts, downtown redevelopment at a very large scale, and a wonderful trip to Napa Valley to examine agri-tourism with a museum visit, wine tasting and a memorable dinner. I understand that we have already several registered for the event and I look forward to seeing many more. Many of you can reach Sacramento directly by air and it is only a 90-minute drive from either the San Francisco and Oakland airports. Remember, our events combine both educational features with relaxation and they are wonderful weekend getaway experiences.

Larry Lund
International President
LarryLund@LAI.org
312-751-1250

Editor's Column

State of the Economy

This is not a political editorial – just this economist’s current outlook on the national scene and the world of real estate.

At the beginning of this year, I attended several forecasts featuring nationally known economists. They opined on interest rates, real estate and jobs. Each was certain that long-term interest rates were going to be at 7-8% by year’s end and short-term rates would skyrocket. Generally speaking, long term rates have been on a continual curve downward since then and short-term rates have been stable.

Ignoring these pundit’s projections, we can say that rates are where they should be and without the low rates the real estate market would be wounded. And, most importantly, real estate has been carrying this nation for at least five years. Depending on the source, it appears that almost 20% of the nation’s economy is tied to real estate and if it were not for an ebullient residential market, our economy would be in the tank.

This year, new residential construction will top 2,000,000 homes, condominiums and apartments and home resales will top 6,000,000. That is 8,000,000 homes sold and 8,000,000 homebuyers that will inevitably rack up credit card expenditures at Home Depot, Lowe’s, and a myriad of suppliers of landscaping, architecture, interior design, pool construction and supply, home remodeling, cabinets, granite and other “can’t live withouts.”

The residential construction industry has the highest multiplier of any industry in America, more than 2.5. That is why every president (except Carter) knows that you need low interest rates and strong home sales to win a national election.

Of equal importance is the rise in home ownership. Because of the proclivity of the homebuilding industry and low interest rates, the U.S will have a home ownership rate approaching 70% within the next few years. Even with the absurd home prices in California, home ownership is rising there.

We should pat ourselves on the back. The industry we represent is a very important part of America.

Report from Hawaii Chapter on Current Market Conditions

Living Up to Expectations

Literally and figuratively, things are looking up for the high-rise condominium market in Oahu, Hawaii. Low interest rates, a strong local economy, and pent-up demand on Oahu have resulted in extremely strong sales and a skyline punctuated by construction cranes.

Looking back, condominium development experienced its first boom in Hawaii in the early 1960's, when leasehold properties were fixed for the first thirty years. As lease rents and leased fee purchase prices increased, the market for leasehold ownership decreased.

The historical high average prices were set in 1990 by Japanese investors who purchased new luxury condominiums between 1989 and 1991. However, once the bubble burst during the mid- to late 1990’s, the average resale price of condominiums in Honolulu, Hawaii declined.

In 2002, the supply of existing condominium inventory was the lowest it had been since the Honolulu Board of Realtors® began publishing data in 1986. Moreover, there were no new condominiums available for sale in the Honolulu Urban Core. Enter Hokua Development Group, LLC, who seized the opportunity by bringing to the market Hokua at 1288 Ala Moana, which consisted of two hundred forty-eight large, oceanfront condominiums with an average sales price of approximately $1 million. These were Hawaii's first true luxury condominiums since the early 1990's.

Hokua at 1288 Ala Moana was the first in the current wave of major condominium development on the island of Oahu. Currently, there are nine new high rise condominium projects (totaling approximately 2500 units) at various stages of development on Oahu. This does not include a number of Waikiki hotels which have recently been purchased for condo-conversions. Total sales for the first half of 2004 significantly increased from 2003, and the sales prices for a condominium in July 2004 set new Oahu records. In addition, for the first time since1998, multifamily new home sales outnumbered new single family home sales this year.

With high-rise residences priced from $230,000 for entry level buyers to over $1 million for luxury tier buyers, both ends of the price continuum appear to have a waiting clientele. Today’s buyers, at every price break, are more likely to be residents rather than Japanese investors. These residents are categorized as current local residents, part-time residents from the U.S. mainland, and new arrivals to Hawaii.

Moreover, buyers seem to be drawn to high-rise condominiums in Honolulu because they offer a winning combination: a good, convenient location, a safe environment, and attractive pricing compared to existing homes on the market. The shift toward high-density, high-rise urban housing is not simply an economical or practical preference of homeowners, it also represents a lifestyle shift of the affluent baby-boomers, who have chosen to place their free time and convenience above all else.

What most appeals to converters to high-rise living appear to be time-- daily commutes rob many of valuable personal time, cultural opportunities, and even community life. High-rise condominium owners are discovering the joys of walking to restaurants, the beach, shopping and movies; the peace of mind that comes from being able to leave on a moment’s notice without worrying about the security of their homes; and the serenity of ocean, mountain, or cityscape views.

The lightning fast sales pace of the recent high-rise projects on Oahu underscores a pent-up demand for high-rise living in Honolulu. Residents will enjoy the benefits of urban living, ocean and mountain views, the comfort of hotel-type amenities, and the convenience of not maintaining a single-family home.

Developers of the numerous new high-rise residences that are reshaping Honolulu’s skyline have clearly understood the values and lifestyle needs of their target buyers and are moving quickly to meet the demand.

Kathryn Whang Inouye

Aloha Chapter, Hawaii