Locations Oahu 2016 Real Estate Market Recap and 2017 Forecast

M A R K E T I N S I G H T S 2016 – 2017SINGLE FAMILY HOMES | PG 4 CONDOMINIUMS | PG 10 LUXURY | PG 12 FOUNDATION | PG 18 Low Inventory Vertical Living A Buyer’s Market Enhancing Lives Oahu’s Competitive 6,000+ New Condos to Kahala Neighborhood Locations, the 34th Most Market Environment Be Built Within 5 Years Spotlight Charitable Company in Hawaii

In 2016, Locations 614 Kapahulu Avenue Welcomed Home Honolulu, Hawaii 96815 (808) 735-4200 2,191 151 Hekili Street, #120 Happy Families Kailua, Hawaii 96734 (808) 262-27272 Locations — LocationsHawaii.com 91-579 Farrington Highway, #206 Kapolei, Hawaii 96707 (808) 690-9555 95-720 Lanikuhana Avenue, #120 Mililani, Hawaii 96789 (808) 625-7100 98-161 Kaonohi Street Aiea, Hawaii 96701 (808) 488-7700 34 Wailea Gateway Place, #A-207 Wailea, Hawaii 96753 (808) 879-5200 EXECUTIVE TEAM Bill Chee Founder & Executive Advisor Scott Higashi President & Chief Executive Officer Brian Stewart Chief Financial Officer Dan Tabori Executive Vice President Business Operations Michelle Cheung Senior Vice President Technology, Marketing & Research Chad Takesue Senior Vice President Sales

MARKET OVERVIEW2016 by the NumbersThe Oahu real estate market remains extremely competitive. Number of sales andmedian price are the two key indicators of market activity, direction and strength.Throughout 2016, these indicators painted a picture of a very active real estate marketexperiencing healthy growth. Fueled by historically low inventory, high competitionfor homes and record-low interest rates, the result was steady increases in both thenumber of sales and home prices in 2016.The Oahu real estate market remains Aloha,extremely active. Since 1969, Locations has builtSingle Family Home (SFH) median prices rose at a rate of 5.0%, while Condo (CND) strong and enduring relationshipsprices shot up 8.3% due to rising demand, lower price points and low inventory. with the community by providingMedian prices set records again, in both the SFH ($735,000) and CND ($390,000) our clients with the most accuratemarkets in 2016. real estate insights. In doing so, our agents have collectively helpedWhat Will 2017 Bring? more Hawaii residents fulfill theirAll indicators suggest that there will be a steady increase in both prices and sales in real estate goals and dreams than2017, similar to the trend in the past few years. More new condo development and any other brokerage over the pastseveral external factors, such as rising interest rates, a gradually strengthening local 10 years.economy and the global political environment, will influence but not negatively impactour real estate market in 2017. Overall, Oahu remains one of the strongest, most Voted “Hawaii’s Best Real Estatein-demand real estate markets in the United States and all metrics point to that trend Firm” for the 6th year in a row, wecontinuing for the foreseeable future. look forward to partnering with you on all of your real estate needs inIt is important to note, the overall Oahu market is made up of several “market areas” 2017 whether you plan to buy, selland hundreds of neighborhoods that all have their own real estate market conditions or just stay informed.and characteristics. Some neighborhoods will encounter headwinds to their marketactivity. Each neighborhood and region should be considered its own unique Mahalo,market. Consult your Locations REALTOR® for information on your specific areaor neighborhood. Scott Higashi President & Chief Executive OfficerForecast for 2017SINGLE FAMILY HOMES CONDOMINIUMSSales Median Prices Sales Median Prices 5% 5% 5% 8%$ INTEREST RATES New! 4.3% – 4.5% Local. Personalized. Accurate. LocationsHawaii.com Locations — MARKET INSIGHTS 3

SINGLE FAMILY HOMES MAKE A S L S !P A H4 Locations — LocationsHawaii.com

MLS - 201622984 6BR/5BA KAHALA MLS - 201700201 4BR/3BA OCEAN POINTE MLS - 201628124 4BR/2BA MAKAKILOKey Indicators Historically low inventory and rising demand took the Single Family Home Median Sales Price (SFH) market to new heights. $735,000 Extremely low inventory for homes below $1.8 million is at the heart of Oahu’s competitive market environment, driving prices to record highs. Factors for 5% limited inventory include a growing population, lack of new developments at a large scale and low turnover of currently occupied homes. As a result of these Bid-Ups factors, we do not anticipate this pattern to change anytime soon, especially in the highly desirable metro Honolulu area. 29.9% How Demand is Measured between a seller’s market and a buyer’s 16.3% Bid-ups measure the percentage market. MRI is so low that if no new homes of sales that were bid up over the came on the market, the existing supply Days on Market asking price. Bid-ups are the primary would sell out in under 3 months. contributing factor for rising prices. Like 19 Days on Market (DOM), bid-ups on Oahu The Perpetual Housing Shortage hit record levels in 2016, with one in Economist Paul Brewbaker analyzed 17% every three homes and one in every four Hawaii’s real estate shortage in condos being sold over list price. 2009 and discovered what he called a “perpetual housing shortage.” His Days on Market (DOM) measures the research found that the state of Hawaii time from when a property is listed to has been issuing roughly 1,500 building when it goes into escrow. In 2016, DOM hit permits per year while demand has record lows as Single Family Homes (SFH) required an estimated 3,500 NEW went from listed to offer accepted in units annually just to keep pace with 3 weeks. Some say homes are being growing population and new household bought faster than people can list them. formation. We’ve been falling short by over 2,000+ units each year for decades, Months of Remaining Inventory (MRI), and are estimated at being over also known as absorption, measures how 60,000 units behind current housing fast the available inventory for sale will sell demand. Even with all the known new out, based on the current rate of sales. developments being planned, the added A measure of 6 – 8 months of remaining units will barely put a dent in the massive inventory is considered a balance shortage accumulated. Locations — MARKET INSIGHTS 5

Did You Know? The 20% Myth First-Time Interest Rate Homeowner Tax Environment The days when individuals Credit were required to put 20% Mortgage rates rose abovedown are long gone. Today a variety First-time homeowners should be 4% following presidential electionof programs have been created to results. The Federal Reserve Bankhelp make homeownership a reality aware of the federally funded Mortgage raised bank rates in December andfor all. Conventional Loans offer a is expected to do so twice again in3%, 5% or 10% down payment option. Credit Certificate (MCC). As a first-time 2017. This is not expected to have anyVeterans Affairs (VA) and United States significant effect on Oahu real estateDepartment of Agriculture (USDA) loans homeowner, you will receive a tax credit market activity. Rates should remain inoffer no down payment. Note, USDA the 4.3% – 4.5% range through 2017.loans are limited to certain equal to 20% of your annual mortgagegeographical areas. interest expense for as long as you reside in the home. This program is subject to funding by the United States government.THE MIGRATION OUT OF TOWNRecord Median Prices Have Buyers Looking ElsewhereEwa & Kapolei Are Oahu’s New Hot Spots Another upcoming large project is Castle & Cooke’s Koa RidgeFor many families and first-time homebuyers, relief from record- near Mililani, with 3,500 homes to be built over 10 – 12 yearshigh prices in Metro and East Oahu can be found out of the starting in 2017. While impressive in scale, Ho‘opili and Koacity, especially in the Ewa Plain and Windward Oahu. While Ridge will not alleviate Oahu’s chronic housing undersupply andthe primary draws to these regions are their affordability and ongoing inventory constraints, especially as demand increasesmore real estate for your buck, buyers should be aware that for communities designed around families.competition increased quickly in 2016. Ideal Military LocationsNew Construction Another contributing factor for increased demand for homesConstruction of competitively priced new homes in Ewa, Kapolei, and condos in the Ewa Plain is the close proximity to militaryLeeward Oahu and Central Oahu is driving population growth bases. With short commute times, familiar neighborhoodin these key market areas. One example of a new development characteristics similar to those found on the mainland and anproject coming to life is D.R. Horton’s Ho‘opili, which will add abundance of VA loan-friendly qualified properties, Ewa is in11,750 homes to the Ewa Plain over the course of 20 – 30 years. high demand with Oahu military families and is fast becomingThe first 200 – 300 homes are slated to be delivered in 2017. the most populated suburb on the island. MLS - 201626881 1BR/1BA HAIKU VILLAGE MLS -201627814 2BR/2BA MILILANI MLS - 201630414 4BR/2BA SUNSET6 Locations — LocationsHawaii.com

Bigger house,hcoemreew! eSince 2011, median priceson Oahu have increasedby $155,000.What Is Your Home Worth?You might be in for a very big surprise. Created specifically forthe Hawaii housing market, the Locations Home Valuator usesneighborhood-specific data to estimate home values whilemainland websites use broader zip code data. The result: anonline home valuation that is the most accurate in the state ofHawaii. For the most comprehensive home valuation, contactyour Locations agent.Instant Property ValueLocationsHawaii.com/HomeValuator Locations — MARKET INSIGHTS 7

The Ratiol CTomwesn What Will the Impact Be? In a study done by Booz Allen & Hamilton that measured the impacts of rail transit on property values in the U.S., the effects of the rail on property values were almost always positive. The rapid transit system in San Francisco caused rent to increase 10 – 15% on average for units within ¼ mile of the rail. Homes close to the rail in southern New Jersey saw a 10% increase in median home prices, as did homes close to the rail in suburban Philadelphia. Although those mainland markets are not exactly comparable to Oahu, it’s positive news for those fearful of the rail’s negative impact. WALK BIKE In Kakaako, world-class dining, shopping Kailua is one of the most bike-friendly and entertainment are all just steps away. neighborhoods on Oahu.8 Locations — LocationsHawaii.com

Close, but Not Too Close All Aboard!Conversely, homes that are TOO closeto the rail can experience a slight dip in SFH MEDIAN PRICES FROM WAIANAE TO AIEAproperty values. Obstructed views andincreased noise can offset the benefit Waianae NEIGHBORHOOD 2016 MEDIAN YOY PRICEof public transportation being so close. SALES PRICE CHANGEAlthough the Honolulu Authority for WaianaeRapid Transportation (HART) has said the Lualualei 23 $419,000 14%rail’s design will not have these issues, 36 $429,500 19%the true impact remains to be seen. Maili 132 $400,000 6% Makakilo - Lower 28 $583,500 7%Because Oahu is such a unique city 14 $572,500 3%and real estate market, it’s impossible Kapolei 45 $525,000 13%to predict how the rail will affect the Ewa Beach 22 $705,000 7%real estate market. Even so, based on 39 $577,000 0%past research we have reason to Waikele 62 $667,500 4%be optimistic. Waipahu - Lower 45 $830,000 3% Pearl City - Upper Aiea Heights Ewa Beach Aiea KapoleiTRANSIT-ORIENTED DEVELOPMENT (TOD)The impact of rail station proximity on Trying to predict how TOD will exactly The major risks at this point are largelyproperty value has received wide attention impact residential real estate is a timing and construction costs ­— timingin the economic literature. Several complicated matter. Real estate is from an overall market cycle as well asstudies tried to quantify this effect, but the local and TOD doesn’t change that. It’s timing relative to any building that mayconclusions are not uniform. important to understand that different be viewed as direct competition. opportunities will exist around differentGenerally speaking, rail stations are transit stations depending on many Uncertainty of the rail constructionexpected to have a higher positive effect factors, including location, current schedule creates risk of not aligningon commercial properties compared with housing inventory, absorption available to residential real estate cycles. Go-to-residential properties for relatively short of land for development, demographics market timing and positioning housingdistances from the stations. and more. developments appropriately against competition are critical. Policy changes required to execute the current TOD vision are not fully implemented, such as changing zoning and height limitations around rail station sites. BUS RAIL“Da Bus” is a form of transportation for The rail will make it easier and faster for many people living in Downtown Honolulu West side residents to get into town and and across Oahu. support Oahu’s growing second city. Locations — MARKET INSIGHTS 9

CONDOSRiseCONTINUE TOAs Condo Median Prices Increase, So Do Condo SalesThe Oahu condo market hit record highs in median price again The market is also moving faster, with homes and condos sellingfor the 4th year in a row, maintaining its sizable lead in sales more quickly than in November of 2016. The median condo forover neighbor islands that are still at 75% of their previous peak. sale goes into contract in just 19 days.Competition drives prices. As strong competition continues, The Oahu condo market is showing many signs of increasedmore condos are bid-up over their asking price and median competition. Bid-ups have increased in every price range belowprices are pushed upward. The 2016 median sale price of $1 million, and Months of Remaining Inventory has dropped in all$390,000 for condos was up 8.3% from the previous year. price ranges.The Oahu condo market is bucking the trend of the typical end- The condominium market is subject to more dramaticof-year slowdown. Days on Market are decreasing, and bid-ups increases than the single family home market, typically drivenare at peak levels in all price ranges under $1 million, signaling a by investors (non-owner occupied) who are in the market atpotential for more aggressive conditions and price increases in the same time, adding to the strong demand from owner-the condo market. occupant buyers.10 Locations — LocationsHawaii.com

HighlightsCONDOMINIUMMedian Sales Price Bid-Ups Days on Market $390,000 23.4% 20 8.3% 25% 13%New condos completing construction Oahu Grows Upin 2005 – 2009 resulted in a change of There were 1,500 NEW condos sold inhousing inventory and mix in the urban 2016 with 1,000 more predicted to closecore, specifically in the Kakaako area. in 2017 and another 1,000 becomingAn unprecedented number of units available for sale. These new condoscame on the market at roughly the same are attracting everyone from first-timetime. This development, combined with homebuyers to luxury homeowners.the increased retail and commercial Urban core condos now compose 50%offerings in the Kakaako/Ala Moana area, of the entire market and this trend ishas served to create a new market for predicted to increase in 2017.residents and property owners in thecore of Honolulu. KAPIOLANI RESIDENCE Affordable and Market-Rate Homes Locations — MARKET INSIGHTS 11 Fee Simple Ownership Developer: SamKoo Pacific

KAPIOLANI RESIDENCE KEAUHOU PLACE KEAUHOU PLACEMarket and Reserved Housing Fee Simple Ownership Developer: Stanford Carr KEAUHOU PLACE HONOLULU’S URBAN CORE OUTLOOK RESERVED HOUSING In the past several years, Honolulu has realized tremendous The Hawaii Community Development Authority growth in the Kakaako area, which stretches from Punchbowl (HCDA) is a State agency that was established to to Piikoi Street and King Street to Ala Moana Boulevard. The supplement traditional community renewal methods vision for the creation of a vibrant urban core community in by promoting and coordinating public and private the Kakaako area started four decades ago in 1976, when the State Legislature created the Hawaii Community Development sector community development. Authority (HCDA) and designated Kakaako as the Authority’s first Community Development District. Four projects opened their AFFORDABLE HOUSING doors to homeowners, while 8 others are under construction The Hawaii Housing Finance and Development and have closed in 2016. Corporation (HHFDC) is the primary agency charged with overseeing affordable housing finance and development in Hawaii.12 Locations — LocationsHawaii.com

KE KILOHANAA surge of new projects is planned for NEW CONDOMINIUMSthe Ala Moana area, spanning from Piikoito Atkinson. Developers are gravitating PROJECT DEVELOPER # OF STATUS COMPLETIONto this area, as there are building height UNITS DATEand density bonuses available under Completethe interim rules for the Transit-Oriented 801 South Downtown Capital, LLC 410 2017Development (TOD). These projects will Street B Under 2017consist of market units, qualified housing, Construction 2017hotel rooms and possible rentals. Keauhou Place Stanford Carr 423 2017 Development, LLC Under 2018To help alleviate the financial challenges Construction 2019of homeownership, the Hawaii Park Lane Kobayashi Group and 215 2019Government mandates that all new The MacNaughton Group and Under 2019construction developments allocate Construction 202020% of their units to reserved housing. BlackSand Capital 2019-2020New developments like Keauhou Place, UnderKe Kilohana and Kapiolani Residence Anaha The Howard Hughes 317 Constructionare actively selling market units. Beyond Corporationthe affordable housing market, there is Underextremely strong demand for condos Kapiolani SamKoo Pacific, LLC 485 Constructionpriced between $500,000 and $800,000. ResidenceWe anticipate many new high-rise Underdevelopments to come online over the Ke Kilohana The Howard Hughes 424 Constructionnext 10 years in the Kakaako and Ala CorporationMoana areas to fulfill the demand of this Sellinghomebuyer segment, which is composed A‘eo The Howard Hughes 466of a healthy mix of first-time homebuyers, Corporation 153 Sellingdownsizers and investors alike. The Block at 803 Waimanu MJF Development Approved - Corporation Not Selling Gateway Towers The Howard Hughes 236 Corporation A‘ali‘i The Howard Hughes 751 CorporationFact 80% OF HOME Manaolana Manaolana Partners, LLC 234 Approved - TBD PURCHASERS Place Not Selling IN KAKAAKO ARE LOCAL Locations — MARKET INSIGHTS 13

HGTV’S BEST LISTING OF 2016 After 1,000,000 votes were tallied, Locations agent Dolores Bediones’ listing in Portlock won HGTV’s Ultimate House Hunt 2016! Did you see our listing on the front page of HGTV.com? Not only did the home win “Best Overall,” it also took home the “Best Waterfront Home.” It received more votes than any of the other homes in all categories. If you’re in the market for a new luxury home on Oahu or simply want to daydream about the possibility of owning a home like this, visit the new Locations website, go to “MLS search” and enter MLS# 201617847. Have fun!14 Locations — LocationsHawaii.com

Luxury Market IS A BUYER’S MARKET The luxury market on Oahu softened somewhat in 2016. Indicators of a headwind include active listings staying on the market longer and sellers having to drop prices to sell their home.Locations — MARKET INSIGHTS 15

Sales by Price Range Luxury Neighborhood Snapshot 100 98 2015 2016 Diamond Head Kahala Area 80 77# of Luxury SFH Homes Purchased 13 SALES 43 SALES 60 Median Price Median Price $3,200,000 $2,600,000 40 31 26 11 11 36 12 9 Hawaii Loa Ridge Waialae Iki 20 $3 – $3.9 Million $4 – $4.9 Million $5 – $5.9 Million $6+ Million 23 SALES 3 0 SALES Median Price 0 Median Price $1,667,000 $2 – $2.9 Million $2,200,000 LUXURY MARKET BY THE NUMBERS Will Luxury Condos Lure Homeowners to the Urban Core? Demand Weakens at $1.8 Million & Above The luxury condo boom that began in 2006, which slowed down in 2008 and came roaring back in 2011, has provided Oahu’s For both single family homes over $1.8 million and condos over luxury buyers with a diverse selection of housing options. New $1 million, the supply/demand balance is reversed compared developments including The Allure, Waihonua, One Ala Moana, with the rest of the market. There is more inventory available Symphony, Waiea, Hokua and Park Lane Ala Moana are plentiful, for sale compared to the pace of sales. The pool of buyers is with several more planned to be completed before 2020. relatively unchanged, but there are more properties available for sale in the new and resale markets, so buyers have more to While sales data does not show a “migration” of buyers from choose from and can be more selective. popular East Oahu neighborhoods like Hawaii Loa Ridge and Diamond Head, luxury condos are experiencing healthy sales For single family homes, the market appears to soften for prices from foreign investors and Oahu homeowners alike. With more around $1 million. Above that point, homes take longer to sell luxury units on the way and Kakaako becoming a hot spot for and sellers are getting less of their asking price. Days on Market upscale shopping and dining, luxury buyers may start to (literally) generally increased in 2016 to 58 days. move up in 2017. For condos, the market appears to soften from $800,000 to $1.1 million, and again above $2 million. Interestingly, condos sold faster in all price ranges in 2016, indicating continued strong demand at all price levels. MLS - 201622140 3BR/4BA KAHALA MLS - 201604498 3BR/3BA KAHALA MLS - 201627417 5BR/4BA HAUULA16 Locations — LocationsHawaii.com

Waialae Iki Park 33 Homes F Kahala Mall 154 Homes E C Waialae Country Club NorthNShore Waialae WEDiamond Head 1,095 Homes Beach ParkMemorial Park S Pacific Ocean Waikiki Hawaii Kai D 273 Homes SW NW NE SE A Paci ifc OceanFort Ruger Neighborhood InsightsPark 77 KAHALA: WHERE VARIETY LIVES Homes Six key areas, Puupanini, Black Point, Kahala Area, Oceanfront, Waialae Golf Course and Kai Nani, create the landscape of Kahala. Locations experts consider the entry B point for a home in Kahala to be just under $2 million. For oceanfront homes, the average price point is $11.8 million. With the vast range of homes available in Kahala, working with a Locations Luxury Agent who knows the nuances of the neighborhood is crucial to buying or selling a home.Where Are Kahala Buyers From? Single Family Home Median Price by Area A Oceanfront C Kahala Area E Waialae G/C $11,878,304 $2,437,494 $3,391,000 B Blackpoint D Puupanini F Kai Nani $2,958,333 $1,132,833 $2,650,000 Identifying the Demand Though the total number of homes sold in Kahala declined last year, sales for homes under $2 million and over $5 million remained at the same level.45% 9% # of Homes Sold in Kahala in 2016 Price RangeHonolulu Japan 18 <$2 Million 22 $2 – $2.9 Million24% 4% $3 – $4.9 Million 5 $5+ MillionKahala China 314% 4%US Mainland Other Intl. Contact YOUR LOCATIONS LUXURY SPECIALIST TO LEARN MORE ABOUT YOUR LUXURY NEIGHBORHOOD Locations — MARKET INSIGHTS 17

Mahalo to our agents & employees whose compassion & generosity support local communities 100+ nonprofits supported 200+ active volunteers 2,000 hours volunteered each year 34th most charitable company in Hawaii in 201618 Locations — LocationsHawaii.com LocationsFoundation.org Locations Foundation is a nonprofit entity of Locations.

To Ensure the Future of Our Community by Enhancingthe Lives of Our Children Through Four Pillars: Education,Health, Mentoring & SafetyOUR VALUESCare & Share with Compassion. Passionately Give Back Through Volunteerism.Foster Prudent, Disciplined Leadership. We Are Better Together.We launched our charitable nonprofit, Locations Foundation, in Fact1988 to improve local communities and help change the lives ofHawaii children and families in need. Our Foundation provides ONE OF THE MOST CHARITABLEevery Locations team member a trusted way to give back to COMPANIES IN 2016our communities. In 2016, our Foundation contributed over$275,000 to the community. Locations was the 34th most charitable company in Hawaii in 2016 as reported by Hawaii Business Magazine! We’reAll Foundation members are Locations agents and staff – to especially proud of being so high on this list because thedate, 200 active volunteers donate part of their annual income Locations Foundation is 100% funded by employees and agents.and free time each year. As a company, Locations donatesmore than 2,000 volunteer hours to service projects throughout Together with our clients, who play a big role in making itour island communities and a portion of our profits to local possible, we are proud to serve the communities in which wecharitable causes. Locations Foundation supports over 100 work and live.Hawaii family and children-focused nonprofits. Locations — MARKET INSIGHTS 19

Connect with Us (808) 377-4621Explore the Newly REnovated Search over 350 neighborhoods. Direct access to your agent. Information MADE BY LOCATIONS AGENTSthat adapts to your needs. Local. Personalized. Accurate. Powerful search tools provide immediate access to neighborhood listings and keep you current onproperty updates. Contact your agent with ease, stay abreast of market insights with the latest reports and use the most accurate Home Valuator to estimate the price of your home. RB-17095