Robert Ferrari's Blog

The Hawaii Bottom is Coming

Robert Ferrari (Ferrari Pacific Realty Corporation) — Mon, 26 Oct 2009 13:34:13 -0700

"The bottom is coming, the bottom is coming", cried Chicken Little as he ran frantically through the yard . . . or something like that. This time it may be true, the bottom may actually be coming or may be here, for that matter. The question is, is this "the" bottom or just "a" bottom?

Reading the statistics from Hawaii Information Service, our MLS provider, one gets the impression that we may be at or very near the elusive bottom. Two of the three main statistics are jittery and bouncing up and down while the third, median price, continues to decline at about a 20% per year rate.

The other two stats are Number of Sales and Volume of Sales, the actual amount of money involved. In the third quarter we saw an increase in the number of sales and the volume of sales for North Kohala, South Kohala, North Kona and South Kona. This indicates that both investors and home buyers are moving back into the market place; prices have gotten low enough that buyers are seeing value.

In October the number of sales is up in some districts and down in others but all very near zero meaning the decline may be coming to an end. The volume is also jittery but moving around that same zero percent change indicating that we may be leaving the many months of declines behind us, for now.

The potential mar on the otherwise bright and shiny housing future is the fact that despite the administrations bobble heads proclamations of an end to the recession, jobs continue to be lost. Until that changes, the average American will not be able to get back into the housing market regardless of how low prices get; no income, no loan qualification.

The people we see taking advantage of current market prices are those wise few who saved money, paid off debt and still have jobs. Many of these are investors. The others are the ones who were raised by parents who taught them the worth of a dollar, the value of hard work and how to plan their future. Unfortunately, this is a small percentage of the American people and we will soon see their appetite for housing satisfied, then we will need the rest of the country to come around in order to maintain any kind of recovery.

And therein lies the rub, so to speak. As soon as we run out of the current group of buyers, investors and those smart enough to have put some money away, we are going to have to wait until the jobs market picks up in order to see any new buyers on the horizon.

Since this administration is running full speed ahead with blinders on, seemingly unaware of history, I don't see the job turn around anywhere in our future. The government has demonstrated repeatedly its inability to run a business. For examples we need only look at Amtrack, the postal system, and now the banking industry and General Motors and Chrysler. If it wasn't for large and continuous infusions of taxpayer money each of these examples would be nothing more than a footnote in a history book and some may be inspite of the cash infusions.

Fortunately, we still have elections and a sobering electorate. The elections of 2010 will tell a lot about our future. One thing we should have learned is that having a democrat house, senate and white house is every bit as disastrous as having a republican controlled government. We need opposing views to make good decisions.

Instead of republicans and democrats we need true conservatives and liberals although I personally question the value of a liberal. As has been recommended in the past, maybe we need to vote them all out and start from scratch. Could it be that much worse with all new bumbling idiots rather than the tenured group of self serving bumbling idiots we now have? Hard to say but it might be worth a try.

Robert A. Ferrari, R(B), ABR, CRB, CRS, PB

Ferrari Pacific Realty Corporation
www.FerrariPacificRealty.com
Kona Board of Realtors Realtor Broker of the Year 2006, 2007
Robert@FerrariPacificRealty.com
Licensed Realtor in Hawaii since 1996

Third Quarter 2009

Robert Ferrari (Ferrari Pacific Realty Corporation) — Mon, 05 Oct 2009 13:57:08 -0700

How far away can the bottom be when sales activity begins to rise, volume begins to rise and median price continues to fall? This is exactly what we're seeing in West Hawaii for the districts of North Kohala, South Kohala, North Kona and South Kona.

First the bad news, if you're a seller. Median prices have continued to slip south at rather high rates considering the turn around in sales. In North Kohala, the median price for Single Family Residences (SFR's) is down <30.7%> to $572,550. This is considerable when you look at an area with mostly million dollar plus homes and estates. The money volume is up a surprising 98% and the number of sales has gone from 4 homes in the third quarter of 2008 to 10 homes in 2009.

Not so dramatic is South Kohala where the median price has dropped <19.3%> to $359,000 for a SFR. Condos, the mainstay in South Kohala, are down just <11.8%> at $445,000. The volume for SFR's is up 38.6% and condos are up 13.3%. Sales for SFR's have gone from 45 in third quarter 2008 to 51 in third quarter 2009, up 13.3%, while condo sales have gone from 30 to 38, an increase of 26.7%.

North Kona leads the way for volume increases this year over last with a whopping 160.2% increase. The median price continues its decline now at $415,000 for a SFR, down <24.4%> and condos are down to $202,500, a <32.5%> decline. Here too, the number of sales is climbing with SFR's up 67.4% with sales of 72 SFR's compared to 43 in 2008 and condos up just 7.3% with 44 units closed this year compared to 41 in 2008.

South Kona is the only district with positives in all categories. Volume is up 50% this year and the median price is up 20.6% to $375,000. The number of sales also rose to 10 compared to last years 8, an increase of 25%.

Studying one quarter is truly micro economics but it's better to have a ray of sunshine hit you when you're laying by the beach rather than nothing but rain clouds. Who knows what the next three months will bring. Historically, October, November and early December are slow in Hawaii. Once the holiday crowd shows up around Christmas time, things could change.

Perhaps the biggest indicator of what's coming in this age of bailouts will be the governments action on extending the home buyer tax credits and anyother stimulus plans they may have. The cash for clunkers was a big hit but costly for the feds. The problem for them is that in spite of the expense, the biggest and only boost we've seen to the economy was those two government backed programs.

With consumer spending making up nearly 70% of our Gross Domestic Product (GDP), something has to be done. The jobs market is still looking dismal for the foreseeable future. There's still talk about a 10% unemployment through next year.

With no new tax breaks coming what will stimulate small businesses to expand and begin to hire again? In fact, quite the opposite is being planned by the Obama administration. They plan on raising taxes on the upper income earners and businesses as well as some hefty tax hikes to pay for the generally unwanted healthcare reform.

Most people polled want healthcare reform in the way of tort law reform that has been shown will reduce the cost of healthcare. Most people are happy with what they have and just want to pay less to get it. Obama is pretty much killing the goose while telling us there are more eggs to be had.

President Reagan gave us a perfect blueprint for economic recovery. What he did during his 8 years in office was miraculous economically and it all began with tax cuts. It's too bad Obama chooses to follow Roosevelt whose policies failed rather than Reagan whose policies worked.

Robert A. Ferrari, R(B), ABR, CRB, CRS, PB

Ferrari Pacific Realty Corporation
www.FerrariPacificRealty.com
Kona Board of Realtors Realtor Broker of the Year 2006, 2007
Robert@FerrariPacificRealty.com
Licensed Realtor in Hawaii since 1996

Aloha Friday Hits the Streets

Robert Ferrari (Ferrari Pacific Realty Corporation) — Thu, 01 Oct 2009 21:19:54 -0700

Hits the streets in an electronic sort of way, that is. This weeks newsletter has been emailed to subscribers and has articles on West Hawaii real estate, a reveiw of both foreclosures and shortsales in North Kona and South Kohala. In addition there we look at who's not making mortgage payments, the Kona Cold Lobsters farm at the Natural Energy Lab Hawaii, we revisit condo occupancy and how it effects loanability, a look at the dim future of solar energy and the ever popular Shameless Plug.

Bottom line is that although we hear a lot of news about foreclosures, in most categories we're under 5% of the active listings that are actually being sold as foreclosed properties. There is a higher, much higher percentage of active listings that are short sales right now but even that isn't through the roof the way the media would have us believe.

If you're not familiar with the Kona Cold Lobsters farm you really should check it out next time you're in town. What a great place to hand pick your cold water lobsters aka Maine lobsters for dinner that night. He also raises Kampachi, a newer fish on the market but one that is perhaps the best tasting sashimi fish in the world.

If we get enough people hooked on the great taste of Kampachi, Maine lobster and another new fish, the Kona Butterfish, we could see a resurgence in the housing market. Who wants to live very far away from not only the best tropical fish i.e., ahi, mahimahi and ono but also to have kampachi, butterfish and Maine lobster available almost every day of the year?

If you'd like to sign up for the free, no obligation newsletter of West Hawaii click here. If you're concerned about the security of your information, please read our Privacy Policy.

Robert A. Ferrari, R(B), ABR, CRB, CRS, PB

Ferrari Pacific Realty Corporation
www.FerrariPacificRealty.com
Kona Board of Realtors Realtor Broker of the Year 2006, 2007
Robert@FerrariPacificRealty.com
Licensed Realtor in Hawaii since 1996

Interest Rates, how low can they go?

Robert Ferrari (Ferrari Pacific Realty Corporation) — Tue, 29 Sep 2009 20:29:56 -0700

Can you believe interest rates are actually holding at under 5% right now. Buying property is really an investment, where else can you find rates like this? Many people today are getting more than 5% on investments so it makes sense to carry a mortgage rather than paying cash in this market.

Bank of Hawaii is offering a 15 year fixed rate mortgage for 4.00% interest with 2.625 points, a point being one percent of the loan. The 30 year fixed rate was at 4.5% for the same points. Even the Jumbo loans were at 5.25% which is a good deal for any home buyer. I remember buying my house in 1993 and thinking what a great rate 6.75% was. This is a great time to buy real estate if you're moving up, down or just want a new home. There's a fairly large inventory of properties available to choose from and it is a buyer's market.

For more information on financing you can go to my web site and get some information and the names of different lenders with whom I've worked and had good results. Please keep in mind that this is not a guarantee of service but I do know they've done well with clients in the past. You can get there by clicking here or go to www.FerrariPacificRealty.com and check out the entire site.

Robert A. Ferrari, R(B), ABR, CRB, CRS, PB

Ferrari Pacific Realty Corporation
www.FerrariPacificRealty.com
Kona Board of Realtors Realtor Broker of the Year 2006, 2007
Robert@FerrariPacificRealty.com
Licensed Realtor in Hawaii since 1996

Stability???

Robert Ferrari (Ferrari Pacific Realty Corporation) — Mon, 28 Sep 2009 17:24:53 -0700

Could it be that we're seeing the beginning of the end? Probably not but it's a fun thing to think about. If we consider Median Price for homes in North Kona we see it at $383,050, down <31%> from last year at this time. Condo prices are down <34%> to $190,000, first time in a long time we've been under the two hundred thousand dollar mark.

In South Kohala the Median price for a Single Family Residence (SFR) is down <30%> to $334,500 and condos are down to $372,500, a drop of <27%>. I suggest stability because of the number of sales. We'll see prices continue to fall until there's an uptick in sales and right now we're seeing the first signs of change. In North Kona, the number of sales of SFR's is down <6%> but that's only one sale different from last Septemeber. North Kona condos are up 10%, again, one condo difference in sales from '08. In South Kohala, the number of sales of SFR's is up 6.67% from last year and condos have dropped <9%>. That means in South Kohala we've sold one more SFR and one less condo.

It may appear to be a mixed message but it's the first time we've seen anything but declines. It could mean a bottom is near or, it could mean nothing and was just a hiccup with one sale closing sooner or later than expected. More to come as the month ends.

Robert A. Ferrari, R(B), ABR, CRB, CRS, PB

Ferrari Pacific Realty Corporation
www.FerrariPacificRealty.com
Kona Board of Realtors Realtor Broker of the Year 2006, 2007
Robert@FerrariPacificRealty.com
Licensed Realtor in Hawaii since 1996

Hawaii Defies the Trend

Robert Ferrari (Ferrari Pacific Realty Corporation) — Fri, 25 Sep 2009 20:02:24 -0700

Hawaii once again goes its own way. While the rest of the country toys with the idea of recovery we wait for the waves. New housing sales climb, we stop building and wait for the waves. Existing housing moves up and down, we continue down and wait for the waves. We seem to always be waiting on the waves or anything else that will pick us up and get things moving here again.

We're about to enter Round 2 of the Foreclosure battle. Round 1 was mostly the investors who got in late or just got in over their heads. Round 2 will be the people who live and work here. Being heavily reliant on tourism and many people choosing to stay home now, that industry is struggling to stay afloat. Hawaii remains the land of dreams but fewer people are able to realize that dream so we are seeing fewer and fewer second homes being built or bought.

Our market in North Kona on Hawaii's west coast has experienced a <29.4%> decline in the number of sales this September compared to last September and a drop in median price of <31.0%> for Single Family Residences (SFR's). Condos aren't faring much better with sales down <20.0%> and their median price down <17.2%>. In South Kohala, Hawaii's famed Gold Coast the number of SFR's sold compared to last year is down <26.7%> and median price is down <34.9%>. Condos there, the main stay of the vacation crowd are down in sales by just <9%> compared to last year but median price is down <26.8%>.

This is not a good time to be a seller but a great time to be a buyer. For more details on what's happening in West Hawaii real estate you can sign up for the Aloha Friday weekly (usually, you know those waves) newsletter. You can check out a sample or sign up by clicking here. We are seeing the bottom end starting to take off, homes under $500K and condos under $300K but the higher end, $800K to $2M is dead in the water. There hasn't been a better time to buy Hawaii than now. Aloha

Robert A. Ferrari, R(B), ABR, CRB, CRS, PB

Ferrari Pacific Realty Corporation
www.FerrariPacificRealty.com
Kona Board of Realtors Realtor Broker of the Year 2006, 2007
Robert@FerrariPacificRealty.com
Licensed Realtor in Hawaii since 1996