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Third Quarter 2009

By
Real Estate Agent with Ferrari Pacific Realty Corporation

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.

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