As mentioned by the Honolulu Advertiser, Hawaii will be adding 1,980 new Army personnel, all of which will be coming to Oahu. 

The Army has settled on the number of soldiers it will send to Hawai’i, deciding on a total of 1,980 new soldiers, with 1,680 going to Schofield Barracks and 300 additional soldiers to Fort Shafter, a news release said.

Plenty of economist and real estate analysts have predicted bottoms in the housing market well before now, so why should you listen to more chirping about a housing bottom? Read here.

…a consensus seemed to emerge among experts at a housing forum held by Standard & Poor’s and the Chicago Mercantile Exchange on Wednesday in New York. Several panelists, including Economy.com’s chief economist Mark Zandi, Goldman Sachs (GS, Fortune 500) economist Charlie Himmelberg, S&P managing director David Blitzer and S&P senior economist Beth Ann Bovino all agreed that home prices would stabilize sometime during the summer of 2009. “The bottom of the housing market is coming into view,”

Consider this quote also from Lawerence Yuen, Chief Economist for the NAR:

It is safe to say we have hit bottom in home sales (which have been essentially stable for 12 months). I do not foresee another notch down. It is just the timing of when the pent up demand will reach the market place. Interest rates are favorable, homebuyer tax credit is available, conforming jumbo loans will become more accessible and affordable, and the job market will likely stabilize by the year’s end given the continuing economic growth. Nationally, sales will pickup. The exact timing as to whether this will start to occur during the fourth quarter of this year or during the second quarter of next year, and as to how robust or modest the recovery will be are a bit cloudy. However, it is certain that existing home sales will be higher in 2009 compared to 2008.

So unless you have been living under a rock or on a rock, like somewhere out in the middle of Puna, then you have probably heard that the Government has taken over Freddie Mae and Fannie Mac.

The Bush administration, acting to avert the potential for major financial turmoil, announced Sunday that the federal government was taking control of mortgage giants Fannie Mae and Freddie Mac. Treasury Secretary Henry Paulson says the historic actions were being taken because “Fannie Mae and Freddie Mac are so large and so interwoven in our financial system that a failure of either of them would cause great turmoil in our financial markets here at home and around the globe.”

You may not, however, totally understand the whole rescue picture and how it impacts home loans.  The NPR came out with an excellent article answering just about every question regarding the Fannie/ Freddie takeover.  I highly recommend reading, Understanding the Fannie, Freddie Rescue.  This is a great article. 

Now compare it to the Honolulu Advertiser’s article on the same topic called, Fannie, Freddie Too Big To Fail.  Two very differing articles on the same subject.

I have talked about this several months ago, but here is a great article about the large Military Housing Construction going on on Oahu.  This is a part of why Oahu’s economy and, consequently, Oahu’s real estate market has done so well. Excellent article.

The Department of Defense about five years ago awarded three contracts for replacing or renovating roughly 17,000 Army, Navy, Air Force and Marine Corps homes on O’ahu over a decade or so.  The bulk of the military housing work is scheduled to run through 2014 or 2015.

I love it!  This is classic Brewbaker at his best.  If you have ever seen him speak, it can be quite humorous.  That first line would not be exaggerating either, if you have heard him before.

Bank of Hawaii chief economist Paul Brewbaker thinks everybody - including the people he works for - have overdone it with economic pessimism, The Maui News reported today.  “I work for people who think there is a recession going on,” he said.  “Turn off the TV,” he recommends and wait for the actual numbers. “This thing (the idea that a recession is under way) is in people’s heads.  The reality doesn’t matter at this point. . . . “We’re bombarded with all this information, much of which is spurious and most of which is redundant. Just turn off the TV and you’ll be fine.” “I don’t know what kind of a recession has a 3.3 percent growth rate,” he said.  A more recondite calculation suggests that the residential real estate slump is nearing its bottom and might soon turn up - in California.  For decades, price trends in Maui real estate have closely tracked Orange County, with a lag of about two quarters.

Two things to keep in mind: 1. Maui is very different than Oahu. and 2. Those historic lag times for Maui, never included, that thing Al Gore invented, the Internet.  The Internet speeds up this process by giving global access to properties as opposed to the real estate books that were published once a month before and you didn’t have access to them sitting in California or anywhere else in the world.

Honolulu is ranked 23rd among the top wealthist cities in the United States.

The study, by PBN’s online partner, bizjournals.com, compared 261 U.S. communities with populations over 100,000. Bizjournals created a six-part formula to analyze the relative affluence of all cities, incorporated towns and unincorporated urban areas. The strongest scores were given to places with high income levels and large inventories of expensive homes.

Expensive homes, Honolulu does have.

Have you wondered why the Oahu real estate market has done so well when you hear that parts of the mainland have dropped in price by 10 to 30 percent. 

Mike Sklarz, a local economist and housing market statistician, said O’ahu home prices are following a historical pattern of flattening after a steep increase. “It’s more like a staircase pattern — up and then sideways,” he said.  Sklarz and other economists said several factors — including population growth, low unemployment, stable personal income, attractive interest rates and relatively low foreclosures — have helped maintain home prices despite the relatively big sales slowdown.

Add to it the fact that we have the largest military housing project in history going on and the fact that we didn’t overbuild during this last cycle, so we don’t have a glut of inventory on the market.

Don’t expect the steep price drops that are occurring in some areas of the U.S.

So everyone was so worried about things when IndyMac Bank went under.  Well now for the interesting news.  Since the FDIC took over IndyMac Bank, they have now announced that the bank will begin systematically modifying loans for those homeowners most at risk of foreclosing so they can stay in there homes.

If I was in trouble with my mortgage and my loan was with IndyMac, I would have felt like I was holding the winning lottery ticket. 

If I was in trouble and my loan wasn’t with IndyMac, I would be hoping my bank was going to go under,  so the government could bail me out.

This is the first real sign of the government stepping in directly to help borrowers in trouble, and it took the failing of a bank to give them enough control to force the issue.  Let’s see if the government starts putting more pressure on other banks to follow suit.

If you think the financial world will come to an end here soon and we are in big trouble, think again.  The government has shown they will step in when needed.  Look at the latest with Fannie Mae and Freddie Mac.

The FDIC, six weeks after taking over mortgage lender IndyMac Bank, said Wednesday that it will start systematically modifying some of the bank’s most troubled loans to keep borrowers in their homes. The Federal Deposit Insurance Corp. said it has started to send out the first of what will be an estimated 25,000 letters to borrowers most seriously delinquent on their loans. The goal of the modifications: to provide borrowers with affordable payments so they can stay current on their mortgages and remain in their homes, while at the same time minimizing losses to investors in securities backed by the loans.

The state DBEDT (Department of Business, Economic Development, and Tourism came out with their annual forecast for the Hawaii economy.  The overall opinion is that Hawaii’s economy is resilient and sturdy.  The two articles have similar headlines, but the Honolulu Advertiser article, Hawaii Economy Sturdy, Experts Say appears to be much more negative and doesn’t follow the title of the headline.  The Pacific Business News article, DBEDT Expects Hawaii Economy To Grow Slowly In 08′ And 09′, sticks more to the numbers, and highlights the annual report.

State economists said they expect Hawaii’s economy to experience moderate but slower growth this year and in 2009. Personal income, total wage and salary jobs, and state gross domestic product are forecast to show some growth over the next few years, however the growth rates have decreased from the previous forecast. She said the state is still seeing job growth, with the number up 0.6 percent through the first half of the year. Unemployment, while higher than recent years, was below the national rate of 5.7 percent.

Highlights of the report include:

• The forecasts for real personal income growth to increase 0.4 percent for 2008 and 0.8 percent for 2009.
• The inflation forecast is expected to rise to 4.5 percent for this year and 3.5 percent for next year.
• Hawaii’s real GDP growth is now projected to grow 1.9 percent in 2008 and 2 percent in 2009, down slightly from the government’s previous forecast.

Paul Brewbaker, chief economist for Bank of Hawaii, said there are comparisons that can be drawn with Hawai’i’s downturns of the early 1980s and ’90s, but that as he looks at the data he is struck by the economy’s resilience. For example, there are fewer homes being built in Hawai’i’s civilian community, but a federal government program to privatize military housing is offsetting that, he said.

He said other noteworthy points include local housing prices remaining stronger than those in Mainland markets smacked by the mortgage credit crunch and the state’s ability to ramp up infrastructure investments because it has a strong credit rating.

“There are things that are way worse than anyone thought,” Brewbaker said. “Despite all of that, things are kind of holding together. It’s actually not as bad as some people think.”

The House approved $553 million in spending for Hawaii military projects.

The Army’s Schofield Barracks would receive $279 million for new buildings, roads, water lines, sewers and other upgrades next year as part of the $553 million in construction spending the House approved today for Hawai’i military bases next year.

This along with the potential addition of 2,000 more troops shows the support and growth of the military on the island.