Good news! A recent article in Pacific Business News shows that California’s number of months of remaining inventory and the days on market have dropped significantly as compared with August 2007.  Is the bottom in view? Looks like it.  California is usually a good indicator of what will happen in Hawaii a few months later. (6 months to a year).

The unsold inventory index for existing, single-family homes in California during August dropped to 6.7 months from 10.6 months for the same period a year ago, according to a report Thursday by the California Association of Realtors.

The index indicates the number of months needed to deplete the supply of homes on the market at the current sales rate.

The Realtors’ organization said the median number of days it took to sell a single-family home was 47.3 days in August, compared with 54.7 days in August 2007.

The August report showed sales were up 56.7 percent statewide while the median home price fell 40.5 percent.

I have been saying for months, look for the number of sales to increase and inventory to deminish as a sign of an improving real estate market, esp. in the hardest hit areas. California typically sets the trend for Hawaii and was one of the hardest hit areas.

When you think of Donald Trump, you think “real estate Guru.”  Well the Donald has spoken, and he spoke on ABC’s Goodmorning America.  If you were going to listen to anyone regarding real estate, he would be it.  You should definitely view this interview.

This is a great time to buy. Now is the time to start looking, and start buying. Over the course of the next year, this is going to be the time to buy. If you don’t do it, you are going to be very, very dissapointed in the years to come. This is the bottom of the market. It may go down a little, or it may not, but this is about the bottom of the market.

 Japanese Billionaire, Gensiro Kawamoto, is in the news again.  (Japanese Billionaire’s Kahala Homes Decried)

If you haven’t heard about this ongoing story, here is a background to it.

In March of 2007, Japanese real estate mogul Genshiro Kawamoto handed over three of his many multimillion-dollar homes in Oahu’s priciest neighborhood to homeless and low-income Native Hawaiian families on Thursday.  Kawamoto plans to open eight of his 22 Kahala neighborhood homes to needy Hawaiian families. He says they will be able to stay in the homes for up to 10 years. He added it showed more dedication to helping Hawaii’s homeless than just handing out cash. Kawamoto laughed when asked if he was concerned about losing money on the effort, saying, “This is pocket money for me.”

According to the Wikipedia entry about Kawamoto:

Kawamoto owns dozens of office buildings in Tokyounder the name Marugen and has been buying and selling real estate in Hawaiʻi and California since the 1980s, and has been accused of making money by driving real estate values down by various methods without respecting the current owners, buying them out and then selling them when the price increased.

Here is what doesn’t make sense to me,  he says he wants to help Hawaii’s homeless and low income native Hawaiians.  That’s fine and dandy, but he is only helping a select few. Why would you hand over the keys to a $5 million dollar home to one family?  If he really wants to maximize his benefit, this isn’t the way, and lets face it, he didn’t become a billionaire by being an idiot, but this is a pretty dumb way of helping people.

Here’s the thing.  Let’s say he sells ONE home for $5 million, goes and buys a vacant lot to build an apartment complex or he buys already built apartment complexes somewhere on this island.  Heck, he could even buy a few single family homes and do better than what he is doing now.  Give them free rent and have them pay their own utilities.  Would he not be benefiting more families?  $5 million should be able to buy you a 12-25 unit apartment complex.   Now multiply that by 8, and you really start to make a difference. 

This whole front that he wants to make a difference to people doesn’t add up.  On top of not maximizing his ability to make a difference, he is running these homes in the nicest neighborhood on the island into the ground where he does no maintenance and they are clearly an eye-sore.  He is irritating neighbors by doing so, and just drive by some of the houses to see the the condition and the picnic tables and weekend partying that goes on in the front yard. This has to be the worst idea I have ever seen for  ”trying to make a difference.”

Want to make a real difference, do what’s right for the neighborhood and for the people that need help.  After all, “It is just pocket money.”

Someone should approach him to invest in low-income housing which the state really is pushing for, and see what he is willing to do.

This was sent to me today: The government was expected to pass the Bailout proposal today, but things didn’t quite happen as expected and the bill failed to pass.  This occurred as the Federal Reserve looks to make $600-700 billion available to the market over the next several months.  In the face of the surprise failed bill, the Treasury Department made a last second change to issue a commemorative dollar bill that will be used to inject into the market.  See below:

OK.  Don’t kill me.  I am just trying to add humor to a tough time in our economy.

That’s right, $1!  No it wasn’t in Hawaii.  It was in DETROIT.

So desperate was the bank owner of 8111 Traverse Street to unload the property that it agreed to pay $2,500 in sales commission and another $1,000 bonus for closing the $1 sale; the bank also will pay $500 of the buyer’s closing costs. Throw in back taxes and a water bill, and unloading the house will cost the bank about $10,000.

Now, read the article and you will understand why.  This isn’t the most desirable neighborhood, the government has stiff penalties for not maintaining the properties, and add on top of that the fact that it is in Detroit (pretty much enough said J/K).

But the home was foreclosed last summer, and it wasn’t long until “the vultures closed in,” Upshaw said. “The siding was the first to go. Then they took the fence. Then they broke in and took everything else.” The company hired to manage the home and sell it, the Bearing Group, boarded up the home only to find the boards stolen and used to board up another abandoned home nearby. Scrappers tore out the copper plumbing, the furnace and the light fixtures, taking everything of value, including the kitchen sink.

If you are a Hawaii homeowner and you use your home as a primary residence, then you need to make sure you are receiving your homeowners tax exemption.  The deadline to claim your tax exemption to reduce your property tax assessment and the amount of taxes owed for the year 2009 is September 30th. 

*    For qualifying homeowners under 65 years of age, the exemption is $80,000.
*    For those 65 years and older, the exemption is $120,000.

An eligible homeowner must own and occupy his or her property as the principal home and documentation acquiring the property must be recorded at the Bureau of Conveyances on or before September 30.

For homeowners who are 75 years or older and have a total household income that qualifies as low-income, exemptions vary depending on the age of the owner:
*    75-79 years, $140,000
*    80-84 years, $160,000
*    85-89 years, $180,000
*    90 and older, $200,000

Persons filing for the home exemption must provide verification of age, such as a copy of a driver’s license or birth certificate.
Others who may be eligible for an exemption include:
*    Hansen’s Disease sufferers
*    Totally disabled veterans
*    Property owners who are deaf, blind, or totally disabled

Here is information from the state on the Home Tax Exemption.

View the home tax exemption form: Home Tax Exemption Form

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.

Wow!  This is impressive.  The Honolulu Advertiser actually posted an article that was not totally doom and gloom! In fact, it was relatively positive.  OK, it is an Associated Press article, but I’m shocked the Advertiser ran the article.  It must be that reference in the article to the “Hawaii is over-valued” statement that was in there.  This must mean the market is going to be booming here soon…….OK. I know, I sound like the Honolulu Advertiser in reverse, but check out this article title: U.S. Home Prices Declining At Slower Rate,  Study Says.

Prices of single-family homes fell in the second quarter, but at a slower rate than in the previous three-month period, an economic analysis company said Thursday……the slowdown in price declines and the amount of extremely overvalued markets are signs that the housing “bubble” has burst, the company said in a news release.

The new program for Hawaii’s community Heros that I have spoken about before has arrived to the islands and has now made it into the news.  This article about Herocare just came out recently and I thought you might be interested to read it.  I am lucky enough to be affiliated with the program as an affiliate partner.

Herocare is a non-profit organization created with the intent of helping our community heroes’ reach their goals of financial stability and home ownership. Herocare is a FREE service offered to community heroes that provide them with specialized services and discounts in dozens of categories.  Community Heroes, as defined by Herocare, are: All retired and active employees of:

1. Government- City, State, and Federal 
2. Military - All branches and All Veterans including 
             National Guard, Reserves, and Coast Guard. 
3. School Systems- Public & Private. 
4. Medical Systems- Public & Private.
5. First Responders- Fire, Police, & Paramedic.

If you or any friends or family members fall into the category of a community Hero, call Herocare at 1(877).HERO.411.  Herocare is not just limited to the home buying or selling process.  There are about a dozen categories it can benefit you with. (i.e. financial planning, insurance, tax preparation, etc).

Overall our real estate market has done really well and some economist are anticipating a “Smooth Landing“.  We haven’t seen the large price declines like we have on the mainland.  When you read all of the doom and gloom articles on the mainland, you can’t help but think that real estate is bad everywhere, and be hesitant about purchasing a home here in Hawaii. 

A few articles surfaced recently that may detail that some happy rays of light are to come to the national housing picture.  Slivers Of Good News Seen In Housing, Amid Plenty Of Bad (Honolulu Advertiser).  We also see, Consumer Outlook Up, Worst Of Housing May Be Over (Honolulu Advertiser) and Is The Slowdown, Slowing Down?

Let me highlight these articles:

While no one is ready to call the bottom of the worst housing collapse in decades, there were glimmers this week that the severity could be waning.  Reports yesterday showed the glut of newly built homes on the market fell to a five-month low last month, while the decline in home prices is starting to ease, and in some cities values are even starting to rise. What’s more, existing home sales rose slightly from June to July, according to data Monday.

Americans felt better about the economy in August, as a widely watched barometer of sentiment posted the biggest boost in two years amid falling gas prices. Meanwhile, two reports suggested that the worst may be over for the slumping housing market.

A relatively upbeat Case-Shiller reading and the slowing pace of home price declines point to hope that the housing market is nearing its bottom.

Now, our local Hawaii real estate market has done very well, esp. in Metro Oahu(Honolulu/Waikiki) up 2% year-to-date.  Honolulu by itself is up 3.8% and Waialae-Kahala is up 12%. 

One of the biggest misunderstandings I here from people, is that because the news about the national real estate market is so bad, so is Hawaii’s real estate market. 

Well that isn’t the case, and what happens when the consumer confidence in the housing market turns positive on the mainland.  What effect will it have on the Hawaii real estate market? I don’t think it will be a negative impact.

So…we have a local market that has done really well, we start to see slivers of positive news in the national housing market that surely won’t adversely affect the Hawaii housing market, and also look at the following:

The NAR’s estimate for interest rates:
·     Average 30-year fixed mortgage rate in December: 6.6%
·     Average 30-year fixed mortgage rate by mid-2009: 6.8%

rates right now are at 6.4% (roughly).

If you are looking at timing the market, understand that you have a potential double whammy coming up.  Positive national news will be positive for the real estate market here, and an increase in interest rates will cost more in a monthly mortgage payment.

$500,000 loan amount (30 year fixed fully amortizing) at a 6.4% interest rate and your payment is: $3,127.53

$500,000 loan amount (30 year fixed fully amortizing) at 6.8% interest rate and your mortgage payment per month is: $3,259.63

That is more than $100 more a month in a mortgage payment just by changing the interest rate.