I came across this funny article the other day.  Bostonians really love their RedSox.

A Boston-area retailer offered to refund the price of any mattress, dining room table, sofa or bed bought during an April promotion if the Red Sox were to win the World Series.

About 30,000 pieces of furniture were bought during the season-opening deal at Jordan’s Furniture. The store took out insurance so it won’t lose too big if Boston goes all the way.

If you or anyone you know has a loan with Countrywide and they are having difficulty with their payments or will when their loan rate adjusts, now is the time to contact your Countrywide lender.  Countrywide is going to adjust the loans for “At Risk Borrowers”.

Countrywide announced plans to refinance or modify some $16 billion worth of loans for more than 80,000 borrowers who will soon hit an unaffordable rate reset, or those who have already fallen behind after their payments rose.  Further, Countrywide hired Marks’ Neighborhood Assistance Corporation as a contractor to help thousands more people. The nonprofit group will contact homeowners and figure out how much they can afford to pay.

The bank says it has identified 52,000 borrowers, who collectively have borrowed about $10 billion, that it believes it can move into prime loans or those guaranteed by the Federal Housing Administration.

Another 20,000 borrowers who have more severe credit issues but are current with their loan payments could be eligible for modifications of their loans. That group has loans totaling about $4 billion.

Finally, Countrywide said it will send letters offering pre-determined, pre- approved rate reduction for an additional 10,000 borrowers who are delinquent on payments on loans totaling $2.2 billion.

These were 3 great articles!

Have you ever wondered what are closing costs, and how much are they?  Well here is a good article that explains some of them, tells you what to look for, and how to make sure you keep them in line.  The fees for Hawaii, however, are typically higher than on the mainland.  An appraisal in Hawaii will cost you around $500-$600 for a residential property, not in the Jumbo Loan category.  I have seen processing, doc prep, and underwriting fees as high as $500-$600 as well.  So when you speak with a lender and you get a “Good Faith Estimate“, don’t just look at what your mortgage payment will be, but keep an eye on the Closing Costs.

The nationwide outlook for commercial building and rents is “decidedly upbeat“, and the same can be said for Oahu as well.  The fallout from the residential sector has not flowed into the commercial sector and office rents are up and vacancy rates are down. 

The office sector continues to post strong job growth, having registered a 3.9 percent increase in jobs over the past year,…  he’s concerned that demand for office space could weaken because of the state’s slowing economic growth, particularly in the tourism and housing sectors.  Also hampering office leasing is low unemployment, which tends to restrict business growth, and efforts by companies trying to offset rising rents by squeezing more employees into less space.

Another week, another update from Keri Shepherd’s Mortgage Market Update.  Great news and info here regarding mortgage rates.  What have they been doing lately and why?  Find out here, and if you haven’t subscribed to her free newsletter you can do so in the upper right corner of the newsletter. 

In a move that looks to help out the troubled global credit market, 3 major investment banks are teaming up to create a “Superfund“, of sorts, to inject confidence into the credit market and ease investors fears of investing in commercial paper.  The fund would buy distressed debt.

“This is exactly what they should be doing — accepting responsibility instead of asking the government to bail them out.” ….called the Master Liquidity Enhancement Conduit or M-LEC — would launch in the next 90 days and be used to buy distressed securities from SIVs. That would in turn give them the capital to pay off their commercial paper obligations, and ultimately extricate themselves from what otherwise might have been substantial losses.

By buying SIVs’ distressed investments, the new fund would inject enough liquidity into the market to make investors more confident in buying commercial paper. The funds’ backers said they will shy away from risky instruments and buy only highly rated asset-backed debt…

In more growing economic news from China, we see China’s stock market close at a record high of over 6,000 points. Let me sum this up for you:

Chinese investors have taken irrational exuberance to entirely new levels. On Oct. 15, the Shanghai Stock Index blasted through the 6000-point mark, and closed at 6337 on Oct. 17, up an astonishing 125% since the beginning of the year.  The Chinese market has more than doubled in value so far this year and sextupled in two years.  “It’s totally out of control,” says Carl Walter, a managing director at JPMorgan.

As the article states, it looks like China is headed towards a correction as the rapid rise look unsustainable.  Still China’s economy is growing at double digit growth rates.

Compare that to the article about the US economy.  The money that is creating wealth in the Chinese market, could be similar to the money that was made in the late 90’s early 2000’s in the US, which helped lead to a boom in real estate.  Asia has is being eyed as the next big market boom for Hawaii real estate.  Lets see what happens.

This article is old news, but should be reiterated again and again.  As the options for loan programs becomes less and less, FHA loans may be the way to go.  I happened to start mentioning this option to clients several months ago when the credit market started to dry up, but now is a good time to follow up with it again.  Keri Shepherd, of IndyMac Bank, actually turned me on to them as a proactive way of helping Buyers stay ahead of the mortgage game. 

If you don’t have a large down payment, have some quesitonable credit scores, or need to keep your closing costs down through credits, this may be an option for you.  Check out the FHA flier for more info and contact me if you have additional questions. Luckily, I work with some great lenders and can put you in touch with some to answer your specific questions.

If your credit is weak or your savings anemic, here are two phrases you’re likely to hear from mortgage loan officers in the next few years: FHA and mortgage insurance.

They’re part of a back-to-basics theme that was emphasized Monday at the annual conference of the Mortgage Bankers Association in Boston.

Oahu home prices were up 2.3% for the third quarter of 2007 compared to the third quarter of 2006.  Some economist feel the 4th quarter of 2006 was our bottom for the real estate market here in Hawaii. 

Higher median prices in Diamond Head, Hawai’i Kai, Central O’ahu, the Leeward Coast, Waipahu and Pearl City helped boost O’ahu’s overall median sale price to $649,900 in the quarter, up from $635,000 a year earlier.

Median prices were lower for metro O’ahu, Kailua, Kane’ohe, the ‘Ewa Plain, the North Shore and Makakilo.

Condominiums sold for a median $330,000 in the third quarter, up 4.8 percent from $315,000 in the 2006 third quarter, the report said.

Median condo prices were up in five of 12 regions — Kailua, Kane’ohe, Makakilo, Pearl City and the Island’s biggest condo market, metro O’ahu. Regions with lower median prices were Diamond Head, Hawai’i Kai, the North Shore, Central O’ahu, the Leeward Coast, the ‘Ewa Plain and Waipahu.

I am tired of writing about depressing articles that national writers love to talk about, so I am changing my focus to a more positive tone on this one, especially since Hawaii real estate is still doing very well and is expected to compared to some areas of the country. Here are the top 10 reasons that it is a great time to buy Hawaii real estate.

1.  Selection, selection, selection. There are more resale homes on the market now. We have 5.1 months of inventory to choose from as opposed to 2 months of inventory at the peak of the market in 2005.  Regardless of the price range a buyer desires, there are plenty of houses from which to choose. Just a few years ago a buyer was forced to make compromises if they were going to locate the home of their dreams. There is a great selection of attached homes, condos, and townhouses. You can find large lots, small lots, and a lot that will accommodate your boat. There are a lot more options in this market.
2. No Bidding Wars. In 2005 we had one client that made an offer on ten homes. They lost the first nine to the ‘feeding frenzy’ that existed. Other buyers bid the properties up substantially from the original listing price. There were escalation clauses where buyers authorized their agents to outbid other offers by thousands of dollars. There is still some bidding going on, but it is only on properly priced, well kept/remodeled, mid-range homes. (The very homes worth bidding on)
3. You can make an offer. A few years ago when you made an offer, the only question was how high above the list price could the buyer reach in hopes of being the best offer on the table. Today the sell price list vs. price ration is about 96%. A seller will not be insulted if you ‘make them an offer they can’t refuse’.
4. Patience is tolerated. In the hot seller’s market that existed everything was rushed. Find a house before other buyers did. Hurry up and make the offer.  Today a buyer can take their time. Look at several homes and think about your decision for a few hours.
5. Due diligence is welcomed. In this market a buyer is encouraged to obtain a home inspection, termite inspection, and appraisal. In 2005 many buyers waived these contingencies in order gain an advantage with multiple offers.
6. There are plenty of specs. In the not too distant past, buyers had to ‘play games’ if they wanted a new home. There were lotteries and waiting lists in order to obtain new construction. Some buyers slept in their cars in order to get to the head of the lines. R.L. Brown estimates that builders have thousands of specs ready for immediate occupancy.
7. Repair requests are welcomed. After a buyer completes a home inspection, they are allowed to submit a repair request to the seller. In the past a seller might insist the home was sold ‘as is’. Many times, there were back-up buyers waiting for a primary buyer to upset the seller whose home was increasing in value almost daily.
8. Few, if any investors. It is estimated that one third of all sales in 2005 were to investors. These non-owner occupied buyer caused the market to inflate and affordability to decline. Mortgage fraud became commonplace. It’s a great time to buy without having to compete with hundreds of prospective landlords.
9. Location, location, location. Today’s buyers can find homes closer to work. In the past buyers flocked to further distances in order to find affordable homes. In this market, reasonably priced homes are within biking or walking distance to schools, rapid transit lines, and relatives.
10. Real Financing is available. The ‘wink, wink’ zero down, no doc, adjustable, sub-prime loans are gone. Fixed rates are back. FHA financing, first time homeowner bond programs, special loans for teachers, and police officers are back in business. It’s a great time to buy real estate!

So what are you waiting for?  Contact me at scott@kahalaassociates.com to make your next move a complete success:)