The government is beginning to step in and help out with the housing market, even if some areas don’t need the help.  We saw it last week with the help of struggling Fannie Mae and Freddie Mac, and we see it this week with the passing of the Housing Rescue Bill.

What exactly does the Housing Rescue Bill do?

The Senate on Saturday overwhelmingly passed a landmark housing bill that will offer up to $300 billion in loans for troubled homeowners and establish a government rescue plan for mortgage finance giants Fannie Mae and Freddie Mac.

• The FHA will be allowed to insure up to $300 billion in new 30-year fixed-rate mortgages for at-risk borrowers in owner-occupied homes if their lenders agree to write down loan balances to 90% of the homes’ current appraised value. (will lenders be willing to do this?)
• The bill would permanently increase the conforming loan limits to a maximum of $625,500 from $417,000. (these amounts are higher in Hawaii)
• The bill includes a tax refund for first-time home buyers worth up to 10% of a home’s purchase price but no more than $7,500.
• The bill eliminates a program that has allowed sellers to provide down payment assistance.
• The bill would also increase to 3.5% from 3% the down payment requirement for borrowers getting FHA loans.
• The bill would grant $4 billion to states to buy up and rehabilitate foreclosed properties.The funding had been opposed by the White House, which said it would benefit lenders and not homeowners.  (Great! Just what we need, State Owned Housing. They have been screaming for more “Affordable Housing”.  Maybe they will do it with the taxpayer money this way? Hope your neighbor doesn’t foreclose.)

Any thoughts?  You first time homebuyers could have a nice benefit there.  Especially if you qualify for an FHA loan as well as qualify for the tax credit.

Having dealt with several short-sale’s in the recent months and having spoken with several other agents that have dealt with them, I have come across a similar situation in all of them.  The process takes a LONG time. 

I am now advising clients, that they should expect the enitire process to take 6 months or more from the day they make an offer on a short-sale property to the time of closing.  If you are looking for a primary residence, a home you will live in immediately, unless you are willing to be extremely patient, you may not want to consider them. 

Here is what is happening:

Client writes an offer on a short-sale property and it is submitted to the Seller’s agent.  Seller’s agent then presents it to his/her client.  The client approves it and he/she gets a copy of the HUD-1 statement from the escrow company to be used and faxes/emails the offer in to the lender for their review and approval (since all parties (lender included) have to agree to the terms and conditions of the Purchse Contract).  This is where the process slows down.  If the seller has not taken care of the hard-ship paperwork, then the lender has to review the paperwork to see if they will agree to a short-sale.  They review the seller’s situation, once approved for a short-sale, then they assign a negotiator. (Took over 1 month for a negotiator to be assigned)  The negotiator does just what the name implies and then once everything appears to be agreeable between all parties, it gets sent to a committee for final approval.  It has been 2.5 months now and we are just finishing up with the negotiator.  This is on a property with only one mortgage attached to the property.  Imagine a short-sale with a first and second mortgage, where lender #1 and lender #2 have to negotiate with each other over some of the proceeds.

Even though Hawaii has a very low number of foreclosures and short-sales compared to some areas of the country, the files here get grouped together with the rest of the countries short-sales.  The lenders are clearly backed up with files to handle.

If you are looking at purchasing property and are willing to consider a short-sale property you need to have the understanding that the process may take 6 months or more and you must be patient. 

Finally, someone got the headline right.  Leave it to the Pacific Business News to do it.  Certainly not the Honolulu Advertiser.  

At a time when nationally, foreclosures have been rapidly rising, Honolulu comes in in last place for the number of foreclosure filings.

Honolulu had the lowest foreclosure rate among the top 100 metropolitan areas in the United States during the second quarter of 2008.  Honolulu ranked 100th out of the top 100 metropolitan areas for foreclosure filings, according to RealtyTrac’s Q2 2008 U.S. Foreclosure Market Report. Honolulu had a total of 250 foreclosures, or one filing for every 1,331, up 61 percent from the first quarter 2008 and up 63.4 percent from second quarter 2007. Stockton, Calif., was No. 1 on the list, with 9,066 filings, a rate of one filing for every 32 households.  There were 496 foreclosure filings in Hawaii during the second quarter of 2008, according to the report from California-based RealtyTrac.

Compare Honolulu’s foreclosure numbers (250) to Stockton, CA (9,066).  That is a huge difference.  Any thoughts?

Just read:

Hawai’i’s active Army population of 20,000 could grow by 10 percent between this year and 2013, it was announced today in a study released by the Department of the Army. (Additional Article)

Add that to the largest military housing project in history. 

If 2,000 additional military personnel (doesn’t include family members) spent $20,000 a year living in the islands, that would be $40 million in additional money to the Oahu economy.

The state’s seasonably adjusted unemploymentrate in June is at 3.8% more than 1.5% below the national average.  Did you know, during the great depression, unemployment was at 25%? (Additional Article)

Hawai’i is tied with two other states for the sixth lowest unemployment rate in the country, with South Dakota leading the nation at 2.8 percent.

In keeping with the good news, Honolulu has been named the second healthiest city to live and retire in the U.S.  (Additional Article for reinforcement)

Honolulu was ranked No. 2 because 95 percent of its residents are covered by health insurance. Residents here also spend more time exercising than almost any other city surveyed and locals have one of the highest rates of life expectancy among the other cities surveyed.

I came across this article titled, “Hawaii Looking To Tap Into China’s Monster Market” that really shows the massive potential from the Asian market that many economist here feel will be the next boom in our economy and more specifically our real estate market. This is not just a boom from Chinese but from Koreans as well.

The recently signed memorandum of understanding between the United States and China allows more leisure travel groups to come to the United States, which officials predict will result in a doubling of visitors from China, to more than 100,000 a year. Those numbers have climbed each year, from 25,443 in 2003 to 55,910 last year.  Last month, the first tour groups from China came to the Islands.  The Chinese visitors, although numbering only in the hundreds, grabbed the spotlight ….Officials also predict an upswing in Korean travelers next year when South Korea is expected to be admitted to the U.S. State Department’s visa waiver program.

I found this pretty cool to check out.  If you have ever hiked to the top of Diamond Head Crater,  you know this is one of the best views around. 

Coming off of my trip from San Diego, I stumbled across this article  that I thought was a practical joke, or an article out of the National Enquirer.  Once I realized it wasn’t a joke I was shocked and overcome with laughter.

San Diego City Attorney Michael Aguirre said on Wednesday he filed a lawsuit against Bank of America Corp and its Countrywide unit to prevent the mortgage lenders from foreclosing on homes in his city, which he aims to make a “foreclosure sanctuary.”

Ok.  I am all for supporting the goal of helping homeowners keep their homes and decreasing unoccupied, bankowned properties but frankly, his approach is preposterous. When someone doesn’t pay their mortgage, the lender’s recourse is to foreclose. Take that away and NO lender will ever make a home loan.  What other option will they have to re-cooperate their losses?  What incentive would homeowners have to pay their loan down?

June’s market stats for Oahu are out.  So what is going on in the market?

Well if you read the Honolulu Advertiser then, June Oahu Median Home Price falls 8.8% to $625,000.  (When did the Honolulu Advertiser report the news like Fox News?)  Harvey Shapiro says, Housing Prices Hold in June.  The Pacific Business News writes, Oahu Home Sales, Prices Fell In June.

So what is the story?

For the entire first half of this year, the median prices have been $629,000 and $330,000, respectively. The median price of a single-family home has decreased by 2.5%, but the condominium price has increased since the same time period a year ago by 1.5%.

You can view the entire June Market Stats here.  To view all past monthly and quarterly market stats go to the Resource Center.

On page 3 of 20 are the Year-To-Date figures.  These figures are much more accurate then comparing a single month this year to the same single month last year. The number of sales for SFH’s is down 25.7% Y-T-D and for condos is down 27.5% Y-T-D.  The median sales price for a SFH is down 2.9% to $629,000 and for condos is up 1.5% to $330,000.

*Several economist predicted our market will balance out and stay steady at 8,000 units sold.  That is the number we are anticipated to hit this year for total number of sales down from our peak of 13,000 units.

on page 18 of 20 we see the Months of Inventory Remaining.  This gives us an indication of the strength or weakness of a market and if it is a buyers or sellers market.  According to the National Association or Realtors, a balanced market is 6-7 months of inventory.   The Months of Inventory Remaining for SFH’s in June was 8.3 and for condos was 7.0.  A balanced market for condos and a slight buyers market for SFH’s.

The $1.0 million plus properties are the highest with 15 months of inventory on the market currently.