Kona Kohala Blog

The Aloha Friday newsletter just went out.  This week we look at real estate activity in North Kona and South Kohala, some information on the abundance of mortgage loans out there and a piece on Kona town looking at the changing weather and growing road system.  If you'd like to receive a copy in your inbox please email me at Robert@FerrariPacificRealty.com.

The Hale Ma'uma'u vent at the volcano is shutting down, for who knows how long, giving us clear blue skies once again.  Our winter visitors will be lured back to the incredible beauty of West Hawaii once more.

January is starting out slowly, a reflection of the economy we're all dealing with.  We have a large inventory of homes, condos and land and interest rates remain low.  Housing prices are expected to remain low for the foreseeable future but not so for interest rates.  By years end we expect to see interest rates jump and the fed pumps more money into the economy and other major steps are taken to rejuvinate the housing industry.

Believe it or not, we're seeing more homes enter the under $400K range with some even hitting the under $300 range.  As the market continues to correct from the craziness of 2005 we see prices shifting downward.

Today's homes in that $400K to $500K range are very nice homes that are actually worth the money. During the heyday of price hikes, people were paying a lot of money for junk in the fear that we would run out of property.  Now that prices are coming down and there is competition between sellers, the homes are well kept, clean and in most cases ready to be moved into.

We have all three pieces of the perfect real estate storm, low prices, low interest rates and a large inventory to choose from.  This week's newsletter will look at what you can get for $400,000.  If you'd like to be on the mail list, email me at robert@ferraripacificrealty.com.   No cost, no obligation.

Here it is almost the end of January, the first month of 2009.  The markets in North Kona and South Kohala are both struggling against gooey conditions in the form of sales lethargy.

The number of Single Family Residences (SFR's) sold in January of '09 compared to January '08 in Norht Kona are down 80% with just 4 closing this year to date.  There have been 8 condos sold compared to 9 in '08 which is an 11.1% decline.  In South Kohala only 3 SFR's have closed, down 62.5% from '08 and just one condo compared to 10 last year, a reduction of 90%.

Median price is still not falling in line with expectations with the exception of condos in North Kona.  This segment is a slight over correction being down 54% at $194,000.  In this weeks newsletter we talked about the large numbers of condos in that price range in Kona.  SFR's in North Kona are down 16% in median price to $490K, nearing first time home buyer range.  Also, where second home and investment buyers will start to jump in.

In South Kohala, the median price of a SFR is $379K but remember that's based on just three sales so not really indicative of the actual market place there.  Condos jumped an amazing 49% in median price but unfortunately, this too must be discounted because only one condo sold this month meaning this is a usless statistic unless you're arguing the come back of the South Kohala condo market and you don't want to talk about the number of sales, just the price of condos.

The market place on the west coast, especially the Bay area and Southern California, are taking off with as much as a 43% increase in acitivity this year.  Until our prices correct a little more, in the downward direction, we will sit in the buyer doldrums we've been experiencing for the last couple years.

New foreclosures and bank desires to unload their real estate holdings will help lower prices but that's going to take time.  Sellers need to realize that until this market is reenergized, holding onto high prices will only freeze out potential activity in our market.  It's time to get prices down to where mortal humans can afford to buy and banks will be willing to lend.

If you'd like to be on our Aloha Friday newsletter mailing list, email us at Service@FerrariPacificRealty.com and we'll add your name.  There is never any obligation and you will not be contacted outside the newsletter and you information is not passed on to any other person or agency.  See our Privacy Policy for full information on how we handle your data.  Aloha

I had a discussion with a new friend today about the pricing of condos in the Mauna Lani Resort.  Marv commented that he believed prices were good for buyers looking to purchase in Hawaii.  He'd been watching the market for many years and even though he's not a Realtor, he sees what many of us see, many well priced condos and homes in West Hawaii for sale today.

I've always talked about real estate purchases as long term investments.  If you buy today, regardless of the price, in 5 to 7 years you will be ahead of the game, if history repeats itself as it always has.  I remember Louis Rukeyser many years ago saying there is no bad time to buy stocks and his logic was the same as mine.  In this country, we have a very dynamic stock market and a very dynamic real estate market.

What is surprising to many akamai (wise) investors is that there were so many people who believed and bet their money, that the real estate market was going to continue to climb even after setting such lofty new highs as it had.  Even after nearly 3 years of declines I still talk to people who think their property is worth what it was at the peak.  You can see some of them in the MLS that have been on the market for 400 to more than 500 days.

The 3 years of declining prices have gotten us to the median price we saw in early 2004, still above what the same property was selling for 5 years ago in 2003.  I say the best time to buy is when you can afford it and then hold on.  If you have the money and your budget allows the extra expenditure and you have savings to carry you through the lean times then buy and buy now.

You never want to find yourself in the position of having to sell.  That is what has gotten so many people into trouble today, they bought something with poor judgement and a poor loan and now they are taking a loss or worse yet, going into foreclosure.

Buying a home now, assuming you can afford it, may be one of the smartest moves you could make.  Because real estate cycles are real and because economic cycles are real, we will see a recovery in the future.  If history remains true, the next up tick will exceed the one experienced in 2005/6.  That means buying now, while prices are low and interest rates are low (they won't stay there that much longer, IMHO) and there is a large inventory to choose from almost has to bring you a nice reward down the road aways.

You should, of course, talk to your financial planner or tax professional about the credibility of such a move.  There are many financial advantages to owning a home, even a second home or investment property.  Discuss these advantages with a trusted advisor then contact us at Ferrari Pacific Realty and we'll get started on finding the perfect fit for your future financial plans.

If you want to keep track of the market here in West Hawaii, sign up for our free, no obligation Aloha Friday newsletter.  Each week, usually, you'll receive the letter in your email on Thursday afternoon so just email me at Robert@FerrariPacificRealty.com and I'll put you on the list.  This will help you stay abreast of not only the real estate market but also some of the goings on in our little piece of paradise.  aloha

What?  Okay, may be it's not a word but it does describe a situation occurring in prices in various subdivisions.  We're seeing prices of similar properties in varied locations coming closer together. 

It used to be that an area like Alii Heights had a corner on the $600K to $700K range but now, prices in Alii Heights and Alii Heights Mauka are inching upwards into the low to mid $700's.  Hualalai Colony, a beautiful stately subdivision with a gated entrance is slowly creeping downward from the $1M range to the low to mid $700K range.  While the location is different the homes are similar; pricing is more a reflection of the design and style of the house now rather than location and amenities.

This may be because of the stricter rules placed on appraisers by the feds and the banks.  Now, appraisals may focus more on structure and less on the surroundings.

Circuit City was on hold for their new store in Kona Commons but now, Circuit City is no more.  It's sad to see businesses shut down; usually blamed on the bad economy but more than likely, on their way out anyway.

I have limited experience with the store but from others I've talked to, the message is the same, no service.  Poor service is probably the number one reason businesses go out of business.  Anyone in the service industry can exponentially improve their chances for success by providing excellent service, a message that falls by the way side when the market is hot.

The opportunity is a big new building sitting empty in an area with lots of empty commercial buildings.  This is a great opportunity for a national chain to plant themselves in the middle of one of the fastest growing areas in the country.

We will pull out of this down swing, we always do.  Those who use this time to position themselves for the future stand to gain the most.  The same is true in the housing market where so many homes and condos are empty.  There is opportunity there whether you want to live by the water or on a cooler more elevated lot in say, Makalei Estates or some other beautiful subdivision where low prices and abundant inventory offer something for everyone.

Here's an amazing number for you, 80% of all the condos for sale in North Kona are priced under $500,000.  In South Kohala, 44% of all condos are under $500K.

Another interesting number is 39%, the number of Single Family Residences (SFR's) priced between $400,000 and $699,000 in North Kona.  In South Kohala there are 55% of all SFR's priced below $500,000.  There are some very good buys out there, right now.

Contact us if you'd like more detailed information.  Where do you think the market is going?

Second question, when will we see the bottom?

aloha

I was looking at some homes for sale today in a very nice gated community, homes that had been over a million dollars a very few years ago.

These two in particular, two I'm very familiar with and both of which had extensive remodels after their purchase, were each sold at around $1.17M.  Today they are both on the market, one at $709,900, a foreclosure, and the other at $890,000, not a foreclosure.

What a great time to have money to invest in Hawaii real estate.  Cash is good but if you have a 720+ credit score, 20% down and want to live in the house there is money out there under 5%.  It's been a long, long time since we saw rates like that and they're not going to last.  Banks are making it hard to borrow now but wait until all that money gets pumped back into the market.

Interest in real estate is going to take off again because people will have money again.  Interest rates will move up as requirements to borrow move down, again.  Expect a big jump in interest rates in the near future and an easing of prerequisits to borrow as the banks start moving all that money that was "given" to them by the feds.  They are going to love loaning money at 7% or more.  Now is the time if you are planning on buying in the next 12 months.  For more information, call or email us.  aloha

Once again the oft predicted but never begun Alii Highway aka Alii By-pass and numerous other names, is to start work by the end of the year.  And this time, the mayor gave us the year, 2009.  Completing the Alii Whatever it's Called and the Hokuli'a By-pass will go a long way to relieving the traffic woes of South Kona.  Coupled with the highway widening in North Kona and those who haven't been here for a few years will not recoginze the place.

On to foreclosures; steady best describes what's happening with the number of foreclosures in west Hawaii.  We have yet to see the effects of the loan modification programs much heralded on the mainland here in Hawaii let alone Kailua Kona, Hawaii.

Until we see a pronounced decline in the number of foreclosures, market forces will stay in the background as the banks determine pricing which goes hand in hand with the number of properties they own and need to get rid of.  Once the foreclosures decline we'll see a stabalizing of prices and a reinvigorated marketplace.  No one wants to by while prices are on the way down although, as a long term holding there's no better time to buy than 3 years into that decline.

There are some great deals in South Kohala like the one we talked about at the Mauna Lani.  There are good buys throughout the property not only at Golf Villas but at the Villages and the Point at Mauna Lani. 

Further south in Waikoloa Beach Resort there are even better prices once you lose the Mauna Lani amenities.  Beautiful condos in the mid $400's with access to the white sands at Anaeho'omalu Bay, shopping at the King's Shops, the new Queen's Marketplace and wonderful entertainment at the outdoor Waikoloa Bowl.

Contact us for information on any west Hawaii real estate.  aloha

Great new listing at the Mauna Lani Resort.  A 3 bedroom, 3 bath condo with over 1800 sq ft of living area and another 240 sf of lanai's overlooking the Francis H. I'i Brown south golf course for just $649,000.  Along with the condo you have access to the fabled Mauna Lani Resort property, golf course, the restaurants, the private beach club and many other amenities by being an owner there.

Contact me for more information or go to our MLS site and type in number 219504 for details and a short video as well as photos.

Correct me if I'm wrong and I really hope I'm wrong.  I understand that a part of the Auto industry bailout is a new loan policy for buyers.  The auto manufacturers would finance new and used auto purchases for the buyers much like GM has done in the past, however, there will be 100% financing and they'll be able to offer loans to people with lower credit scores than they are now able to do.

This sounds almost identical, no, make that identical to what happened in the home mortgage lending.  We allowed people who could in no way repay a loan borrow the money for a house with no money down and then foreclosed on them.

Does this mean we'll have great deals on slightly used cars in a couple of years?