Kona Kohala Blog

As 2008 comes to a close, one much appreciated by many, the bottom of the long spiralling market may be in sight.  There are a number of serious steps being taken to stop the onslaught of foreclosure properties.  This alone will go a long way towards stopping the price drops since properties will no longer be competing with bank owned property to set prices.

An end or at least a large reduction in the number of short sales and foreclosures will allow the market to set prices once again.  It will take some time for the market to recover the huge devaluations experienced by home owners and investors but at least buyers will no longer feel like they're trying to catch the "falling knife".

With the combination of low prices, even lower interest rates and a large inventory of homes to choose from, buyers will start coming out of the woods to find that new home they've wanted for so long.  Once the bottom is firm, the sale of existing homes will begin to pick up rapidly, as long as the banks are willing to cooperate.  Prices, however, will stay low for a while.

Banks have to do their parts to encourage the housing market which is so intertwined with so many other industries.  Right now the banks are still in the over-reaction mode coming off their poor practices of the past 8 years.  Look for more stringent requirements for loans but nothing we haven't been through before.  Once housing starts it's mini turn around, watch for the rest of the country and later the world, begin a long slow recovery back to a sound money market.

Welcome 2009!