Kona Kohala Blog

It's pretty early in the month to be making predictions but since, by nature, predictions are just best guesses, I'll offer a few anyway.  A continuing trend we've been watching for the last month or so has been North Kona Single Family Residence (SFR) median prices rising slightly.  That is still happening early in March and no reason to expect a change in that trend.  Median prices on other properties remains in a decline.  Condos in North Kona and South Kohala continue to drop but not as rapidly as in the past.  Even SFR's in South Kohala are losing value but seem to be leveling off.

The biggest change is the number of sales.  We've seen rapidly rising sales for going on two years.  That trend may be coming to an end.  The number of sales in all categories for west Hawaii i.e., North Kona, South Kohala, and North Kohala in SFR's and condos are all slowing.  What were double digit growth numbers are now single digit increases.

Possible causes are a depleted inventory of good properties or buyers who are leery of more price drops.  A lot of what's coming on the market today, especially the foreclosure and short sale properties, aren't in the best of shape.  Many of the foreclosures have been stripped of all appliances (appliances, stove, refrigerator, dishwasher, washer & dryer are traditionally a part of the sale in Hawaii) and in some cases, toilets, sinks and anything else removable have been taken by the last tenants.  Needless to say, these properties don't show well.

Although we've had many investors move into the market there is a finite number of these people.  I suspect we're seeing an end to that group of buyers; there will always be some but the large influx of investors are no longer here.

The biggest problem facing buyers today is the lender community.  Most of the banks still in the business of real estate loans have received huge amounts of tax payer money to defray the cost of their loses since the decline in the real estate market.  It doesn't seem that the banks have really lost any money on this and in fact, seem to be making money with every foreclosed property they sell.

So why have they made it so hard to get a loan?  I understand tightening loan requirements so we don't have another debacle like we had but I believe they have gone way overboard.  Well qualified buyers are being denied loans for silly, petty reasons which is only hurting our recovery.  I can't think of a single industry that could do so much with its reach as real estate when it comes to aiding our recovering economy.  No other industry effects so many ancillary industries as real estate and yet the banks are allowed to continue their recovery cramping style.  Until we get rid of the bulk of distressed properties we can't expect a full recovery.  We can't have this recovery until people start going back to work.  It's happening ever so slowly now but opening up the housing market again will put so many people back to work immediately like builders, plumbers, painters, concrete companies, iron companies, air conditioning companies, window companies, roof covering companies, carpet makers, furniture makers, appliance makers, fixture makers, loan officers, title officers and their companies, attorneys associated with real estate, Realtors and all the people they employ, appraisers, county assessors, county building inspectors and that's just a start.

It's too bad our government is unable to multitask.  Instead of dealing with all of the issues facing us today they tend to work only on those that get their faces in the media are are considered high profile issues.  I think a recovered economy would garner a ton of good PR but hey, what do I know?