Kona Kohala Blog

If you're one of those people who wants to retire to sunny west Hawaii and trying to time the market, do it now!  Our market, both North Kona and South Kohala, is beginning its turn; our numbers of sales are on the rise.  The median price of both Single Family Residences (SFR's) and condos have stopped their nose dive into the last century and we're seeing activity in all price ranges.

We still have a pretty good inventory of properties to choose from and interest rates are still hovering around 5%.  Without my crystal ball I can't guarantee anything but my experience and what I'm seeing today tells me that this is the time to buy if you're planning on doing so in the next few years.  We are at the turning point, the proverbial bottom.  We may still slip a little lower but I don't recommend waiting too long or you're going to be in that crowd of people lamenting about missing their chance.

If you're ready to move on your purchase, contact me and let's get started narrowing the field.  You can email me at Robert@FerrariPacificRealty.com or call my cell at 808-896-0661.  You should give yourself at least 6 months to research the property and learn all you can about the area it's in.  Now is the time so let's get started.

It is unfortunate that this administration knows nothing of fishing poles and it would even be comedic if they weren't my tax dollars being flushed down the drain but they are so it's not funny.

Once again the administration turns its back on root causes and focuses on short term fixes that have already been proven not to work.  Every effort to date, all the various forms of loan modification and forgiveness have been for naught.  Not only have there been only small numbers of people involved in these futile attempts at redemption but those who did buy in are usually back in financial trouble within 6 months.

As our friend and mentor Yogi Berra said, "It's deja vu all over again."  The liberals want to make people dependent on them for hand outs.  Every time something goes wrong they throw money at it even though we've seen by the recent efforts to do this, it doesn't work.  "It's the economy, stupid", as one famous American said not too long ago.

Fix the economy and all these other problems go away.  You'd be surprised at how many Americans would make their mortgage payments if they had a job.  Bailing people out is not the answer.  Making people dependent upon a government on makes for more dependency, not the independence that most people want.  Given the choice of living off the public dole or earning a living performing worthwhile work, most people would choose work.  Work is good, it's a healthy endeavor and it's personally rewarding beyond a pay check.

Fix the economy and watch how quickly our society comes back around.  It is too bad that the liberals tend to look at different ways of giving handouts rather than different ways of creating a vibrant work place.

How about real estate?  There is a great selection of homes listed between $1M and $3M available today.  I've been working with clients for the last four days looking at homes in this price range from Kona to North Kohala.  Last year we were looking at the same homes but their prices were about 20% or more higher than today.  The problem this year is deciding between numerous beautiful homes within their price range that meet their needs.

If you're in this price range now is the time.  Jumbo loans through one of our favorite lenders are as low as 5.125%.  With interest rates creeping up the last two days they may be higher today but still, they're great rates.  Low interest rates and a good sized inventory, the ideal time to find that dream home that may have been just out of your reach last year.  Call me at 808-896-0661 or email Robert@FerrariPacificRealty.com for more information on these or any other homes you may be interested in.

It's a beautiful day in sunny Kailua Kona not yet eight o'clock and the sun is already high in the sky.  It's going to be a great day to view property in North Kona and South Kohala with clients.  Prices are still coming down and with the exception of condo inventory in North Kona there's plenty to look at.

In this week's Aloha Friday newsletter, we look at the future of interest rates according to the Mortgage Bankers Association and their crystal ball.  With the Federal Reserve getting out of the Mortgage Backed Securities business, interest rates are going to begin their upward climb.  With interest rates on the rise, any advantage to lower prices may be neutralized.  Now is a good time to be making an offer if purchasing real estate is something you intend to do in the near future.

We've seen an increase in activity, the number of sales, all along the west coast of Hawaii Island.  While that is encouraging news for many it's not so for me.  There are small pockets of wise people out there.  People who know that it's best to live within a budget.  That living below your means can cushion your "golden years" and that a home is not an ATM machine but instead, an investment in your future.

Those people have recently popped out of the wood work and begun buying homes for their retirement which is coming in a year or two for most.  Just as quickly as they appeared, they may well disappear leaving untouched inventory again searching for a right price and a buyer at that price.

We still haven't seen a significant change in the unemployment figures and until we do there can be no sustained recovery.  Our current administration is hell bent on passing a health care program that is favored by few.  If it weren't for a huge ego being involved the idea would have been dropped many month ago.  Instead of someone's legacy legislation they should be working on an economic recovery program that will get our great country off the ropes.  All that wasted time and energy and now vast amounts of dollars on a program the majority of Americans have said they don't want.

When we see unemployment turn around we'll see the entire economy turn around.  It won't be overnight but it will be steady.  Instead of driving business out of America, the administration will encourage business to come to America.  When that happens, when our "leaders" do what's best for us instead of what's best for them we will see our economy revitalized but not until then.  And, not until then will we see a recovery in housing or any other market in the country except the service industry as foreigners come here to sign see on their holidays thanks to their vibrant economies that even their socialist governments can't tank once America becomes a third world country.

For first time home buyers and for those looking for a retirement home that's not going to take up their time, condos may be the answer.  The bulk of our condos for sale in North Kona and South Kohala are under $300,000 with many under $200,000.  The limiting factor for those interested in these less expensive properties is often the monthly maintenance fees.  These fees are quite high compared to most mainland complexes.  The main reason for this is the insurance costs.  Hawaii is in the same risk category as Florida; this is hardly fair since the number of hurricanes to hit Hawaii is minuscule compared to Florida but still a concern to large insurance companies.

The bulk of the monthly maintenance fees in Hawaii is the cost of replacement insurance on the condo complex which is covered by the associations master policy.  The good news for owners is that they are only have to carry insurance on their furnishings and other contents and liability if the condo is being used as a rental property.  For most of those who own a condo as an investment and a rental, both the contents insurance and the liability insurance can be added to their primary home policy for the cost of a rider.

Maintenance fees are known as the second mortgage that never goes away and is of concern especially for those wishing condo life in retirement with a fixed income.  Since lenders count the maintenance fee as a debit on a loan application, a large fee can reduce the amount of money that can be borrowed for the purchase of the condo.  As an example, there are some condos in North Kona, especially in the Kailua Kona area that have fee close to $1,000/month.  When you add that to the monthly payment on a mortgage you can see that it can get very expensive very fast.

So when looking for a more reasonable condo for retirement keeping that maintenance fee down becomes more important since it's a part of your overall monthly bills.  Fortunately there are also excellent condos with maintenance fees in the low to mid $300's per month making them much more affordable.

If you're considering a condo as an investment property, check with your financial advisor or tax consultant to find out what expenses can be tax deductions.  We're seeing so many people planning two to three years ahead right now for their retirement.  Some are buying rental properties that can generate income between now and the time they actually retire.  There are some good tax benefits in doing so.

Others are buying condos now but planning on selling them when they retire.  One of my clients called it his "hedge against inflation"; he is buying at what he considers to be near or at the bottom of the market and will use his appreciation when he sells to buy the home he'll live in when he retires.

If you'd like to see how this can work for you, contact me at 808-896-0661 or email Robert@FerrariPacificRealty.com.  I'll prepare an Investor Worksheet for you that you can take to your financial advisor.  He or she can use this worksheet's numbers and apply them to your particular situation and decide whether or not it's a good idea for you.

It may be no surprise that the number of short sales and foreclosures continues to rise but where it's rising in the marketplace may be a surprise.  Historically we've been watching lower end homes being recalled by the banks as foreclosure properties if they didn't make it in a short sale.  Well, that lower end has slowed down, quite a bit.

What's changing today is that the middle class and the upper class or high end homes are now making their move towards foreclosure and short sale.  One of the reasons is that those with deeper pockets could hold out longer, which they have but this economy is hitting everyone.  Those pockets while deep do still have bottoms and after a year or two without a job or at a much lower paying job, the assets are running low.  Even the wealthiest are starting to feel the pain as their home values drop below what is owed.  Entire neighborhoods that were home to the "well to do" are experiencing this economy and it's not treating any one group any nicer than another.

In West Hawaii, we're starting to see short sales in homes over $1,000,000.  This means they've given up making payments or are about to and just want to get out with some of their credit rating left.  For those who have been sitting on the side lines waiting to buy some of these nicer properties, now is the time.  In looking through listings in Kohala Ranch today I came across a foreclosure, the first one in a while up there.

If you're one of those people who have been waiting patiently for this moment you are about to reap the rewards of that patience.  In a short sale, the price paid for the property is of no concern to anyone including the banks.  What is important is today's market value.  The banks are typically taking approximately 85% to 88% of market value on short sale properties but you do have to be patient a little longer.

Short sales are notorious for taking a long time.  That is getting better as banks are learning to use modern methods of dealing with short sales, something they haven't had to deal in over a decade.  More agents are becoming familiar with the process which is also helping to speed things up.  I've applied for my Short Sale and Foreclosure Designation after having taken all the required course work.  At first I was hesitant to be involved with short sales due to the bad publicity.  Now I realize they are the thing of the future and that future is now, this is our "normal" and what we're going to be faced with in the foreseeable future.

Check out our page on Short Sales.  They're not for everyone but they can be a great deal if you're one of the people who qualify.

Today was a monumental day in that a short sale closed after just 6 months in escrow.  I was talking to the Loss Mitigation rep at Bank of America about what a nightmare it had been and how just being able to communicate with him made such a difference.  For the first five months, I was unable to make contact with any of the reps but once I had one to talk to it went quickly.

Now I'm told that the whole process is being made more efficient.  The federal government working together with some of the larger lenders have come up with some standardized practices.  They've even come up with standardized forms we can use.  One potential problem is that while this headway has been made, the program is voluntary.  Not only is it voluntary but a bank may agree to the terms in one transaction but not in the next one.  Does this sound like something the government would be involved in?

Bank of America has the lion's share of short sale and foreclosure properties.  They've begun working with a company now called Equator nee, REOtrans.  This is allowing all documents to be posted on line accessible by all those involved in the process.  Hopefully this will make things happen faster, we'll see.

There are lots of reasons short sales have bad reputations but most importantly is getting the process fixed.  Equator has been working well with foreclosure properties.  If it works as well with short sales we may have a great alternative to other liquidation methods up and running in no time.

This would mean that people who qualify for a short sale could actually get on with their lives sooner than has been possible.  It will mean we can reduce the back log of "under water" properties by getting them sold and the owners out of a financial death grip.  This will be a good first step towards stabilizing our market place.  I'm opening escrow on another short sale on Monday so we'll see if it's real or just more smoke and mirrors.  Let's hope it's real.

If you think you may be qualified for a short sale, contact me by email at Robert@FerrariPacificRealty.com or call 808-896-0661.  If you're thinking of buying a short sale, contact me so I can prepare you for the process.  There's a lot both buyer and seller can do to prepare for the sale and being prepared is part of the trick of getting the job done.

Can we please forget about the health care bill for a while, at least until we solve the economy problem?  If the congress and the president and all his men would put as much energy into the jobless problem as they're putting into this health care bill that almost no one cares about, we might make head way towards getting people back to work.

This country is falling apart and no one is doing anything about it.  What a waste.  The average person on unemployment has been there for 8 months and the number of new people joining them continues to climb.  This increase seems to always be a surprise to those in the know; have we hired too many idiots to manage our country, it seems so.

We're all concerned about the housing industry, the consumer confidence, the Gross Domestic Product and on and on but who's worried about health care?  I know lots of people are but not to the degree they're worried about jobs.  Reducing our unemployment from near 10% to 6% or so would put a lot of people back on company health insurance plans.  Encouraging new business would do the same.

The problem was never a lack of health insurance, it was a problem of affordable health insurance.  If the government would tackle the cost of health insurance and work on tort reform so the health providers could afford their insurance we might see some positive change.  It's all about putting people back to work and not at some government agency.

I'm watching our housing market turn around here in Hawaii, especially in North Kona and South Kohala.  I know it's a limited turn around.  It's being fueled by those wise individuals who have always saved a part of their income.  Those who have lived below their means.  Those who have strived to live without debt.  These are the people buying homes now.  They're the ones who saved for their retirement and didn't rely on the government.

They now see great deals on homes in paradise and they're going for them.  Unfortunately, we only have a small number of such people.  We live in a society that relies on someone else to take care of them.  If things don't go right, they blame someone else.  These people are like our politicians who are so quick to claim credit buy reluctant to claim responsibility.

Forget the health care people in Washington and work on some effective taxation that will put this country back to work.