Kona Kohala Blog

When people aren't freaking out about obamacare or worried about having a job they sometimes follow the real estate market.  When following that market recently, there has been much talk about having hit the proverbial bottom.

I think we're in for a number of bottoms, one of which we may be at right now.  I think there will be more than one just because you can't have a true economic recovery without people going back to work and despite the administrations raving about the millions of jobs they've saved and/or created, the last two weeks have seen more loses than the "experts" have anticipated.  You can not have a sustained jobless recovery, period.

Today's bottom is supported by the decreasing inventory of both Single Family Residences (SFR's) and condos in North Kona.  Combined with the increase in sales of both categories and a leveling off of the decline in median price may indicate a bottom.

This bottom will not last.  Once there is any indication of a recovery the banks will begining to release more of their "shadow inventory".  These are the thousands of homes waiting to be foreclosed upon.  The banks are holding off so they don't flood the market driving prices even further south.  We will see them come trickling on to the market as current inventory is being gobbled up by prudent investors and those looking for a home to live in.

I have been searching the Waikoloa Village area for clients and almost half of the homes we're looking at under $400K are foreclosures.  There are also many others that are short sales, homes on the market attempting to not go into foreclosure even though the owners owe more than their homes are worth.  We're also seeing banks becoming more willing to negotiate prices on these properties.

I was surprised this morning when a very nice home in Keauhou Estates, listed at $899K, showed up with a price increase to $999K.  Bank of America evidently believes the crisis is over and prices should go up.  I think this false belief is based on the bonuses they received this year and not on the actual real estate market lurking far below their ivory tower.

It's Aloha Friday here in North Kona where we're still seeing an upward trend in real estate sales.  Year to date we've seen a 93.22% increase in the number of Single Family Residences (SFR's) sold and a 98% increase in the number of condos sold.  In South Kohala the number of SFR's is down just <2.17%>, a big improvement over last year at this time and condos are up 113.64% in the village and the resorts.

Prices continue to decline luring in more buyers.  In North Kona the median price for a SFR is down <15.27%> to $394,000.  Condos are down <20.57%> to $250,000.  In South Kohala the median price of a SFR is down <8.75%> to $360,000 and condos are down <20.3%> to $430,000.  As prices come down more buyers are entering the market and today's buyers are generally qualified and motivated to buy.  Whereas last year we were looking at "tire kickers" this year we're seeing buyers as reflected in the increasing number of pending sales as compared to the active listings.

It's a great time to buy real estate if you can afford it.  Having a second home or an investment property in Hawaii is more affordable than it has been in a long, long time.  If you're interested in property here, contact me by email or call me at 808-896-0661 to discuss how owning property here could fit into your life.

For a long time, Waikoloa Village has been a popular home for retirees to the Big Island.  Not only is it a self contained community but it has the Robert Trent Jones designed Waikoloa Village Association golf course, a very challenging 18 hole course.  There is also the requisite community swimming pool and tennis courts to keep people busy and active.

Now as we approach the bottom of the real estate market there are some tremendous buys in the village for both condos and Single Family Residences (SFR's).  The hottest condo market is currently in the $100,000 to $149,000 price range.  Anything below that price is sold almost as quickly as it comes on the market and demand drops off sharply above that point.

There is still a good selection of properties available so if you're interested in relaxing in the sunshine and fresh air in Waikoloa village, give me a call, 808-896-0661 or email, Robert@FerrariPacificRealty.com.

Looking ahead, we will probably see the inventory hold it's own even thought they are selling quickly.  The "shadow inventory", the millions of homes and condos held in abeyance by the various lenders afraid to dump them all on the market at once, is daily adding to the properties for sale and should continue for the next couple of years, at least.

The next big wave of properties coming in on the shadow inventory express will be the Option-ARMs, those nasty little loans where you don't even have to pay the interest.  While the owners of these loans felt good about having payments they could make, their balance continued to climb and climb.  Now that they are resetting, their monthly payments are tripling and these people are in trouble.  Because of restrictive fees placed on them by the lenders, these poor people can't even refinance or modify their loan without huge penalties.  We don't need more rules in the finance community we need rules that are enforced.  Let's hope for less government control and more government oversight, work with what you have Mr. O, it can be done.

April 22nd is the day the new EPA lead laws go into effect.  Why is his important?  Probably the most compelling reason is that if you are found to be in violation of this new law, you are liable for fines of up to $37,500 per day.

The law states that any renovation, repair or paint in a home or building built in 1978 or before requires that the contractor be certified "Lead Safe" by the Environmental Protection Agency.  You can go to the EPA web site for a list of contractors in your area who have gotten the Lead Safe certification.  Please note that even painting an older home requires this if there's a chance old paint would be disturbed.  I haven't read the entire article so I don't know how they address owner builders or owner painters.

Prices continue to level off in North Kona and South Kohala while activity levels are still robust.  I believe this is one of the many bump ups we will see as prices continue to decline, albeit at a slower pace, drawing more people into the marketplace.  We're seeing more condos in both North Kona and South Kohala, especially in the Waikoloa Village area, priced under the one hundred thousand dollar mark.  This is a great opportunity to get into a rental property to start balancing your investment portfolio.

I can provide you with an Investment Spread Sheet that will give you some valuable data to take to your financial planner or tax consultant to see if this is right for you.  Contact at Robert@FerrariPacificRealty.com or call my cell at 808-896-0661.  I'll prepare one for you on each property you're interested in.

Most of our activity growth for Single Family Residences (SFR's) in North Kona are in the $401K to $500K price range.  The next hottest range is $900K to $1.5M.  The area between $501K and $899K is the slowest area in terms of sales activity.

Interest rates are staying low since there's still no sign of inflation in the Consumer Price Index released today nor in the Core CPI which came in a 0.1% as predicted.  Keeping the listing side full is the slow release of "shadow inventory" the banks are releasing as properties sell.  Since these timed releases will continue for the foreseeable future, only an interest rate increase or a price increase will interrupt this bumpy recovery and I use the term recovery lightly.  There will be no sustained recovery until we see jobless claims make a serious move towards growth.  With all the new taxes being placed on small business from obamacare, don't expect that soon.

More independent analysts are now saying that obamacare is going to actually cost the taxpayers money rather than saving money as the administration would like us to believe.  An example is a client with a small company, about 130 employees, who announced no pay raises this year due to the increased cost of health care with obamacare.  His employees aren't too happy about it but he showed them the numbers from accounting and there just isn't enough to go around even though his company continues to expand even in this economy.

Watch for a government take over of the banking industry just like we saw in the auto industry and the insurance industry.  This demonizing of Wall Street has a reason, pass the new regulations allowing government into the financial sector; strange when you consider that Wall Street donated huge amounts of money to the obama campaign.  Goldman Sachs gave $994,975, Citigroup gave $701,290 and J.P. Morgan Chase donated another $695,132, wow.  All this legislation is about controlling the lives of the American people and has nothing to do with what's best for the American people.  There's no way the obama regime can get us anywhere near out of debt by taxing the wealthy.  Some say they don't want us out of debt but that's for another day.

Bottom line is if you taxed those making over $250,000/year at 100% you couldn't raise the money to pay off the trillions we're now in debt for.  Somebody's gotta' pay and if it's not the rich who do you think it's going to fall upon to cover the tab.

Keep in mind that the obama's reported over $5,000,000 in income in 2009 and paid just over $1M in federal taxes, about 20%.  How many middle income earners pay only 20%?  Your time is coming unless we make some changes, changes that will guarantee a little more balance in the executive and legislative branches of our government.  November will be that opportunity, vote, let your voice be heard.  Change is imperative in order to slow the gutting of America.

One day you hear about a recovery then unemployment unexpectedly spikes or the bond market reacts negatively or the GDP isn't what it was supposed to be and we're back in the toilet.  So goes the economy, so goes West Hawaii real estate . . . totally unpredictable.

Sales activity was picking up but now are dropping off with the exception of condo sales in North Kona which are up this month by 27.27% over last April.  Median price, however, is still in a downward spiral as sellers look for the number pleasing to buyers who walk around kicking tires on the multitude of properties just sitting there waiting.

The median price for Single Family Residences in North Kona has dropped <25.39%>, condos down <7.99%> as we see the activity pick up in this one category.  In South Kohala both SFR's and condos are down <16.56%> and <29.02%> respectively.

All we're seeing are the buyers with money picking over the carcases of the foreclosure and short sale market.  As prices settle lower and lower on continued bad news more and more people step up and take the best of breed for a fraction of what they would have paid last year.  It's a great time to have some money put away and a secure job.

Speaking of jobs, why hasn't our administration begun looking into creating some through small business?  I know the government has expanded dramatically.  Just the number of people keeping obama in the air should have boosted the employment numbers but so far, not.  Do you realize how much money he's spending flying all over the world?  He just got back from his gazillionth trip to Europe, doesn't even stop at the White House for a change of clothes and he's off cross country to pitch his new jobs program . . . no wait, that's wrong.  He's off to pitch more control, this time of the financial sector.

You'd think the SEC with nearly a trillion dollar budget could take care of that without the president having to step in and offer more hands on control.  Has this guy ever been to the White House?  How about the capital?  Word has it he's got a really nice office without any corners where people could come to him.  People we tax payers are giving lots of money to, to be advisors. 

There is no recovery coming, at least not in the next 3 years.  We're going to see some change come November but until obama's back in Chicago with the rest of the thugs he's brought to Washington we won't be on any kind of path towards economic health.  Anyone have any idea how far in debt we've gone in the last year all because he feels the government should fix everything rather than letting entrepreneurs do it?  Reagan had it all worked out, a perfect blue print after the mess carter left us in.  It worked beautifully but instead of adopting that plan, obama has turned it 180 degrees and done just the opposite and look at the results, just the opposite of what we saw under Reagan.  Nope, no recovery during this reign folks, just more debt for future generations to work through.  I wish he'd read and understood the basis of Ayn Rand's book "Atlas Shrugged", maybe that would have made a difference.  Oh well, nothing wrong with starting over.

I've been spending quite a bit of time in the Waikoloa area the last few weeks.  In the village I've been working with clients looking for a home in the $300,000 range and we've found 6 nice possibilities ranging from the mid $200's to $319K.  If you're in the market for this type of home, now is a good time to check it out.  Only 2 in this category have been sold this year but 4 more are in escrow.

Waikoloa Village is a great family place and great for retirees.  Not only does it have a large pool for residents to use but there are two tennis courts also available.  In addition, as a resident, part of the annual association dues make you eligible for discount golf and the beautiful Robert Trent Jones golf course there.  The village also has a gas station and a well stocked grocery store located in the professional plaza at the entrance to the village.

Six miles down Waikoloa Road is the Waikoloa Beach Resort.  When I moved here 24 years ago there was only a Sheraton run hotel there, nothing more.  Since that time, the Sheraton has become a completely remodeled and updated Mariott Hotel.  Less than a mile away along the pristine shoreline is the Waikoloa Hilton Hotel.  In addition to the hotels there are almost a dozen condo complexes that house the thousands of visitors that come to play on the Big Island's Gold Coast.  First of the shopping centers to be built was the King's Shops sporting names like Coach, Louis Vuitton, and Tommy Bahama.  There's also art and jewelry shops galore and great eateries like Roy's, Merriman's and Blazing Steaks.

Across the street, the Queen's Marketplace was recently opened with even more art and jewelry, Tony Romano's Macaroni Grill, Starbuck's, Hawaiian Quilts, Perfumania and Reyn Spooner's.  Located on the grounds of the Queen's Marketplace is the Waikoloa Bowl, an incredible outdoor entertainment venue where Earth, Wind & Fire were the opening act and what an act it was, fantastic!

Just up the coast and abutting the resort is the Mauna Lani, one of Hawaii's grandest of the grand properties.  Here you'll find the Villages at Mauna Lani, a spectacular condo development built by Maryl Builders in 2004 and 2005.  They're the pearls in the necklace of Mauna Lani, a refulgent development with the finest finishes one can imagine.  No touch of elegance was over looked when these luxury homes were designed and built; you have to see them to truly appreciate the care and craftsmanship that went into their construction.

These beautiful condos range in price from the high $800's to about $1.5M and they are worth every penny.  My clients for this property have narrowed their search to two units, one of which was rented (they make excellent vacation rentals if you're not living in them full time) but is now vacant so I can get in and take some supplemental photos for them.

Regardless of the price range you're looking in there is something for you in the Waikoloa are.  On top of the wonderful homes and equally wonderful pricing right now is the weather.  It's called the Gold Coast and for good reason.  The Trade Winds blow through this area keeping the air crystal clear most of the time.  This fresh air has crossed 2,500 miles of open ocean before getting to Hawaii Island so you know it's clean as are the skies most days and nights.  If you're interested in resort living contact me for more information.  Both Waikoloa Village and the Waikoloa Beach Resort along with the Mauna Lani Resort offer unparalleled beauty and comfort.  Call me at 808-896-0661 for more information.

In both North Kona and South Kohala, the median price of Single Family Residences (SFR's) and condos continues it's slide south.  SFR's in North Kona are at $385,000, down <14.25%> compared to the same time last year while condos are at $251,750, a <13.19%> drop from '09.

In South Kohala the SFR's median price is $360,000 which is a small <7.69%> drop compared to the <20%> drops we've been seeing over the last few years.  Condos are down <20.08%> to $479,500.

As of today there are 365 SFR's and 287 condos for sale in North Kona and 195 SFR's and 255 condos for sale in South Kohala.  The number of sales are on the rise as people have begun taking advantage of the lower prices.  North Kona SFR's are up 52.31% and condos there are up a whopping 90.91% compared to 2009.  South Kohala condo sales are up 100%, however, SFR sales there are down <12.77%>.

All in all we're seeing a lot more people coming to buy rather than just to look which is what we saw last year.  Since the much touted jobless recovery is impossible to sustain, prices should remain low for quite a while longer.  The one big fear is that with the government printing money faster than the makers of Monopoly then pumping it back into the hands of those who have never learned to save, we will see inflation rear it's ugly head maybe as soon as Q4 2010.  When that happens we may see the buying activity slow as higher inflation translates to less buying power or, we may see prices take another turn down.

Without jobs people can't buy the everyday gadgets and trinkets they're used to having which will impact small businesses.  Small businesses make up almost 50% of the GDP so watch that tumble.  Jobless people may lose their homes but they still have to live somewhere.  Does that mean more rental properties, investment opportunities or are we going to get slapped around by liberal law makers like those in Los Angeles?  There, they are talking about passing rent control laws that will freeze rents.  That could end up backfiring as land lords get out of the business and the same people that can't make mortgage payments now can't make rent payments; there goes the property tax income, a major source of income for the local governments.  This administration really needs to focus on jobs and small business not health care, financial reform and having astronauts landing on Mars.  Mars is like a common person's luxury vacation, you do that when you're flush, not when you're a many trillion in debt and it's rising.

Hopefully such folly won't be permitted to be enacted even in LaLa-land.  One very good thing about this current administration is that it has gotten people off their bottoms.  The silent majority has been awakened and things are about to change.  As people begin to appreciate the rewards of conservative government, how jobs are created and taxes come down, they may vote in some of those who will correct this death spiral we're in.  Let's hope our government comes to it's senses before it's too late.

In the mean time, it's a great opportunity for those who were wise enough to save their money and not get greedy using their homes as ATM machines.  It's a great time to buy that dream home in Hawaii.

Call me at 808-896-0661 or email me and let's get started winnowing through the multitude of active listings and find just the right home for you.  aloha

Only two more weeks to make use of the tax credits being offered by the feds.  For first time home buyers that's $8,000 of refundable money and for those who have owned a home for five years of more and are buying a new home, it's $6,500 when you file your taxes.

This credit goes away at the end of April but as long as you're in escrow by then you have until June 30th to close.  If you're in the market consider getting that property you've been eyeing and get it under contract.

I don't expect a straight shot to recovery but it does appear that we are starting up in sales activity across the price spectrum.  The watch dog areas, Waikoloa Beach Resort and Mauna Lani Resort, are seeing large increases in condo sales.  This is what we've been waiting for as an indication that the market is gaining strength.

In North Kona which has a more full time population than South Kohala, land of the resorts, we expected to see a continuing if not hardy level of sales activity.  In South Kohala, we've seen a large inventory for sale but who could afford to buy a second home let alone and investment property and that's pretty much what we have in the Waikoloa Beach Resort and Mauna Lani Resort.  Now, they are beginning to sell.

For one thing it means prices have come down far enough that investors and second home buyers are seeing value.  It means there is a return of the tourists who make up the population of South Kohala, especially the resort properties.  It means there is a little more confidence in a partial if not full recovery.  It also means there are those out there smart enough to anticipate the interest increases even before they become empirical data.  These are the smart ones, the ones who didn't refinance each time their home went up in value, who didn't use their homes as ATM machines, who continued to save money during the "good times", and those who are wise enough to stay within their budget regardless of how well they're doing.  Now, they're reaping the rewards of their frugality.

Yesterday we were looking at condos in the Vista Waikoloa project in the Waikoloa Beach Resort just south of the Hilton Hotel.  This complex was built in 1990 when there was still plenty of room to built resulting in a spacious complex like the nearby Shores at Waikoloa.  The units are not only spacious but the lanai's are big enough to live on and there's plenty of room between the buildings so you don't feel at all cramped walking around the manicured grounds.  There are only a few units for sale and some are right at $300,000, a great buy with a very good chance of above average appreciation in the future.

After having shown condos in the Villages at Mauna Lani, an absolutely beautiful complex with high end everything but still good prices, I walked into a Vista unit.  I swear I thought I'd just walked back into a Village unit.  The owners had redecorated and remodeled the kitchen especially.  It was magnificent with black granite, new appliances, travertine floor tiles and new cabinets.  It looked very close to a unit that would cost at least two times what this one is worth and has much lower maintenance fees.

If you're interested in luxurious condo living in a luxurious resort setting call me, 808-896-0661 or email Robert@FerrariPacificRealty.com.  We'll go look at the Vista at Waikoloa and the Villages at Mauna Lani.  This is paradise.