Archive for April, 2008

Honolulu had one of the lowest foreclosure rates among the top 100 metropolitan areas in the United States during the first quarter of 2008. RealtyTrac said metro areas in California and Florida accounted for 13 of the top 20 foreclosure rates. Ninety of 100 metro markets saw foreclosure activity increase in the quarter.

Honolulu ranked 99th for foreclosure filings of the top 100 metropolitan areas, according to RealtyTrac’s Q1 2008 U.S. Foreclosure Market Report. Honolulu had a total of 155 foreclosures, or one filing for every 2,147, up 1.3 percent from fourth quarter 2007 and up 51.9 percent from first quarter 2007.

There were 371 foreclosure filings in Hawaii during the first quarter of 2008, according to the report from California-based RealtyTrac. RealtyTrac’s count provides more geographic detail of the local foreclosure picture compared with a monthly RealtyTrac count by state, but is still a somewhat imprecise measure of homes threatened by foreclosure. Data collected by the firm includes a range of document filings in the foreclosure process, from default notices to auction notices, so the data may include more than one filing on the same property. But Hawai’i foreclosure actions may be underrepresented because default notices typically aren’t filed publicly in nonjudicial foreclosures, which are more prevalent in Hawai’i compared with many other states. Still, RealtyTrac does count nonjudicial foreclosure sale notices.

Though O’ahu’s housing market is cooling, there are relatively few foreclosures thanks to a relatively stable job market and median home prices. Also, new home construction didn’t flood the market with inventory, and local lenders say local borrowers didn’t take out as many of the riskier loans as their counterparts in some Mainland markets.

Hawaii ranked 44th in the country for its rate of one foreclosure filing for every 1,348 households. Foreclosures were up 18 percent from the fourth quarter of 2007, and up 109 percent from first quarter 2007, the report said.

Market Indicators Tell You When To Invest In Oahu Real Estate

Real estate prices cycle through highs and lows. Tracking the following market indicators (among a few others) will help you decide if it’s a good time to invest in real estate in your neighborhood.

Job Growth
People go where the jobs are, and home prices follow jobs. A strong local job market is a sure sign of a healthy real estate market. While the Wall Street Journal gives you insight into the nation’s overall economy, check your local newspapers for statistics in your area.

Housing Inventory
The housing inventory is the number of houses for sale at one time in the area. If there are more houses than buyers, prices tend to fall and if there are more buyers than houses, the opposite happens. Also look at the number of months or days it is taking to sell a home. Contact me if you would like information on your neighborhood.

Number of Repos on the Market
A repo is a house that has been taken over by the bank because the owner failed to meet the loan payment—in other words, it’s a foreclosure. The more foreclosures in your area, the weaker the real estate market. Contact me if you would like information on your neighborhood.

Number of Multiple Offers on Homes
Multiple offers are when two or more buyers “bid” at the same time for the same house. It’s a sure sign of a hot market, usually resulting from a limited inventory creating the need for buyers to compete on price for the same property. Again, call me and I can give you some insight on your neighborhood status.

Remember……The Key To Real Estate Investing IS LOCATION, LOCATION, LOCATION……AND ALL REAL ESTATE IS LOCAL. So to learn about the local conditions in your neighborhood market, please don’t hesitate to call or send an email. I will be happy to get you the information you need.

5 Income Related Reasons To Buy An Oahu Investment Home Now

According to the National Association of Realtors (NAR) second-home sales (for vacation homes and investment homes) accounted for four out of 10 homes sold as recently as 2005. While vacation-home buyers purchase primarily for enjoyment, investment-home buyers are looking to generate income in the following five ways:

#1: Appreciation
High returns are not uncommon if you select good real estate properties. It’s a return rate you likely won’t find on bank products or with most stocks.

#2: Cash Flow
More than half of all investment-home buyers rent out their properties. Month in and month out these properties create income from renters AND gain long-term appreciation.

#3: Less Volatility
While real estate cycles through periods of highs and lows, it doesn’t change dramatically day-to-day like stocks. Investing in real estate is viewed as being less speculative than stocks.

#4 Tax Advantages
Your real estate investments offer you two tax advantages: you can deduct property expenses and depreciation. Plus doing a 1031 exchange lets you avoid paying tax on profits from the sale of rental property if you roll it into another real estate investment property (talk to your tax advisor).

#5 Value-Added Improvements
The saying “buy it low and sell it high” applies to stocks and real estate. The advantage with real estate is you can buy inexpensive property, fix it up, then raise the rent or sell it for more money.

If real estate investing is a path you are interested in pursuing, please feel free to call or email with any questions you have….Aloha, Jon.

Gov. Linda Lingle spoke to the Hawai’i Economic Association’s annual conference this week, stating that Hawai’i's economy hasn’t ground to a halt or slipped into recession. In a speech designed to point out positive aspects of Hawai’i's economy, Gov. Linda Lingle said she remains optimistic about the state’s economy and that people shouldn’t be discouraged by negative headlines about the national and world economies.

“Our state’s economic growth has slowed, but it has not stopped,” Lingle said. “Most important indicators show moderate growth, that when contrasted with the rest of the nation is a fortunate position for Hawai’i.”

Her remarks also came after a run of economic setbacks for the state: the pullout of two cruise ships, the shutdown of Aloha and ATA airlines and the closure of Molokai Ranch. Hawaii residents are also facing rising gasoline and grocery prices.

“The abundance of negative stories about the Mainland and world economies is precisely why I believe an objective perspective on our specific situation is so important,” said Lingle, who noted she needed to paint an accurate picture of Hawai’i's economy and why she remains optimistic. She said the local problems were caused by business-specific factors and not related to the overall soundness of the state’s economy. Molokai Ranch’s closure was in large part over longstanding development opposition, she said, while Aloha succumbed to competition and the high cost of fuel. ATA faltered when it lost a big military contract. “It was unfortunate that these events happened within a 10-day time period, but they were not connected to the status of Hawai’i's overall economy or based on weak fundamentals,” Lingle said.

She went on to list a number of positives for the state, including its minimal exposure to subprime mortgage problems and unemployment that is among the lowest in the country. Lingle said the current slowdown is not like the 1990s when speculative foreign investment created a real estate bubble that quickly deflated when the money left as quickly as it had arrived.

Lingle also noted state government remains in sound financial shape, with bond ratings being maintained because of positive tax revenue and employment growth. Some other states, including California and Arizona, are facing multibillion-dollar budget deficits, she said.

Among other positives, she noted the Walt Disney Co. has plans to invest in a Ko Olina resort and that the military’s stationing of a Stryker brigade here will mean $250 million in new construction and spending.

Bank of Hawaii chief economist Paul Brewbaker said his current forecast is for a 5 percent decline in visitor arrivals this year, though this could change by the time he issues an economic forecast next week. He said almost daily changes in news about possible airline mergers and the number of airline seats between the Mainland and Hawai’i make it difficult to predict.

Brewbaker said economic growth is nil but that he did not think the state would slip into a recession, though there is a higher risk of that occurring than there was a few months ago. He also is forecasting the median price of an O’ahu single-family home will decline to $600,000 in 2010.

Content for this blog entry were excerpted from an article written by Honolulu Advertiser Staff Writer Greg Wiles. The full stiory can be found at the following address:

http://www.honoluluadvertiser.com/apps/pbcs.dll/article?AID=/20080426/NEWS01/804260322/1001/&source=nletter-news

Condo, Townhome, Or Single Family Home – Which Is Best For You?

Oahu Single Family Homes
As of today, there are currently approximately 2000 single family homes available on Oahu for sale that are not already under contract or pending sale. The average list price is $1,225,396. The most important distinguishing factors that determine a single family dwelling are that it sits on its own piece of land (which is sold part and parcel with the home) and it is not attached to anyone else’s residence (usually). With single family homes, your home pretty much is your castle. Subject to neighborhood and subdivision regulations and ordinances, you can do with it as you wish. Want a different exterior color? Usually you can accomplish that (taking into account the fact that the neighbors may not be receptive to a purple house with ecru trim). Need more room and want to add on? Subject to the codes of your jurisdiction, you may be able to expand your living space.

You will probably have a yard of some sort–from “postage stamp” size up through much larger lots, and your ownership will include all of it. In effect, when you buy a single family home your purchase will be of a parcel of land (your lot) on which sits a structure (your house).

Single Family Homes

Advantages:
• You can modify or improve the property as you wish, for the most part.
• Resale value is generally the highest on single family detached homes.
• You can add to the house if you need more room (generally).
• Generally, no condo or maintenance fees.

Disadvantages:
• All maintenance and repair costs–interior, exterior and everything in between–are yours.
• Lack of amenities (for example, pools, playgrounds, etc.) that you may find in other types of housing.
• You are responsible for landscaping and lawn upkeep costs.
• In most areas, single family homes are more expensive than townhouses or condominiums.

Is a Single Family Home for You? • You like your “space.” The idea of apartment living gives you the willies.
• The prospect of cutting the lawn, trimming the bushes excite you (or at least don’t send you headed for the nearest bridge.)
• You like the idea of modifying your home–changing the color, the appearance, the size. Having someone tell you that you couldn’t do that would bother you.
• You can afford it.

Oahu Town Homes
As of today, there are currently approximately 600 Townhomes available on Oahu for sale that are not already under contract or pending sale. The average interior living space is about 1200sf and the average list price is $419,432. Townhouses often can make an excellent “middle ground” between a detached single family home and a full fledged condominium because, to some degree, they offer attributes of both.

For purposes of definition, we will describe a townhouse as a home that is attached to one or more other houses. For this discussion, townhouses can ranges from duplexes and triplexes all the way through huge townhouse communities consisting of dozens of similar homes.

There is a good degree of variance in the way townhouse communities are structured. It may be a simple agreement (as is often the case of duplexes and triplexes) that each parcel of land and the home that sits on it is separately owned. In the case of larger townhouse communities, you will generally have an additional shared ownership in the common areas of the complex as well as any amenities such as swimming pools, park areas, etc. This ownership you will share jointly with all other townhouse owners in the complex.

In any townhouse purchase that involves a Homeowners Association, it is vitally important to get as much information as you can, since the association can have a considerable impact on your ownership experience!

Town Homes

Advantages:
• May have less exterior maintenance and repairs to be responsible for.
• Having a neighbor’s home attached to yours may bring a higher level of security.
• There may be amenities in the community (for example, pools, tennis courts, playgrounds and the like).

Disadvantages:
• You will be responsible for payment of Home Owner’s Association fees.
• You give up privacy when compared to single family homes.
• Your options for changing the exterior look of your house will be limited.

Is a Townhouse for You?
• You like the idea of your “space” but not having to deal with most exterior maintenance has even more appeal.
• A small backyard “retreat” or deck is just about all the yard you need.
• The idea of having neighbors close doesn’t really bother you–you just don’t want them above and below as well as next to you!

Oahu Condominiums
As of today, there are currently approximately 2100 Condominiums available on Oahu for sale that are not already under contract or pending sale. The average interior living space is about 863sf and the average list price is $493,490. The easiest way to understand the concept of condominium ownership is to see at as an apartment you own (in fact, many condominiums are apartments that have been converted over the years). Your ownership extends inward from your interior walls, floors and ceilings. In addition, you are a partner, with all of the other owners in the complex, of the exterior structure (the foundation, exterior walls and roof) as well as any common areas and amenities (for example, swimming pools, clubhouses, tennis courts, play areas, etc.)

One of the requirements of condominium ownership is the payment of a monthly condo fee, which covers general repairs and maintenance to the common areas of the complex as well as (hopefully) build up a cash reserve for future needs. In general, all exterior maintenance and repairs are the responsibility of the condominium association, although you will be charged for them, either through your association dues or a special assessment (a one time charge assessed to all owners for, as an example, a new roof). The normal day-to-day maintenance of the grounds (some examples are cutting the grass and maintaining the pool) are also the responsibility of the association. Interior maintenance and repairs (for example, replacing a dishwasher) are the responsibility of the individual owner.

In some areas, a condominium may be the only consideration that fits within your budget. The reason for this is simple. In general, the same square footage will cost less in a condo setting than it will in a single family home or townhouse, due mainly to land cost–you can build many more condos than you can single family homes on the same amount of land.

Condominiums

Advantages:
• You will be responsible for little or no exterior maintenance or repairs.
• Many condominium communities offer amenities (pools, play areas, tennis courts, etc.) you may otherwise not be able to afford.
• Condominiums are often located in locations convenient to centers of employment and shopping.
• Condominiums are often more reasonably priced than other forms of housing.

Disadvantages:
• You will be responsible for payment of Condominium Association fees.
• You give up more privacy when compared to single family homes as well as townhouses.
• You only own from your interior walls inward. The rest of the structure and all of the land is owned in common with the other condominium owners.

Is a Condominium for You? • You want absolutely nothing to do with exterior maintenance and repairs.
• You like the idea of amenities (swimming pools, tennis courts and the like) but you don’t like the idea of having to pay for them on your own.
• You like the safety of numerous and nearby neighbors.

Regardless of your preference, single family home, townhome, or condominium……I will be glad to assist you in achieving your Oahu real estate goals…….Just let me know how I can assist you today…….Aloha, Jon.

Seven Common Seller Mistakes To Avoid

1. FAILING TO HAVE A PLAN

Evaluate your current situation. Why are you planning to sell your house? Are you moving up to a larger house? Do you need the money out of this house to make your move? One thing you need to do is to get a realistic idea of exactly how much cash you will be getting out of this house when it sells. Are you going to move locally? What mortgage amount can you really afford with payments including higher taxes and insurance? Can you afford a house significantly better than the one you already have. Are you moving down to a smaller property? What are you going to do with your furniture and other things that you have collected over the years? Will be comfortable in a smaller place? Are you retiring? Moving locally or out of state? Are you going into a retirement community? What activities do you expect to be involved in after working days are over? Are you moving out of the area because of employment? How fast do you have to be in your new location? Are housing costs higher there, or lower? Is your employer helping with sales costs, moving, costs, temporary housing, etc? How does your family feel about the move? One reluctant teenager can seriously undermine the entire process. Are you the executor of an estate? What is the time schedule for your plan? You get the idea…….evaluate your current situation and develop a plan.

2. FAILING TO TAKE A HARD, SERIOUS LOOK AT THE CONDITION OF THE HOUSE.

Houses wear, paint gets dull and shabby, landscaping can become overgrown, and roofs deteriorate. Often times as we live in a house we “live with” minor inconveniences that we intend to fix “Some day.” It is not unusual to not notice conditions that are glaringly obvious to a buyer.

How old is your roof? An average lifespan is 25 years. How old is your hot water heater? An average lifespan is 10 years. Do you have a septic system? Has it been pumped and fully inspected within the last two years? Is there any obvious water damage from old leaks? Have you had any improvements done to the house without permits and inspections? Are your hardwood floors scuffed and scratched? Are your carpets worn? Any of these conditions that are noticed by the buyer may make him bypass your house and buy another. Or any found during the home inspection can cause the buyer to cancel the sale. It is best to have someone with fresh eyes take a hard critical look at your house. A good Realtor® will do this and make his or her recommendations.

3. FAILING TO PROPERLY “SCREEN” YOUR REALTOR®.

It’s likely that you don’t often interview people. Yet, in order to find the Realtor® who is right for you, you may need to interview several. The quality of your home buying experience is dependent upon your skill at selecting the best-qualified person.
It’s interesting that in the real estate business someone with many successfully closed transactions usually costs the same as someone who is inexperienced. Bringing that experience to bear on your transaction could mean a better price at the negotiating table, selling in less time, and reducing the number of hassles.
Your agent should be a skilled, win-win negotiator!

4. FAILING TO GET PRE-QUALIFIED FOR THE HOME LOAN ON THE NEXT HOUSE.

Don’t waste hours searching for a home that is not in your price range! Save time and money by pre-qualifying for a loan. Before you go shopping for a home, you need to determine how much you can afford. Once you are pre-qualified for a mortgage, you will know your buying power-you will save time by looking only in your price range. This process is simple. A lender will ask you basic questions
concerning your history, run a credit report, and determine your buying power.
You can even get pre-approved for a loan! Imagine for a moment that when you and your Realtor® initially draft your offer for the home you select, you are already approved for the loan- IN ADVANCE. No stress, no worrying about qualifying, no concern whatsoever about your ability to qualify would stand between you and the home of your dreams. In today’s market, a pre-approval can be a powerful negotiating tool. Many owners will not accept an offer without a pre-approval. If there is more than one offer on the same house, the pre-approved buyer has the
advantage. You deserve peace of mind and negotiating power by getting an approved loan before you make an offer.

5. PRICING THE HOUSE INCORRECTLY.

Whether a house is priced too high or too low, it can cost you thousands of dollars. Obviously a house priced too low will net you less cash at closing. However, a house priced too high will take longer to sell. The homebuyer today is an educated consumer. On average a buyer will see 18 homes before purchasing. The house that sells today is the best one on the market in the price range. The sale of a house is a competitive enterprise. Ask your Realtor® to show you what homes you are
competing against. Some people will say, “I can always lower my price later.” Both
Realtors and buyers are looking for new listings. Rarely do they notice a reduced price. The saddest sign anyone can put on a sign rider is “Price Reduced.” That means the house was not priced right in the first place. The buyers will ask, “If the price was wrong, what else is wrong?”

6. FAILING TO OBTAIN A HOME INSPECTION FROM A QUALIFIED INSPECTOR.

The job of a professional home inspector is to look over every major part of a home and write a report that judges the homes quality and condition. A home inspector reports on the structural and mechanical condition of the home. A well-qualified inspector who has adhered to federal licensing standards can spot problems that you might not be able to see. Expect problems to be clearly explained, repair expenses closely calculated, maintenance costs estimated, and a written report delivered
within a day or two. Most-contracts are contingent upon the outcome of several
inspections such as: wood-boring insects, excessive amounts of radon gas, structural soundness, and the condition of the electrical and plumbing systems. These problems must be corrected or the buyer has every right to cancel the contract.
Getting an inspection up front can save money by giving you time to shop for the best repair price instead of being under pressure to get repairs done immediately.

7. NOT KNOWING YOUR RIGHTS AND OBLIGATIONS.

Real estate law is extensive and complex; the contract for sale and purchase is a legally binding document. An improperly written contract can cause the sale to fall through or cost you thousands of dollars for repairs, inspections, and remedies for
title defects. If there are defects in the title, or if the property is in conflict with local restrictions, you must remedy them. You deserve to have an agent who is not only knowledgeable about the transaction but is also willing to educate you throughout the process so you will feel more comfortable.

Selling your house? Request a FREE Comparative Market Analysis.

So Oahu, Which Is It…..Seller’s Market Or A Buyer’s Market?

I ask this somewhat “tongue firmly planted in cheek”, as I get asked this question about every couple of days. The person asking the question is usually certain they know which it is, and I have found over-time, they are usually wrong about 80% of the time.

The correct answer is…….it depends…….it depends on many variables, not the least of which, how one defines a “seller’s market” and a “buyer’s market”……

The correct answer is……..it depends……and a good realtor (like me) can make all the difference in the world, regardless of your buying or selling needs…..

The correct answer is……..it depends…….and the right answer might be neither……in other words, what I will call a “neutral market”.

Let me explain.

A ‘seller’s market” could best be defined as a marketplace in which sellers are in the best negotiating position; there are more buyers than sellers, so multiple offers are fairly common, and full-price offers or higher may be required to purchase a home. On Oahu, in 2003, 2004, and through 2005, we were easily in what you might call an island-wide seller’s market. Inventory was low, prices were rising rapidly, and average days on market was historically low (ranging between 15 to 35 days).

A “buyer’s market” could best be defined as a marketplace in which buyers are in the best negotiating position; there are more sellers (excessive inventory of homes for sale), so buyers can take their time shopping around and potentially make lowball offers that might be accepted. A ‘buyer’s market’ calls for increasing inventory, declining prices, and average days on market on the high side (ranging between 60 to 90 days or more).

A “neutral market” could best be defined as a marketplace in which the numbers of buyers and sellers are roughly equal and neither side is at a major advantage; a seller could expect to sell an appropriately priced home given a reasonable amount of time. . On Oahu, in 2006, 2007, and through 2008, so far, we were easily in what you might call an island-wide neutral market. Inventory has/is steadily growing, although slower than I expected, prices have been generally flat (up one month and down the next, all within a range), and average days on market has returned to normal levels (ranging between 35 to 60 days).

Now, before you scream and yell……..If you are a North Shore Resident or Leeward Coast resident who has been trying to sell for many months now……….or if you are an Honolulu resident who is tired of renting and ready for prices to decline so you can afford to buy your own home………or if you are an upscale East Oahu homeowner…………..Let me just say this……Island wide, we are in a “neutral market” heading toward a “buyers market” in the coming months and years……….In certain geographical areas and price-range neighborhoods, we are already in a “buyers market”….and in certain upscale markets and price ranges, we are somewhere in-between a “sellers market and a neutral market”.

So, bottom-line, the next time you hear someone say it’s a “buyer’s market” or “whatever” because they heard it on TV, you tell them………it depends………for some it is a “buyer’s market”, for others it is a “seller’s market”, and for other it is yet another type of market, a “neutral market”………and have them call me and I will explain it for them…….or at least try……Aloha, Jon.

In general, prices for Oahu properties were flat while sales volumes were down through March 2008.

Oahu – Single Family Homes For The Year 2008
Number of Sales………….. 673 (-22.2%)
Median Sales……………… $620,000 (+0.0%)
Average Sales Price…….. $842,119 (+9.3%)

Oahu – Condominiums For The Year 2008
Number of Sales………….. 1,037 (-23.8%)
Median Sales……………… $330,000 (+3.1)
Average Sales Price…….. $392,805 (+2.6%)

According to the Honolulu Board of Realtors, the month of March median price for single family homes on Oahu was $628,000 and the median price for condominiums and townhomes was $329,300.

In an article published in the Pacific Business News, the number of foreclosures in Hawaii is up significantly compared with March 2007, but the number still is low in comparison with the rest of the country.

Hawaii had 120 foreclosure filings in March, down 16 percent from February, but up nearly 85 percent from March 2007.

Hawaii ranks 45th in the country for its foreclosure rate of one filing for every 4,167 households, according to the latest survey by California-based real estate research firm RealtyTrac.

Nationwide there were 234,685 foreclosure filings in March, up 5 percent over February and up 57 percent from March 2007, according to the report.

If you would like a list of foreclosure properties available for sale on Oahu, just email me and I will be glad to send you a current list.

Don’t Ignore The First Offer

Let’s assume that you have had your home on the market for only one week. Your asking price is $799,000. Today your Realtor® calls to ask for an appointment to present an offer that a buyer has just made on your home. Of course, you are delighted to hear the news and anxiously await the Realtor’s arrival to learn more about the terms of this offer.

The amount of the offer is $740,000. Because this is the first bid on your home and due to the short market time of one week, you feel quite certain that there will be many more if this sale does not go through. Your reply to the buyer is that you have decided to reject the offer and hold out for your full price of $799,000. The buyer chooses not to pay your figure and continues to look at other homes.

The weeks begin to go by with no other offers in sight. After a period of two months on the market, you begin wondering if you should have been willing to negotiate with a little bit more flexibility than you did. You ask your agent to see if the original buyer has found another home yet. Unfortunately, the buyer has already bought and moved into another home in your area. In an effort to get some new interest in your home, you decide to drop the asking
price to $775,000. Five weeks later, another buyer becomes interested in your home and submits an offer in the amount of $715,000.

Because you have been trying to sell your home for over three months, you are getting rather tired of the whole situation and decide to counter this offer by splitting the difference with a figure of $745,000. The buyer, who knows your home has been for sale for a while, will only agree to split the difference again at $730,000. Reluctantly, you finally settle for the
$730,000 figure.

This scenario that I have just described is not at all unusual. It is normal to feel that other offers are just around the corner when you get an offer shortly after putting your house up for sale. Ironically, however, the first offer is often the best offer to work with because you are likely to be in a strong bargaining position when an first offer comes along. Your patience and bargaining power is less as time wears on.

ADVICE: The first offer is usually made by someone who has been waiting just for your type of house to become available. Don’t ignore that first offer.