Archive for January, 2012

This week the Federal Reserve publicized its intention to keep it’s near zero interest rate policy through 2014….to the delight of borrowers and stock market investors AND to the dismay of savers and fixed income retirees around the world.

Since 2008, the Fed has cut overnight borrowing costs to practically nil, meaning we will have experienced “emergency” rates for six years by 2014…..One can only hope that the US economy can finally stand on its own feet after such a prolonged period of “emergency” rates.

Regardless, I STRONGLY encourage all homeowners to consider refinancing their home loans if they have not already done so, as the savings can be immense…..and savers/investors, consider diversifying your portfolio with an income generating property in 2012 and borrowing some of the cost to take advantage of the rates…..Just let me know if I can be of assistance…….Aloha, Jon.

For those of you considering selling your home in 2012……Now might be the best time……Although I am no better prognosticator than the next guy, some national experts believe the following……

■Standard & Poors thinks prices will drop 5% in the next few months.

■JP Morgan Chase believes prices will depreciate 6% to 7% over the next six months.

■ Barclays says prices will fall 7% by the end of the first quarter of 2012.

Bottom Line

Please keep in mind these national firms may not have the pulse on our local economic conditions, nonetheless, you may pay a hefty price for the convenience of not having your property on the market right now. If you are thinking about selling this year, call me and we can discuss your situation and what makes the most sense right now, listing for sale now or waiting until later……Aloha, Jon.

Aloha All.

For as long as I have been alive, the the US Dollar has been the Reserve Currency of the World, thanks to our country’s successful World War II efforts…Central banks around the world hold US dollars as a safe haven asset…..But today, we see the first signs of that status changing……Up until today, for example if you or anyone wanted to by a barrel of oil on the open market, the buyer had to pay the seller in US dollars to complete the trade…..No other form of currency is accepted……..However, India is now the first buyer of Iranian oil to agree to pay for its purchases in GOLD instead of the US dollar, as reported by Debkafile.com.

Top officials feel China will be the next country to follow suit. India and China take about one million barrels per day, or 40% of Iran’s total exports of 2.5 million barrels per day. Both India and China are two of the world’s largest owners of gold inventory.

If other countries and central banks around the world switch to GOLD as a primary reserve currency, then the US Dollar will be impacted negatively and the US economy will be impacted…..This situation merits monitoring as we move forward and I will let you know about my observations as conditions merit……Aloha, Jon.

Here are the Annual Residential Resales Data For Oahu for the last 26 years as compiled courtesy of the Honolulu Board of Realtors from Hicentral MLS, Ltd data.

Essentially, on average, over the last 26 years, prices have increased about 4% to 5% per year.

Aloha all.

Today the Fed made several impactful statements with its Summary of Economic Projections……Specifically, the following…..

“Information received since the Federal Open Market Committee met in December suggests that the economy has been expanding moderately, notwithstanding some slowing in global growth. While indicators point to some further improvement in overall labor market conditions, the unemployment rate remains elevated. Household spending has continued to advance, but growth in business fixed investment has slowed, and the housing sector remains depressed. Inflation has been subdued in recent months, and longer-term inflation expectations have remained stable.

Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee expects economic growth over coming quarters to be modest and consequently anticipates that the unemployment rate will decline only gradually toward levels that the Committee judges to be consistent with its dual mandate. Strains in global financial markets continue to pose significant downside risks to the economic outlook. The Committee also anticipates that over coming quarters, inflation will run at levels at or below those consistent with the Committee’s dual mandate.

To support a stronger economic recovery and to help ensure that inflation, over time, is at levels consistent with the dual mandate, the Committee expects to maintain a highly accommodative stance for monetary policy. In particular, the Committee decided today to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that economic conditions–including low rates of resource utilization and a subdued outlook for inflation over the medium run–are likely to warrant exceptionally low levels for the federal funds rate at least through late 2014.

The Committee also decided to continue its program to extend the average maturity of its holdings of securities as announced in September. The Committee is maintaining its existing policies of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction. The Committee will regularly review the size and composition of its securities holdings and is prepared to adjust those holdings as appropriate to promote a stronger economic recovery in a context of price stability.”

What does this means……..translated, it means…

> that the Fed will keep interest rates abnormally low through late 2014 to try and further stimulate the economy, hoping that the European financial crisis will not draw the US and the world into a global depression and that inflation will remain in check.

> that the Fed is considering unleashing QE#3 in the near future to stimulate the economy.

….In my opinion, I think we are looking at much higher inflation than the Fed anticipates, several European countries (probably Greece, Portugal, and possibly Italy and Spain in 2013) defaulting on their sovereign debt later this year forcing the global economy into another liquidity crises much like we experienced in 2008 with the Lehman Brothers failure…the US experiencing extreme financial and political turmoil associated with its overly burdensome national debt of $15 Trillion and climbing…and the challenging of the US Dollar’s international status as the world’s reserve currency with it possibly being replaced by GOLD or GOLD backed currency such as the Chinese Renminbi by late 2015. Regardless, we are in for some seriously challenging times and I pray our country’s leaders and the leaders of the world are up for the challenge……Call me if you would like to know what it means for you personally regarding how you should manage your Hawaii Real Estate Portfolio…..Together we can work out a plan to overcome the current and future financial climate…..Aloha, Jon.

Aloha All.

For the last three years I have taken a break from this blog to be involved in two different key projects……

In 2009 and 2010, I formed a Short Sales Team to assist families facing foreclosure…….During that time I personally assisted 42 Oahu families in completing short sales and avoiding foreclosure and as a Team we assisted over 100 families……It was a stressful but rewarding time as many lives were positively affected.

At the end of 2010 and throughout 2011, I conducted my own personal real estate development activities with the purchase, condominiumization, and sale of an 9 unit apartment building…..It was complex and financially rewarding….are great experience.

And now, in 2012, I am once again ready to assist you with your real estate needs…..So contact me directly at 808-728-1230 if I can be of assistance. I look forward to helping you achieve your Hawaii Real Estate goals.

I will be making occassional blogging entries on topics I feel are important……So just let me know if there is a topic you would like for me to cover……..Aloha, Jon.