Though the gain was attributed to more sales in a few higher-priced neighborhoods boosting the islandwide median price, it was the first year-over-year growth for any month since October 2007.

Still, the full year recorded a 3 percent decline in the single-family home median price, and there is agreement between local economists and some top real estate brokers that buyers and sellers should anticipate prices will fall this year by a greater, but still moderate, amount.

The University of Hawai’i Economic Research Organization projects the median single-family home price will decline 5.2 percent this year, and 2.6 percent next year.

Local brokerage firm Prudential Locations anticipates the median price could fall 6 to 10 percent by midyear. It notes that price movements, which vary by neighborhood, could be down more than 15 percent in some areas.

Nationally, the median single-family home price was on pace to drop 9.3 percent last year after slipping 1.4 percent in 2007, according to the National Association of Realtors.

“The Honolulu housing market shows remarkable price resiliency, even with the number of reduced sales,” Sandra “Sam” Bangerter, Honolulu Board of Realtors president, said in a statement.

Bangerter said some Mainland markets have had median price declines of 18 to 30 percent.

One positive trend for housing is interest rates that are falling and acting as a counterweight to poor consumer confidence that has deterred many people from buying property.

Prudential Locations in a recent report said reduced interest rates and other moves by the federal government to stimulate the national housing market could lead more people to buy homes, which increases demand that helps support prices.

“Such loan products would have a tremendous impact on the Hawai’i market, making forecasted price reductions less drastic,” Prudential said in its report.

Prudential also cited efforts to reduce foreclosures, which depress property prices, as another positive prospect for the local housing market this year.

Content provided by Andrew Gomes at agomes@honoluluadvertiser.com.

Hawaii, is projected to lose about 8,800 jobs next year and have visitor arrivals fall nearly 6 percent next year, according to the quarterly forecast released today by the University of Hawaii Economic Research Organization.

That would mean about 835,000 fewer visitors this year and 385,000 fewer next year.

The report was one of three forecasts released this week, all of which found the state’s economy to be on much shakier footing than even 90 days ago, the result of powerful turbulence from the global financial crisis.

The three forecasts also said Hawaii will not see any meaningful recovery from the downturn until 2010 at the earliest.

“The global financial crisis and widening global downturn have materially worsened prospects for the Hawaii economy,” wrote the authors, UH economists Carl Bonham and Byron Gangnes. “The Hawaii economy is now in recession, and as the downturn continues into 2009 we will see larger job and income losses than we have experienced to date.”

“We really think the fourth quarter of this year is going to be pretty bleak,” Bonham said and the first quarter of 2009 may be even worse, especially for the visitor industry.

“The consumer problems aren’t going to disappear after Christmas,” he said. “We really haven’t seen the full repercussions of a 20 percent drop in visitors.”

Hawaii’s unemployment rate, which had been historically low only a few quarters ago, is forecast to peak at 6.2 percent in the second half of 2009, and then remain above 5 percent through 2011.

My only personal thoughts on this report is that is not a surpise that the economy is in recession and will be for awhile, as anyone trying to make a mortagage payment and feed his family knows, but with that said……I still see the glass as half full……we may have 6% unemployment and 20% fewer visitors, but that means we HAVE 94% employment and 80% of the visitors are still coming to Hawaii…..each of us is responsible for keeping a positive attitude despite challenging times, so I urge you today to overcome the economy with a positive attitude and a smile, and remember, this too shall pass…..Aloha, Jon.

Homebuyers must repay the tax credit over a 15-year period. It applies to both newly constructed homes and pre-existing homes. Buyers may qualify for the tax credit as long as the home is their primary residence and they have not owned a home during the past three years. It is available on single-family detached homes, townhomes and condominiums.

Buyers qualify for the full tax credit are single taxpayers with incomes up to $75,000 and married couples with incomes up to $150,000.

So put the tax credit to work for you and let’s work together to make the most of this unique opportunity!

Not exactly shocking news for the average consumer. Then again, one of the best ways to overcome a problem, it admitting it exists.

Hawaii is now in a recession, according to Moody’s Economy.com, which has updated its list of states in recession.

Using employment and industrial production data, Moody’s compiles a monthly list gauging whether the nation’s 381 largest metropolitan areas are in expansion, at risk or in recession.

The report determines an area’s status based on a six-month test that compares the six-month moving average in the current period to the six-month moving average in the period six months ago. If the test shows the area is in contraction, it is said to be in recession.

There were 637,550 people in the work force in Hawaii in September. The unemployment rate rose to 4.5 percent and there were 12,050 more people out of work than there were a year ago.

So now that we have admitted that the problem exists, I am going to start looking for signs of receovery…..Just as I mentioned last week in this very blog……..All the market factors are lining up perfectly for the next six to twelve months……Remember, it is as simple as 1, 2, 3.

3. Inventory, foreclosures and pricing of properties in our Oahu housing market indicate that the signs of a market shift are coming….

I realize I may be in the minority here, given typical media pundiits calling for the end of the economic world, but I feel strongly about where I see this market going from here…….What are your thoughts?

All the market factors are lining up perfectly for the next six to twelve months……Let me explain. It is as simple as 1, 2, 3.

1. Interest rates are dropping below 6% on residential mortgage loans. Rates are seldom that low and when they have reachd that level, mortgage loan rates usually do not stay there for long.

2. Mortgage Money is available….that what lenders across the island are telling me. With five percent down or less. Of course, the Buyers DO need to have a steady job, and areasonable credit rating. The days of Buyers needing to prove employment, have cash on hand and credit worthiness have returned for good, hopefully.

3. Inventory, foreclosures and pricing of properties in our Oahu housing market indicate that the signs of a market shift are coming, that is the supply of new home construction and foreclosure homes are beginning to be absorbed by first time buyers, investors and secure homewoners taking advantage of their financial strength and current market weakness. This spring may be the tipping point when the market activity flourishes. I believe it will. This Buyer and investor activity will create its own momentum. as more buyers and investors choose to buy now the demand they will create will stabilize the market and lead to market appreciation. It is simple supply and demand.

Did people who bought at the peak of the Oahu market in late 2005 and 2006 lose equity? In most neighborhoods, yes, and in some neighborhoods they lost a lot. Are Buyer’s who buy over the next year likely to be buying at the (or near the) bottom of the market and benefit from excellent appreciation. Every indication that I see is…..YES!

THEREFORE, I am telling all of my Buyer clients and anyone else who will listen……..what one of the richest men in the world used to say…..(J. Paul Getty)….”I buy when other people are selling.”

So….Get in the Game…..and call me today and I can help you call the plays to make you a winner….Aloha, Jon.

Just a quick blog entry to announce that I’ve recently merged JON MANN REALTORS, LLC, with PRUDENTIAL LOCATIONS, the largest locally owned and operated real estate firm in Hawaii. The company has a deep understanding of our islands’ unique housing market and extensive knowledge of historical real estate trends that I will be able to share with my clients.

In spite of the recent economic turmoil, It is truly an exciting time for me to be in real estate. Interest rates are still at historically low rates making first time home-buying a realistic and attainable goal for many people. Opportunities also exist for the astute investor to acquire an initial real estate investment, or to trade up to a larger property.

As “Hawaii’s High Tech Real Estate Agent”, joining forces with Hawaii’s premier technology based real estate company was just common sense and good business practice, allowing me to continue to provide excellent customer service and now be armed with unmatched information technology tools, and educational devices for my clients. A win-win combination to be sure.

So continue to look here each week for valuable information on Oahu real estate and if you know of anyone interested in buying, selling, or investing in real estate, I would appreciate your referring them to me. I assure you that I will do my very best in assisting and advising them to enable them to achieve their Hawaii real estate goals. Please call or email me anytime…Mahalo and Aloha, Jon.

Internal Revenue Code (“IRC”) §121 allows taxpayers selling a principal residence to exclude $250,000 of gain from taxation (or, $500,000 for married taxpayers, filing jointly) as long as they have lived in the residence for 2 out of the preceding 5 years.

Alternatively, for taxpayers selling investment/rental property, while they may not exclude gain from taxation, they can nonetheless defer payment of taxes by completing their disposition as an exchange under IRC §1031.

While the rules for excluding gain from taxation or deferring payment of taxation may seem fairly straightforward under the above code sections, they become more complicated if the property was used as both a principal residence and for investment/rental purposes.

Fortunately, in February of 2005, the IRS issued Revenue Procedure 2005-14 clarifying that taxpayers are entitled to take advantage of both the §121 capital gains exclusion and the §1031 capital gains deferral. However, Rev. Proc. 2005-14 only addresses situations wherein the property being sold is investment property formerly used as a principal residence; it does not address how to apply §121 to situations when the property being sold is a principal residence formerly used for investment purposes.

Now, pursuant to the Housing Assistance Tax Act of 2008, taxpayers selling a principal residence formerly used for investment purposes, have specific guidance on the application of §121. Specifically, IRC §121 has been amended, effective January 1, 2009. Again, the amendment only affects taxpayers who are selling a principal residence (“qualified use”), which they formerly used for investment (“non-qualified use”). The central point of the §121 amendment is that these taxpayers are not entitled to the full §121 exclusion because the prior investment use is considered “non-qualified” use and any gain allocated to the period of non-qualified use may not be excluded under §121.

How to determine the amount of gain that is not eligible for exclusion:

The period of non-qualified use (period not used as a principal residence) must be divided by the total years of ownership to determine the amount of the gain that is not eligible for exclusion under §121.

Any period of non-qualified use before January 1, 2009 should not be included in the calculation. And, depreciation should also be excluded from the calculation and is simply taxed at the applicable recapture rate.

Summary of the rules under §121 amendment
• Sale of residence that was formerly investment property – the taxpayer is entitled to only a prorated portion of the $250,000/$500,000 exclusion.
• Non-qualified use prior to January 1, 2009 is disregarded, except for purposes of meeting the 5 year rule under HR 4520, if applicable1
• Gain resulting from depreciation is taxed and is disregarded for purposes of determining the prorated amount of the exclusion

Taxpayers selling a principal residence after January 1, 2009, which was formerly used as an investment/rental property should consult with their tax or legal advisors regarding the application of the amendment to §121 to their particular situation.

Significant content for this blog entry was provided compliments of:

Julie would be glad to answer any questions you had about exchanges, so contact her today…Thanks Julie, for the information….Aloha, Jon.

No so fast, my friend.

Some experts say the most important thing that needs to happen before the $700 billion bailout even has a chance of working is that home prices must stop falling. That would send a signal to banks that the worst has passed and it’s safe to start doling out money again.

The problem is the lending freeze has made getting a mortgage loan tough for everyone except those with sterling credit. That means it will take several months or much longer to pare down the glut of houses built when times were good — and those that have come on the market because of soaring foreclosures — before home prices start appreciating.

Housing is a critical component to the U.S. economy and by extension the availability of credit. Roughly one in eight U.S. jobs depends on housing directly or indirectly — from construction workers to bank loan officers to big brokers on Wall Street. A turnaround in housing prices would boost confidence in the wider economy and, experts hope, goad banks into lending again.

Although the housing industry usually leads the economic receovery, banks are still cautious that the economy is going to get worse before it gets better. Still, the government hopes that by scooping up billions of dollars in bad mortgage debt and other toxic assets, banks eventually can clean up their shaky balance sheets, crack open the vaults and send money washing through the system again.

The rescue plan also raises the federally insured deposit limit from $100,000 to $250,000, a move that could boost banks’ reserves and further grease the lending wheels.

We shall see. Some concerns exist.

To begin with, even when the Treasury starts buying bad assets, some banks may hoard the cash they receive in return until they see how the plan pans out. That has the potential to make the lending logjam worse. It also creates a vicious cycle: No trust means no lending; tight credit means it’s harder to buy a home; the more difficult it is to buy or sell a home, the further home prices will fall; and the further prices drop, the more foreclosures there will be. Basically, the very same problem we are dealing with currently.

As of now, U.S. home prices are down 20 percent from their peak in July 2006, yet still have further to fall, and must hit bottom before demand picks up. The long-awaited bottom in prices could be a year or more away on the national level.

Jobs are another big concern. The stranglehold on credit has choked companies big and small that depend on regular inflows of borrowed money to pay employees and stay afloat. Local jobbes losses here on Oahu have been significant in 2008.

The Labor Department said Friday that employers cut 159,000 jobs in September, the fastest pace of losses in more than five years. Experts say that number will grow as the effects of the credit gridlock course through the economy in coming days and weeks.

The nation’s unemployment rate is now 6.1 percent, up from 4.7 percent a year ago. Over the last year, the number of unemployed people has risen by 2.2 million to 9.5 million.

The unemployment rate could rise to as high as 7.5 percent by late 2009, economists predict. If that happens, it would mark the highest since after the 1990-91 recession.

Boosting employment is critical to kick-starting lending because if jobs are growing, then incomes are a growing, and if incomes are growing then people are consuming.

The bailout does not adequately address the three main reasons for the economic mess….too much debt, too much spending, and too much greed……It will, however, most likely, positively affect the recovery of the housing industry and the outlook for employment….and hopefully each individual person will look into themselves and address the debt, spending and greed issues prevalent in out modern American economy/society……In my opinion, that is…….Aloha, Jon.

Note: Some content for this blog entry was para-phrased from an article by AP business writer By STEVENSON JACOBS.

For the first time in three years, median home prices on Oahu fell below $600,000.

After holding fairly steady for much of the year, Oahu home prices tumbled last month, down 9.2 percent for single-family homes and nearly 12 percent for condos.

The median price for Oahu homes in September was $590,000, down from $635,000 in August and $650,000 the previous year. It was the first time the median price fell below $600,000 since 2005.

Condos fell to $296,000, down from $328,000 in August and $335,000 a year ago.

Transactions also fell, with 215 home sales recorded last month, down from 255 a year ago. Condo sales tumbled 26 percent, from 414 sales in September 2007 to 305 this year.

So, call me once you have sold those stocks and I will share with you why “CASH IS KING” in real estate and how I can help you get a great deal……(really)…….Aloha, Jon.

I did not expect it, nor did the financial markets. Not when the $700 billion bailout package had the support of the Democratic and Republican leadership teams. But obviously, there were enough disgruntled members in the House (and angry Amercians contacting their congressmen about the unbelievable price tag of this mess) to scuttle the bailout bill as it failed to pass today. Republicans failed to back their President and voted 2-1 against the bill. Democratic leadership took verbal shots at the present administration rather than leading the cause. The impact on global financial markets was immediate. The Dow Jones fell 777 points, the largest drop ever in a single day. The question now is where to from here. I suspect a bailout package (though revised) will still go through at some stage but will require more horse trading from the dissenters and likely a few other failures along gtghe way. I would think it is too important to just toss away now. However, the longer it takes, the more carnage we’ll see in the markets as the liquidity squeeze continues to chock financial institutions globally. For the time being, policy makers will need to rely on other tools to help stabilize markets. Central banks continue to inject liquidity into the system, but these are only temporary stop-gap measures. Markets will remain turbulent as US lawmakers continue to haggle. What a fine mess we have managed to get ourselves into……I pray for my childrens’ future…….I am instructing my buyer clients to stand asisde until the markets stabilize…….because we just might be on the verge of a national economic depression. Let’s pray our government leaders can work together and solve this national/global crisis soon.