Hawaii Real Estate

Wednesday, July 21, 2010

Bernanke pledges to keep rates low for an “extended period”

Today Fed Chairman Ben Bernanke told Congress the economy remains “unusually uncertain” and he is prepared to take steps to keep the economic recovery going if things worsen.  With the short term lending rate at zero, I’m not sure how many more bullets the Fed has in its gun to spur leverage but the take-away from this is his commitment to keep rates low for an “extended period.”
 
That should bode well for real estate buyers in the near term and help with those who are looking to hedge against possible inflation (or hyper-inflation in some opinions) in the future.  In layman terms…you want to have a 4% mortgage on a property when rates go up and cost of goods and services go up too!  Why?  Mortgages are generally a fixed expense that does not rise when the cost of everything else goes up (including your income hopefully).
Right now, however, these historically low rates don’t seem to be getting personal and corporate borrowing ignited.  The government needs companies to leverage to build, innovate, expand, but most important of all…hire people!  Until employment increases we cannot see real growth… of course this is just the opinion of one businessman in the middle of the Pacific Ocean and his dusty old finance degree.

More at:  Bernanke comments today

Thursday, July 01, 2010

Tax Credit Extended

The Senate has just passed an extension of the closing deadline for the Homebuyer Assistance and Improvement Act which allows those who were under binding contracts prior to April 30th to close on the property prior to September 30, 2010.  the previous closing date deadline was June 30, 2010.

See more at:  Tax credit extension information

Saturday, May 15, 2010

Kawamoto unloading

I had heard several weeks before the homes started hitting the market that Japanese Billionaire Gensiro Kawamoto was going to sell some of his Kahala and Hawaii Kai holdings…but whats the impact?  It remains to be seen.  The upper end of the market in Kahala has been pretty stagnant and all of Kawamoto’s homes are in bad condition.  So if you buy a big tear down on Kahala Ave for $2.5 Million bucks so still have to rebuild or rehab the house for another cool million.  Since only 3 homes over $3 Million have sold in the past 6 months in Kahala… whats the absorption rate on a dozen of these homes…we shall see.

Kawamoto newspaper article

Friday, May 07, 2010

Turmoil on the stock market should spell lower interest rates.

Here’s a article from a CNBC contributor today:

On Friday May 7, 2010, 1:29 pm EDT
For those of you who consider me far too ‘glass is half empty,’ here’s a little bright side to the near 1000-point drop in the Dow yesterday: Investors fled to the 10 year Treasury, driving the yield way down and pulling down the rate on the 30-year fixed mortgage right along with it.

The yield came up a bit, but at one point yesterday you could get a 30-year fixed rate mortgage for 4.5 percent with no points. How’s that for housing stimulus?? So was it just a blip on the radar? Not necessarily.

“More than anything, it means mortgage rates will stay close to the 5 percent mark a bit longer than was forecast a week or so ago,” says Greg McBride of Bankrate.com. He admits it’s probably a temporary blip, but “mortgage spreads are widening because bond investors are nervous about anything that doesn’t carry a U.S. government guarantee.” If the situation in Greece were to become a global contagion, he adds, that could keep U.S. mortgage rates down.

We saw a big run up in mortgage purchase applications last week, toward the end of the home buyer tax credit, but refinances were down. This move in the 30-year could juice both those readings in next week’s survey. Of course it’s temporary, but so much of the housing market now is based on consumer confidence, so if this temporary blip eases the expected-falloff from the end of the tax credit, that would be an unexpected bonus.

Thursday, April 15, 2010

SFR - NAR’s Short Sale & Foreclosure Resource Certified Agents

Benn Pacific Group would like to congratulate the following agents who have completed the National Association of Realtor’s program for SFR - “Short Sale & Foreclosure Resource” certification:

Shari Funai
Michelle Richardson
Mark Young
Tomoka Kajihiro
Tyler Pang
Trevor Benn

Benn Pacific Group agents are committed to updating and bettering their knowledge and experience to serve our clientele.  In these economic times there has been an influx of distressed property sales and we have armed ourselves to assist our Buyers or Sellers when this is applicable.

Thursday, February 11, 2010

IndyMac and OneWest Bank

If you want to see the back-end of the credit crisis and how the FDIC did the hand-off of IndyMac assets to OneWest Bank see the following links… enough to make your blood boil.

Business Week article

Here’s a visual explanation:  TBWS video blog

Monday, January 11, 2010

Banks told to prepare for higher rates

Last week, for the first time since 1996, Federal Regulators warned Banks to check their portfolios and give themselves “stress tests” to ensure they can handle a rise in interest rates.  The guidance was meant as a reminder for the Banks to watch their risk exposure to higher rates but also confirms our thoughts that eventually (probably within the year) the Fed will begin a series of rate increases.  Most experts think that kind of action would not be likely until unemployment rates get under 9%.  We’ll see…

Read more at:  Link to article in Washington Post

Thursday, December 31, 2009

2010 Outlook

Outlook 2010

Well…It’s crystal ball time!  Last year I wrote a very long dissertation on my thoughts for 2009 and the feedback was that it was great information but simply too long.  So, here’s the synopsis for 2010 in my humble opinion:

The Bad News.

I get the Lis Pendens and the foreclosure reports and there is still a substantial amount of distressed properties forthcoming.  In particular the neighbor islands and West Oahu seem like they will be negatively impacted by increased foreclosures and short sales.

Additionally, the employment numbers don’t look good and they also don’t take into account that in Hawaii, many people work multiple jobs.  We are still going through furloughs for the State employees and cutbacks in the private sector.

Local experts are anticipating that tourism will continue to be slow in Hawaii for 2010 while our mainland visitors put off their Hawaii vacations to stay closer to home this year.  In addition, the Japanese are still coming but spending less…even with the Yen’s strength over the Dollar, overall spending is substantially down when compared to the last time the Yen was sub-100 against the Dollar.  Everyone has a wait-and-see approach towards the anticipation of a Chinese tourism boom.  So far the boom has not come.  It’s still very expensive to come here relative to their vacation alternatives but, as I was recently reminded, with the sheer numbers of potential visitors from China we only need a very small percentage for a very big impact!  Sign up for your Mandarin lessons now!

I think we will see higher taxes in 2010 both State and Federal and less allowable deductions.  This will take more money out of consumer’s pockets and lead to less consumption.  After all…someone has to pay for all this stimulus spending right?

The Good News.

The good news is we have really really low interest rates!  Historically these rates are exceptional…and they are artificially low due to the government buying mortgage-backed securities via Fannie and Freddie.  The risk, however, is that when they discontinue their buying spree, rates will likely move upward as the open market requires a higher yield on those mortgage bonds.

Why else should you buy now?  Well… inflation.  I have been preaching this for all of 2009, but if you believe that inflation is the end result of the government printing a trillion dollars and the currency being devalued against every other major currency, then you should buy real estate.  Get a fixed mortgage at these rates and pay it back with 60-cent dollars in the future.  In other words…the price of milk may fluctuate but your mortgage stays at a fixed payment, regardless of inflation.

Government spending on “shovel-ready” projects should spur the construction sector which will help the economy by offsetting some of the employment weakness.  Whether you believe in the long term benefits of development/mass transit or not, the short term benefits are likely to be jobs. 

Certain neighborhoods are hot right now!  Remember that the real estate market is made up of neighborhoods and not all of them rise and fall together.  Look at Hawaii Kai during the Japanese Bubble burst…hardly a noticeable dip.  My call… markets like Aina Haina, Mililani Mauka, Pacific Palisades are showing strength, might be a good bet if that’s an area that works for your budget and lifestyle. 

The First-Time Home Buyer tax credit has been extended through April 2010.  A genuine credit of up to $8,000 against what you owe Uncle Sam.  Even if you owned before or bought last year you may be entitled to some credits so check it out: Home Buyer Tax Credit Information

Who is buying right now?
This is a largely organic market where the Buyers are locals who live and work in the Hawaii.  Right now they are living with their family members and are looking to have a place of their own.  The investors are dipping their toe in the market for certain types of properties but financing for commercial, multi-family and condo-hotel properties is still difficult.

Conclusion
I think that real estate prices will drop another 6-8% in 2010, but interest rates might trend upward in the second half of the year so, if you are a Buyer, it becomes a decision between a low fixed rate or a small pricing discount (which ultimately boils down to the question of “how long are you going to own the property?”).  I generally think it’s a good time to buy but I would be looking to buy properties with all the same attributes that we look for in all our purchases…mainly a good value in a good neighborhood.  If you are a Seller this year…sell sooner, not later. 

Tuesday, November 10, 2009

Tax Credit Extended

First Time Homebuyers and not-so-first-time Homebuyers may qualify for a tax credit!

See a few links here to answer some of your questions:

** Please remember to consult a tax professional for advice on your individual tax related circumstances**

Thursday, October 01, 2009

A visual explanation

Here’s an interesting look at the credit crisis:
http://www.crisisofcredit.com/