While real estate sales remain slow in comparison to previous years, we are noticing a steady increase in overall sales over the course of the year.

The following graph shows news escrows by week for the 37 weeks through October 25, 2009. As the graph indicates, while we have experienced the normal spikes due to the holiday and seasonal increase in visitors, the average upward trend is fairly steady.

Many things can be read into the data below. One can surmise that this trend in buying reflects the increase in short sales and foreclosure properties and the lowering of property values. Obviously, the more foreclosures and short sales there are, the lower the property values fall.

The bottom line is that home prices are coming down slowly and you can find some attractive deals on the island of Kauai!

Aloha!

As a relatively new CDPE designate, I look upon this economic situation as an opportunity. It's not all about making money. We certainly won't get rich on short sales. Rather, this is an opportunity to help people, homeowners, get out of a bad situation.

Most homeowners facing foreclosure never anticipated this outcome. They bought a home thinking they have finally reached a part of the American Dream, only to find out that when the ARM expired, they were in "lender hell."

As realtors, we are in a unique position to assist people in this "lender hell" to see the light at the end of the tunnel and the hope that they can somehow, come out on the other side with minimal damage to their lives. At this point, for realtors, it is no longer about just making a living, it's about making a difference.

I, for one, am proud to be a part of the solution.

-Nance Overton, RA, CDPE

Aloha,

I am pleased to announce that I have recently completed the exhaustive training for and received the prestigious Certified Distressed Property Expert (CDPE) designation. This designation is my opportunity to better serve Kauai homeowners facing foreclosure. Being among the initial group of real estate professionals attending the first class to be held in Hawaii, I am one of the few currently positioned at the forefront in the solution to the foreclosure crisis in Hawaii.

My understanding of the foreclosure and short sale processes are strenghtened. I have the knowledge and tools to assist homeowners in their darkest hour: when they are faced with losing their home to foreclosure. My commitment to serving the people of Kauai in their real estate needs has been increased to an all new level.  

So many homeowners here in Hawaii have no idea that there are other options open to them. They start missing mortgage payments, they hunker down and wait for the foreclosure notice, then they just give up and let their home go to the highest bidder. If I hear from a homeowner soon enough, we can try to avoid the foreclosure and save them the embarrassment of future credit and tax ramifications that many people aren't even aware of.

My Broker, colleague, and I are proud provide the community on Kauai with free seminars to discuss the options available that can help them avoid foreclosure. If you live on Kauai or own a property in Hawaii, please feel free to come to the seminars or call me for assistance.

It's all in your perspective.  If you are the seller and you are selling at or below the price you bought it for, it's most certainly a fire sale! However, I'm inundated with buyers that think they can get a property that was assessed at over a million dollars last year for a couple of hundred thousand! Not happening here, not yet.

Don't get me wrong. I am fully aware that housing prices are plummeting on the mainland. But let me tell you that I live on an island - the Garden Island, to be exact - in Hawaii. Most of these islands are 5-star vacation destinations. So, when I get an inquiry from someone looking for a 2 bedroom/2 bath condo on the beach in Poipu for $60K (yes, sixty), I have to shake my head.

And then it happened - well, almost. Two condos (neither 2b/2b OR on the beach in Poipu, mind you) came on the market for $59,000 (yes, fifty-nine) a few days ago. Now, these condos are assessed at over $200K and they are not distressed properties, so one has to wonder what these sellers are thinking? The easy answer - since these are not my listings - is the sellers are very motivated and just want to dump the properties. Someone savvy buyer will make a killing, I'm sure.

The other aspect though, is these prices will undoubtedly cause all the others (right now there are about 31 listings in this complex alone) to start falling. In addition, those who cannot afford to cover the reminder of their loans will be hard-pressed to convince a buyer why they should pay $200K more than the ones that are listed at 59K. Even after they are sold, they will skew the numbers for a long time to come. This could also prompt other sellers around the island to start selling for as low as they can go...whatever that might be. Now, this is not necessarily a bad thing. It may actually get the ball rolling again - which would be a good thing. We all know that a stagnant housing market is no good for anyone. And investing is a tricky business at best. But, with prices starting to fall (if that's what happens) investors and homeowners alike will come back and start buying again.

So, I guess I must ask the question: is the fire sale starting??

(Since I wrote this -- one of the two listings has gone under contract. Cash deal, no doubt! Kudos to the agents involved!!)

 

The graph below indicates the median prices for the following categories:

• Princeville Area Condos
• Poipu Area Condos
• All Kauai Condos

 

You can easily see the rapid rise in the cost of a condo on Kauai since 1999. Price levels of 10 years ago are not likely to be seen again anytime soon. You can also easily notice that prices have remained fairly stable over the last year or two, depending on the area. One reason for this is that sellers who bought high are not willing or able to sell for a loss. For some, the tax liability is too high and it makes more sense to hold out for a price that covers their loans and closing costs. So, while we wait to see how the stimulus package and the homeowner packages roll out, prices on Kauai are at an impasse.

 

In this age of technology, it is only natural that the majority of people looking for homes or property will start that search on the Internet. This is wonderful because buyers are much more informed about the properties they are searching for before they contact an agent. On the other hand, a buyer should always enlist the services of an agent when they are preparing to buy a property.

There are several reasons for "hiring" an agent to assist in the search and purchase of a property. The most important are the following:

•1.       A buyer's agent represents the buyer's fiduciary interests. Let's be very clear: a seller's agent represents the seller, not the buyer. He looks out for the seller's interests and will work out the best monetary deal on behalf of the seller. A buyer's agent will look out for the buyer and will negotiate the best deal possible for the buyer.

•2.       The buyer's agent has access to all information about all the properties available in the area where the buyer is looking. Generally speaking, most agents are members of a multiple listing service (MLS). This provides them information not always given to the general public sites.  This can be very important information when considering a purchase.

•3.       There are many conditions and timelines involved in the purchase contract. The buyer's agent understands the purchase contract and will keep track of the buyer's and seller's responsibilities when it comes to the due dates of finances, disclosures, inspections, loan status, etc. Of course, if there are any questions regarding legal ramifications, the buyer is urged to discuss them with a real estate attorney for their own protection.

•4.       The buyer's agent is also much more knowledgeable about the area where the buyer is looking.  General web sites can't provide the knowledge and expertise of a real estate agent. The website doesn't know that the neighboring property is in shambles or there is a new shopping center going in a mile or so away. After all, anything that affects the property currently or its future resale value is important to know before buying any property.

On the flip side, because the buyer's agent represents the buyer, it is important that s/he instruct his buyer to contact him with any questions about a property or to schedule a showing for the property. The agent should also accompany her client on the showing. As agents, we understand that our clients continue to search the internet and drive around looking for "For Sale" signs; however, once they enlist the services of an agent, it is important to utilize that agent's expertise and access to information. Here on Kauai, most listing (seller's) agents will not show a property to a buyer if they are working with another agent; however, in the off chance they do, information can be passed to the buyer that may not be in their best interest. In my humble opinion, an agent who allows his client to contact other agents and go view properties alone is not fully representing the client.

One final note...a buyer's agent should realize that many people don't know that agency sites (e.g., RE/MAX, Century 21, Coldwell Banker, etc.) are geared to show contact information that only applies to their realtors benefit. For example, if you are on the RE/MAX site, all listings available in the area will pop up, but they will provide RE/MAX contact information for that area, not necessarily the actual listing agent.  This is wonderful if the person searching is not working with an agent already. However buyer's agents need to inform their buyers of this fact. I mention this because, just this morning I had two calls from people working with other agents who had searched my company's site and found properties they thought were our listings. Neither of the properties was ours. I told both of them to contact their agents and let them handle the scheduling of a showing with the actual listing agent.

Ciao for now and good luck!!!  

As the new year winds its way into existence through the problems left behind by the past years, we all find ourselves trying to have hope of a prosperous year to come. We have a new president coming into office with, what the news commentators term as, a major economic stimulus plan. All we can do is speculate...good or bad? I have heard some refer to the failure of Roosevelt's New Deal and remark that they hope President-Elect Obama heeds to the lessons of the past.

So, will the housing market be saved with this new stimulus plan? Will the consumers become more confident as the year moves forward and credit is finally loosened? Again, we can only speculate.

Here on Kauai, things have been flat. The median price of single family homes has only dropped by a mere .06% over the last year. This is incredible, considering sales have dropped off by a whopping 36%. We look to 2009 as a fairly flat year. We certainly don't expect any major increases. While inventory remains high, sellers are not convinced they need to drop their asking prices dramatically. So, for now, we are playing the wait-and-see game like everyone else.

Now that we know who our next President will be, we wait to see what will happen with the economy. Here on Kauai, the market remains soft. Sales have slowed in the past two years, as has tourism. Last summer's increase in fuel costs spawned a significant drop in tourism throughout the islands, Hopefully, with the decline of gas prices. Tourism will begin to increase.

Overall, the decline in the economy over the past two years has resulted in a 27.75% drop in tourism through August,2008. Real estate prices have dropped by about 5%, according to the Kauai County Economic Statistics. This decline is expected to level off over the next fiscal year. **

In essence, we are looking at a fairly stationary economic future, meaning that housing prices will have to come down to attract buyers. There are, unfortunately, more short sales and foreclosures on the horizon. Keep your eyes open, the next buyer's market is at hand.

**Statistics from Kauai County 2008-09 Kauai Economic Outlook.

While multi-billionaires Donald Trump and Warren Buffett are touting real estate and stocks (respectively) as great investments now, the problem seems to be that John Q. Public still can't afford to buy a primary residence, much less invest in property or stocks!  Both can be an uncertain prospect to most people. And for those who are truly watching the stock market swoop and dive, there is far too much volatility to want to put money into either type of investment.

What one has to remember is that both real estate and the stock market can be used as long term investments. Buy cheap and sell high is the adage Warren Buffett used in a recent interview. When real estate inventory is high, prices start to come down and buyers can buy within their means. As buyers buy, inventory dwindles, prices start to rise, and -- voila! -- sellers start cropping up and more homes are being sold again, now at higher prices. This is an example of a normal real estate cycle, otherwise known as the laws of supply and demand. It is important to note however, that these cycles normally take years to develop.

The stock market can be a little faster to develop cycles, depending on the companies in which you invest. The long term investments generally show little variation, even in volatility such as we have now. Start-ups require a lot of research before you invest and can be very risky. Generally, the more stable the stock values are, the lower the risk.

As we all know, any investment is a risk. Don't let anyone tell you differently.  Our economy is fairly uncertain, to be sure. And whether the analysts you listen to are professing sunny or gloomy future, you should only invest when you can afford it. However, when the billionaires are talking about investing, it just might be time to consider reinvesting in your future.

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My current listings on Kauai:

   MLS #    Tp   Taxkey            Price          Location                              Land area     Details  

   206433  SH   4-2-6-5-14-23  $375,000    Kuhio Shores At Poipu #204                      854 #204 1/1 

   213693  T     4-2-6-5-14-23  $755,000    Kuhio Shores At Poipu #204                      854 #204 1/1

   213315  T     4-5-4-5-24-37  $648,000    Nihilani At Princeville Resort #13A              1,874 #13A 3/2.5

   216647  RS   4-5-4-18-17     $720,000    4725 Emmalani Dr              10,248 sqft     1,388 2/2

   196353  RS   4-5-4-15-10     $960,000    3829 Haulani Pl                  11,502 sqft     1,884 3/2

As Realtors®, we all want consumers to start buying real estate again. With the market as unstable as it seems now and the mortgage industry staggering from the severity of its own demise, many people are hesitant to spend money on any investments and are busy looking for ways to save their portfolios. Buying real estate is the last thing people are thinking about. However, now is really the time to buy real estate. Why, you ask? Well, here are a few reasons...

1. Interest rates are still at an all time low. The market downswing of the 90's in Hawaii saw interest rates in the high 7's and up, depending on the size of the loans. Loans today can still be acquired starting in the mid 5's and up on 30 year fixed loans -- if your credit rating is high. This is a major savings.
   
2. Waiting for the prices to bottom out is a losing quest...bottomed out prices are only apparent AFTER the prices start to go up again.
   
3. Once the prices do hit the bottom, the interest rates may be higher, so it could, essentially, cost you more money to get that loan for that low-priced home.
   
4. No matter what the market, real estate is always a good investment. Real estate values, like gold and silver, are cyclical.  It will always go back up. Admittedly, the hardest bite to swallow is when you've bought when prices have topped out (again, hind sight is 20/20).
   
5. Buying real estate -- especially for cash buyers -- helps get the inventory moving again and allows for values to start drifting upward.

As difficult as it may seem to swallow in the current market, real estate is the best investment you can make, especially when there are so many deals to be had right now. Prices are coming down. Unfortunately, short sales and foreclosures are becoming more prevalent as well -- even here in Hawaii. So there are always opportunities to buy at lower prices than a couple of years ago.

The bottom line is: The longer you wait to buy that piece of property you've always wanted, the harder it may be to get a loan, and the interest rates may bite you along the way. So, either spend the money now and get a great deal that will likely appreciate over the coming years while the cost of the money you borrow is still low, or miss the boat...