Mike Drutar REALTOR (S) e-PRO

January 2012 Big Island Real Estate Sales Data

Mike Drutar R(S) ABR, e-PRO — Wed, 08 Feb 2012 22:29:00 GMT

Stability remains consistent and strong once again in the West Hawaii housing market.

North Kona

Overall sales were very stable in North Kona in January. We had 26 residential sales compared to 21 in January of last year. For condominiums, we had 20 sales compared to 26 in January of last year. That is a combined total of only 1 less sale. The median price of residential houses rose nearly $26,000 to $379,991. The condo median price was $132,700. This is down from the January 2011 median of $192,500.

South Kohala

South Kohala was also stable. There were 13 residential sales compared to 14 last year. There were also 13 condominium sales compared to 13 last year. Again that's a combined net of 1 less sale. The residential median price was $275,000, compared to $332,500 last year. This is a significant decrease from last month, which had a surprisingly high median price. I think given the small sample size both numbers are a little bit skewed. The truth is likely in between. The condominium median price was $489,000. That’s an increase of over $150,000 from 2011.

Looking Ahead

Right now in North Kona and South Kohala we have a total of 866 condos and houses on the market. 106 of those are foreclosures and short sales (12%). We have 262 houses and condos in escrow, and 143 of those are foreclosures and short sales (54%). Those numbers should show that foreclosures and short sales go fast when they are on the market. It also looks like we have quite a few sales already in the pipeline.

Where do people most want to live?

Mike Drutar R(S) ABR, e-PRO — Thu, 26 Jan 2012 20:29:00 GMT

Hawaii of course!!

http://www.bizjournals.com/pacific/news/2011/11/09/hawaii-no-1-state-where-americans.html

Good article on the "Have we hit bottom" discussion

Mike Drutar R(S) ABR, e-PRO — Wed, 11 Jan 2012 20:52:00 GMT

http://realestate.yahoo.com/promo/has-the-housing-market-finally-hit-bottom.html

2011 Hawaii Real Estate Year In Review, A Look Toward 2012

Mike Drutar R(S) ABR, e-PRO — Wed, 04 Jan 2012 23:34:00 GMT

We have a lot of data to look into, so let’s dive in. We’ll start with the December data, then the 4^th quarter data, then a look at the year in review and what to expect in 2012.

North Kona December

There were 32 houses sold compared to 36 last December, and 40 condos sold compared to 34 last year. That’s a net of + 2 units sold. The median price for houses was $346,450 down 8.8%. The median price for condos was $153,000 down 12.8%

South Kohala December

We saw 16 houses sold compared to 18 last December, and 19 condos sold compared to 26 last year. The median price for houses was $453,856 up 47%. This number looks like some sort of statistical anomaly; it came out of nowhere. The median price for condos was $325,000 down 3.7%.

North Kona 4^th Quarter

For the last 3 months of the year, there were 100 residential sales, compared to 95 in 2010. There were also 76 sales of condos, compared to 69 in 2010. The median price for houses was $371,250 which was down 2.5%. Condos were hit harder with a median price of $159,750, down 13.65%.

South Kohala 4^th Quarter

The 4^th quarter saw 51 houses sold compared to 54 last year. There were 39 condos sold compared to 46 last year. The median house price was $363,000, up significantly from $312,500. The condo median was $325,000 down significantly from $420,000 of the 4^th quarter of 2010.

Overall, if you combine the number of houses and condos sold in South Kohala and North Kona we had a net of 2 more sales. That’s pretty stable. We saw a big increase in the median price of houses in South Kohala in December, and that seemed to also raise the median for the 4^th quarter. We’ll need to keep a good look at this moving forward. I’ve mentioned this many times before: when the market increases, it increases in South Kohala houses first. These are usually lower in price than Kona houses and represent a value to buyers. Eventually the price increases in South Kohala. As this happens and the gap between the median price of Kohala and Kona shrinks, buyers find the Kona market to be a better value, and we see an increase of prices there.

Year End Data

For the entire island in 2011, there were 2,220 houses and condos sold compared to 2,030 in 2010, a 9.35% increase.

The sales volume (total money spent on houses and condos) was $883M in 2011 and $852M in 2010. The exact increase was $31,014,040, which was a 3.6% increase.

The island wide median house price was $247,000 compared to $260,000 in 2010, representing a 5% decrease.

North Kona

For the year, North Kona had 417 residential sales, up 9.16%. There were 325 condos sold, up 6.21%. We finished the year with a median residential price of $370,313, which was down 8.79%. The condo median price was $170,000, which was down 21.66%.

South Kohala

There were 214 residential sales in South Kohala, and increase of 18.89%. There were 230 condos sold, up 27.78%. The South Kohala median residential price was $335,500, up from $333,000. This is the first time in 5 years that we finished the year up in median price in either South Kohala or North Kona. It’s a very modest increase, but an increase none the less. Again, South Kohala houses tend to be a harbinger of things to come. South Kohala condos had a median price of $344,500, down 9.46%.

Looking Toward 2012

I believe that 2012 will be the best year to buy in quite some time. We have a number of factors that make me feel this way. First, interest rates are hovering around 4% for well qualified buyers. That is a very low number and is a substantial decrease to your cost of ownership. Second, we have about a year of market stability. In years past we had a difficult time seeing the bottom of the market. It is looking like we are in it now. With the general feeling that things have stabilized, we will see more money entering the market because buyer who have been sitting on the sidelines will be more secure than in years past. However, I do not believe that this will cause a significant increase in median price. We expect to see more foreclosures enter the market after the summer of 2012 and that will help with the limited supply we have now. This leads me to the third reason that I like 2012 for buying. Your choices for purchase will increase. Right now supply is pretty tight, and while there is money on the sidelines waiting to enter the market, there are not enough quality listings. When we do see a listing with a low price, we are seeing multiple offers, often above list price, often cash. If you are looking at buying a property and it is important to you that you get the lowest possible price, you need to be ready to make an offer within 5-7 days of the listing hitting the market. It can be difficult to pull the trigger so quickly, but there are many buyers willing to do so, and those other buyers are your competition.

If you are considering selling, you will be best served by listing your house in the next 6 months. Again, we expect to see more properties on the market in the second half of 2012, and those houses will be your competition. If you list in the second half of 2012, expect it to take longer to sell.

Mike Drutar R(S)

Accredited Buyers Representative, e-PRO

November 2011 Big Island of Hawaii Sales Data

Mike Drutar R(S) ABR, e-PRO — Mon, 05 Dec 2011 21:13:00 GMT

We are seeing fewer distressed properties on the market. Currently there are 2393 active and in escrow listings of houses and condos on the entire island. 349 of those are short sales (14.5%), 66 are pre-foreclosure (2.7%), and 194 are bank owned sales (8.1%). So, distressed sales make up about 25% of the listings. We have had a total of 2058 sales this year, and 869 of those have been distressed property sales, which makes up about 42% of all sales. I mention this because distressed properties represent a good value compared to other properties. Often, people are put off by a short sale listing. Generally speaking, the banks have done a good job at streamlining the short sale process, and it can be a great opportunity to reduce your purchase price, if you can wait the 45 day for the bank to approve the short sale.

Home Inventory Shrinking:

http://www.calculatedriskblog.com/2011/11/visible-existing-home-inventory_28.html

We are seeing the number of homes on the market dwindle nationwide.

Mortgage rates look to remain low for 2012

http://www.lvrj.com/real_estate/experts-say-mortgage-rates-will-remain-low-for-2012-134956238.html

	North Kona Res Units Sold
Nov 2011	32
Oct 2011	36
Nov 2010	32

	North Kona Condo Units Sold
Nov 2011	17
Oct 2011	19
Nov 2010	18

	North Kona Res Median
Nov 2011	387,000
Oct 2011	394,500
Nov 2010	408,000

	North Kona Condo Median
Nov 2011	179,000
Oct 2011	215,000
Nov 2010	217,500

We see that the number of units sold continues to be very consistent. The median prices are down, houses are down 5.15% from last year, and condos are down 17.7% from last year.

South Kohala

	South Kohala Res Units Sold
Nov 2011	17
Oct 2011	18
Nov 2010	17

	South Kohala Condo Units Sold
Nov 2011	12
Oct 2011	7
Nov 2010	9

	South Kohala Res Median
Nov 2011	330,000
Oct 2011	320,500
Nov 2010	285,300

	South Kohala Condo Median
Nov 2011	387,500
Oct 2011	330,000
Nov 2010	470,000

Residential sales look very stable, but we are seeing a few more condos being sold. I don’t think the number of condo sales is indicative of any change in the market though.

October Big Island Sales Data

Mike Drutar R(S) ABR, e-PRO — Thu, 10 Nov 2011 23:55:00 GMT

October once again showed the market stability we have become accustomed to seeing. North Kona had 36 residential sales, up 4 from last month and up 9 from October 2010. There were 19 condo sales, up 2 from last month and down 1 from October 2010. The median price of houses was $394,500, up over 6% from last month and October of 2010. The condo median price was $215,000, down $20,000 from last year and up slightly from $208,250 in September.

South Kohala had a small blip in the radar with 7 condos sold, compared to 16 in September and 11 in October of 2010. It’s tough to say if this is a trend, or if we just had a high number of condos sold in September that took away from October sales. There were 18 houses sold, compared to 19 in October last year and 15 in September. The median house price was $320,500, down 3% from last year and up from $307,800 in September. The condo median price was $330,000, down from $470,000 last year and down from $369,000 in September. I don’t want to pay too much attention to the condo median price with such a small sample size of 7 sales.

Overall we have had over a year of stability In October of 2010 we had 74 sales in North Kona and South Kohala, in September we had 83 and in October we had 80. Year to date prices are down a little, but not in freefall. We had expected to “turn the corner” late this year with the year to date median price for the island equaling the 2010 median price. That won’t happen. Right now the island median residential price is down 5.95%

3rd quarter Big Island Real Estate Data

Mike Drutar R(S) ABR, e-PRO — Thu, 13 Oct 2011 02:33:00 GMT

September continued the trend over the last few months of a stable real estate market. Units sold are not really gaining or slowing with any consistency, and the median prices are doing the same as well. Overall for September we had a total of 3 fewer sales of houses and condos in North Kona and South Kohala when compared to last September.

In North Kona we had 32 residential sales in September compared to 33 in August, and 20 condos sold compared to 27 in August. The median price for houses was $373,694 and increase of 9% over last September, and way up from the August number of $329,000, which seemed very low at the time.

In South Kohala there were 15 residential sales in September, same as last year and off from 18 in August. We saw 16 condos sold compared to 14 in September of last year and down from 24 in August. The median price of houses was $307,800 down 5% from last September and down from $329,000 in August.

Overall, things seem pretty flat on a monthly basis with some small market flux here and there.

We also have our 3^rd quarter numbers. Since we are in a relatively small market here, I tend to believe our quarterly numbers do a better job of accurately showing where the market.

For the 3^rd quarter of the year, North Kona saw 98 residential sales, an increase of 15% from last year. There were 77 condos sold, for a 5% increase. The median residential price was $346,701 down from $399,500 last year. The condo median price was $180,000, down from $198,100 last year.

South Kohala had 51 residential sales, and increase of 3 units from last year. Condos saw the biggest gains with 59 sales compared to 47 last year for an increase of 25%. The residential median price was $330,000 down 4%. Condos in South Kohala had a median price of $341,000 down from $375,000 last year.

Overall we see very similar numbers of units sold over the last year and from month to month. The data was a little more clouded when it comes to price though, with most data showing prices going down, but a few exceptions. Right now, low interest rates might speed up the market a little bit.

August Big Island of Hawaii Sales Data

Mike Drutar R(S) ABR, e-PRO — Fri, 09 Sep 2011 23:26:00 GMT

North Kona

There were 31 residential sales in North Kona last month. August of 2010 saw 28 and July saw 33, so we continue to look stable. We saw 27 condos sold, same as last year and just below the 30 from July. The median price for residential sales was $329,000 a nearly 20% decrease form $408,500 last year. And down from $353,000 in July. August had a median condo price of $235,000 recovering very strongly from $137,000 in July, and up 46% from $160,000 last year. NOTES FROM THE LOW JULY SALES IN LAST MONTHS REPORT “Looking at the individual sales (I felt that number needed some serious investigation) we had a lot of sales of very small, old condo units. These are units in complexes that had very few sales in recent months, and all of the sudden had many sales. The effect was to drive up the units sold for the month, while driving down the median. So, I think we should not get worried about the low median price of condos, but we should also not get overly excited on the units sold.” As I expected, they July number was an anomaly.

South Kohala

South Kohala continues its stability. There were 18 sales up from 17 in July and 17 last year.. Year to date, the South Kohala market has seen a 33% increase in units sold compared to last year. The condo market in Kohala grew with 245 sales compared to 18 in July and 15 last year. Year to date, condos sold in South Kohala are up over 45%. The median price of residential units sold was $329,000 down from $370,000 in July and down 3% from last year. The median condo price was $324,750 down form $372,250 in July and down from $355,000 last year.

What’s Ahead

Interest rates have plunged. National averages have been under 4% for the last few weeks. I don’t think any of us ever thought we would see this in our lifetimes, 30 year fixed rate loan with a number in the 3’s! There is a good amount of foreclosure inventory on the way as many banks have decided to do only judicial foreclosures. These take more time and as a result, there are more foreclosures in the “pipeline” which should start hitting the market in 6-9 months (that’s the rumor at least). Hopefully that pause will alleviate a severe market decrease. For many buyers sitting on the sidelines, the low rates and the increase inventory in a few months will be the best opportunity to make a purchase. When we see all these properties hit the market, it will be time to buy.

July Big Island of Hawaii Sales Data

Mike Drutar R(S) ABR, e-PRO — Mon, 08 Aug 2011 21:17:00 GMT

North Kona

There were 33 residential sales in North Kona last month. July of 2010 saw 23 and June saw 41, so we are down a little bit from earlier in the summer. We saw 30 condos sold, up from 23 last July and close to the 33 we had in June. The median price for residential sales was $353,000 which was substantially from July last year when we had a median of $450,000. The median of June was $399,000. We will need to see if next month recovers and July was just an aberration. The median price in condos was also way down from last year. July had a median condo price of $137,000 which is one of the lowest numbers we have seen in a long time. Last July that number was $220,000 and June had a median of $211,000. Looking at the individual sales (I felt that number needed some serious investigation) we had a lot of sales of very small, old condo units. These are units in complexes that had very few sales in recent months, and all of the sudden had many sales. The effect was to drive up the units sold for the month, while driving down the median. So, I think we should not get worried about the low median price of condos, but we should also not get overly excited on the units sold.

South Kohala

South Kohala looks more stable right now. There were 17 residential sales compared to 16 last July and 19 in June. Year to date, the South Kohala market has seen a 40% increase in units sold compared to last year. The condo market in Kohala is also stable as well with 18 sales compared to 18 last year and 16 in June. Year to date, condos sold in South Kohala are up over 40%. The median price of residential units sold was $370,000, about even with last year when we had a median of $362,500 and up from $345,000 in June. The median condo price was $372,250 which was down from $399,500 last year and $462,500 in June.

What’s Ahead

The next few months should be interesting. With the recent financial downgrade of the US credit rating, and changes in the foreclosure process, we will likely see a pause in purchasing. There is a good amount of foreclosure inventory on the way as many banks have decided to do only judicial foreclosures. These take more time and as a result, there are more foreclosures in the “pipeline” which should start hitting the market in 6-9 months (that’s the rumor at least). So, while there may be a decrease in demand due to changes in the financial market, there will also be a pause in the supply. Hopefully that pause will alleviate a severe market decrease.

2nd Quarter Big Island Real Estate Data

Mike Drutar R(S) ABR, e-PRO — Fri, 08 Jul 2011 19:36:00 GMT

As we enter the midway point of the year, we have seen a mostly stable market. We have been keeping our eyes open for signs of a real estate “double dip” and so far we have had very mixed data. We do expect to see foreclosures keeping prices where they are, and there may be some declines in certain segments of the market, but overall we do not seem to be seeing the large drops across the board of a few years ago. We’ll look at June’s numbers and the 2^nd Quarter numbers.

June Data

North Kona

We had 41 residential sales in North Kona last month. In May we had 35 and last year we had 45 for June, so it looks like we are in the same ballpark. We had 31 condos sold for the month compared to 32 last year and 35 in May, so again we are in the same ballpark. The median price for residential sales was $399,000 which is down a little from last year when the median price was $420,000. Last month the median was $421,000. The condo median price was $207,000 which was up a ridiculous 45% from last years number of $142,500. This looks to be a bit of an aberration since we had a median of $167,000 in May

South Kohala

South Kohala had 19 residential sales after we had 20 last year and 24 in May. We saw 16 condos sold compared to 19 last year and 23 in May. The median residential price was $345,000 compared to $317,000 last year and $315,000 in May. That’s a pretty big jump, we’ll keep an eye on this to see if it holds in the months ahead, but I expect it will drop next month. The median condo price was $462,500 up from $335,000 last year (38%) and up from $385,150 in May. We see far fewer of the lower priced resort condos than last year, and we are now seeing some of the higher priced resort condos starting to sell.

2^nd Quarter 2011

Entire Island

This is where we start to see some possible downtrend in the market. Second quarter residential and condo sales for the entire island totaled 586. Last year that number was 612 so it looks pretty flat with only a 4.2% decline. However we are still up year to date by 5.9%. Median residential for the island is down 1.95% year to date.

North Kona Units Sold

North Kona Median Price

South Kohala Units Sold

South Kohala Median Price

May Big Island Sales Data

Mike Drutar R(S) ABR, e-PRO — Mon, 06 Jun 2011 22:54:00 GMT

North Kona

There were 36 residential sales in North Kona last month. That’s pretty much in line with last year (34) and last month (38). We saw 35 condos sold, up from 32 last May and way up from 18 which we had last month. The median price for residential sales was $421,000 which was down 5.5% from $445,650 last year. Year to date North Kona residential is down 1.2% from last year from $405,000 to $400,000.

The condo market has seen much less stability. One of the best things about condos is that you don’t have to clean the pool, tend to landscaping, paint the exterior, or any of the other maintenance duties of home ownership; you simply pay the monthly maintenance fees and it is done for you. The negative of that situation is that when some of your fellow neighbors stop paying their maintenance fees, it can cause you problems. There are some condo complexes that are having to reorganize due to owners not paying their maintenance fees. As these situations happen and other condo associations (which are remaining solvent) are seeing high delinquency rates, banks are becoming hesitant to lend money to buyers for these properties. This limits the possible buyers to those who have cash, which drives prices down even more. So, while we see stabilization in the residential market, the condo market continues to drop. This presents a buying opportunity, but it is not without risk. The median price for condos was $167,000, down 22% from $215,000 last May, and down from $180,000 last month. I would point out however, that we are seeing a severe decrease in condos on the market compared to last year.

South Kohala

South Kohala continues to pick up momentum again this month. There were 24 residential sales compared to 10 last May and 15 last month. Year to date, the South Kohala market has seen a 60% increase in units sold compared to last year. The condo market improves in Kohala as well with 23 sales compared to 19 last year and 17 last month. Year to date, condos sold in South Kohala are up 70%. The median price of residential units sold was $315,000, down from $334,500 last year but up from $300,000 in April. The median condo price was $385,150 which was up from $370,000 last year and $320,000 last month.

What’s Ahead

…more of the same, which is to say some good and some bad. The truth is that we are past the days when the news was all bad, and in the end, that is an improvement. I did see a few more orders from banks seeking valuations on their shadow inventory at the end of May, but nothing substantial. One of the biggest changes in the months ahead will be related to the government no longer backing large loans (over $700k). This could make it more difficult to get large loans, which would in turn drive down the prices of those larger more valuable properties, which would in turn drive down the prices of the properties below them, and so on. It remains to be seen how much of an effect this will have.

April Big Island Real Estate Data

Mike Drutar R(S) ABR, e-PRO — Tue, 10 May 2011 21:04:00 GMT

Aloha,

As I mentioned last month, April was expected to have numbers lower than April of last year. This was not due to a slowdown in the market, but more about the fact that April of last year was very strong. The final numbers are in and it looks like sales were down slightly for houses and down quite a bit for condos.

North Kona

We had 38 residential sales in April which was down from 44 in April 2010 and 42 last month. Condos had 18 sales, down 33% from last April’s 27 total and down 56% from 36 last month. The median residential price in April was $368,000. That’s down from $410,000 last April and also down from the same amount last month. Our median price for the year is down just 1% from last year, so we appear to have some stabilization. The median condo price was $180,000, down from $236,000 last April and up from $162,000 last month. The median price for the year is down 31% from last year.

South Kohala

There were 15 residential sales in April, the same as April 2010 and down from 24 last month. There were 17 condo sales up from 14 last April and down from last months amazing number of 35 sales. I would not say that there is a shortage of condos in the South Kohala market, but the inventory has been reduced drastically from just a few months ago. As I mentioned before the South Kohala condo market was hit hard by foreclosures and short sales and the bank were aggressive (after a long delay) in reducing their condo holdings. We are seeing fewer bank owned condos in this market than we did before. The median price for condos was $320,000, down from $352,000 in April of 2010 and down form $399,000 last month. Year to date median price for condos is down 13% from last year.

What’s Ahead?

I expect next month will see about the same number of sales as last May. There has been a lot of talk about a double dip in the real estate market; that prices will drop again to a point even lower than we saw before. It appears that nationally we are seeing that now. I’m still not sure that we have that here yet. It’s important to note that here on the Big Island we have different economic influences than the rest of the nation. We are more at the mercy of construction and tourism than anything else. Nationally, the bank owned property saturation is increasing, driving down prices. I’ve mentioned in the past that I do work for banks where they have me go out to properties that are distressed (going into foreclosure, short sales) and give the bank a price opinion. For me, I can get a general idea of the shadow inventory (homes that are not on the market now but are in the foreclosure process and will eventually be on the market) by how much the bank send me out to properties for these valuations. When things were at their worst, I was doing 30 of these a week. In April I did maybe 10. The long and the short is that I’m not so sure that we will see a drastic increase in the number of bank owned properties on the market.

National Home Price Change (2008 to 2011)

Big Island Real Estate Data for the 1st Quarter 2011

Mike Drutar R(S) ABR, e-PRO — Wed, 06 Apr 2011 01:48:00 GMT

The end of the first quarter is already upon us, and the news continues to show strengthening in the West Hawaii market. Even negative data is balanced by positive data.

North Kona

The North Kona residential market continues to improve by all measures. For the quarter we had exactly 100 houses sold, up from 79 in the first quarter last year and up from 93 in the last quarter. The median price was $407,500, again up from last year by 4.4% and up from last quarter by 7% from the last quarter. So, North Kona residential is up on all counts. We will see a decrease in the next quarter when compared to the previous year, mainly because Q2 2010 was pretty high. The most important thing going forward is that we are only $2,500 below the median price for 2010. Simply put, we are pretty stable and NOT seeing freefall.

The condo market is different. Sales were up; we had 85 sales this quarter, compared to 73 a year ago and 68 in the last quarter, the second highest quarter in the last 4 years. However, prices are WAY DOWN. The median was $172,000, the first time below $200k is a very long time. A year ago the median was $259,000, and last quarter it was $225,000. The following goes for both North Kona and South Kohala condos: banks are selling these as fast as they can and they are taking big losses to do it. If you own a condo, now is not the time to sell. In fact, it is about the worst time to sell. Houses are so cheap that many buyers do not see the value in condos. This means the condo sellers have to reduce prices drastically to initiate a sale. The important thing is that they have finally realized that they need to do this, so prices have dropped and condos which have been on the market a long time are finally selling at a pretty fast pace.

South Kohala

The South Kohala residential market continues to make very small moves. 54 for the quarter compared to 33 last year and 53 last quarter. While year versus year looks good, up 63%, I would have expected to see more sale than last quarter by a larger margin. The median price was $330,000 this quarter compared to $373,500 last year but UP from $305,000 last quarter. It is pretty hard to interpret that data in any way with much confidence.

The condo market is incredible compared to where it was 2 years ago. First, understand that the South Kohala condo market is VERY different from the North Kona condo market. Many people buy a condo in Kona to live. Many more people buy a condo in Kohala to play. These are often vacation properties that are used a few months of the year and then rented out a lot of the other time. We had 76 sales compared to 35 last year for an increase of 117%. 2 years ago we had 12 sales for the entire 3 months! In the last quarter we had 45 sales, an increase of 68%. The median price was $360,000, down from $479,500 last year, $466,000 last quarter. I would note that Q2 last year was $354k and Q3 last year was $379k.

The market for condos in Kona and Kohala are different, but banks are still dropping prices and selling as many as they can, and there are obviously buyers who have been waiting for this.

Overall, we continue to see strength in the market. We are all seeing more buyers calling the office and more real estate activity. Hopefully we will continue to see modest, gradual gains. I had mentioned that the bottom should be sometime late this year, but things might be heating more than quickly than I had anticipated.

February Sales

Mike Drutar R(S) ABR, e-PRO — Tue, 15 Mar 2011 00:48:00 GMT

North Kona

We continue to see signs of improvement in the real estate market. North Kona had 35 residential sales compared to 21 in February of last year and 20 in January. Condos sold hit 23 compared to 24 in February of 2010 and 26 in January. Year to date we have seen a 27% increase in North Kona Homes, and a 8.8% increase in North Kona Condos sold.

the median price for residential sales was $430,000 up 4.5% from last February and up from $330,000 in January . The median condo price was $149,000 down 42% from last February and down from $210,000 last month. Year to date median price is up from last year for homes, 4.58%, while condos are down 31%.

Expect to see a pulling effect soon for the condo market in Kona. As the cost of homes rise, condos look more appealing and we start to see more condo sales.

South Kohala

South Kohala residential finally had a good month by some measure. We had 16 residential sales compared to 8 in February last year, and 13 last month. We had a staggering 28 condo sales compared to 11 last year and 13 in January. Strong numbers all around. I don’t think we will see quite this volume next month, but it’s nice to finally see South Kohala have a good month. Year to date residential sales are up 57%, condo sales are up 127%.

Why are we seeing so many sales? There is value in South Kohala. I’ve mentioned in the last few months that South Kohala was severely lagging in sales while Kona was seeing a recovery. Well, the market has spoken and money is now moving into the Kohala market. We see this dynamic play out over and over throughout the years. At this point in my real estate career, it’s pretty easy to spot. First, prices go up (or hold compared to other markets on the island) in North Kona residential. This lasts for a little while, then buyers see the value in their “second” choice; Kona condos and South Kohala. We then start to see those numbers improve while Kona holds steady. Eventually the prices and value of the Kohala market and the condo market become less appealing when compared to Kona Residential. At that point we see Kona residential sales go up again, and the process starts all over. This is based on the idea that for many (not all) buyers North Kona residential is the preferred place to buy. If you are looking at other markets besides north Kona, you can start to see when prices are about to go up.

The median residential price was $330,000 compared to $355,000 last year and the exact same as last month. The median condo price was $367,000 compared to $445,000 last year and $335,000 in January.

In short, things are picking up. Usually I like to have this report out by the 6th, but I have been so busy that I just have not been able to dedicate the time until today. Next month we will be on time for out 1^st quarter 2011 report. I expect to see an increase in sales across the board, with a price increase for North Kona Residential (remember, that means the other markets will soon follow!)

January Big Island Real Estate Data

Mike Drutar R(S) ABR, e-PRO — Thu, 03 Feb 2011 23:33:00 GMT

North Kona

We saw 20 residential sales compared to 23 in January of last year and 35 in December. January is usually a lower month; sales in January are on contracts written in December and late November, times of the years when peoples attention is not on purchasing a property. So while the numbers are down significantly from December, they are about in line with January of last year. Condos sold hit 26 compared to 21 in January of 2010 and 34 in December.

The median price for residential sales was $353,250 down 3% from last January and down from $389,500 last month. The median condo price was $210,000 down 17% from last January and up from $176,000 last month.

South Kohala

As I have mentioned recently, South Kohala residential is recovering more slowly than North Kona. There were 13 sales compared to 11 last year and 17 in December. We had 13 condo sales compared to 7 last year and 25 in December. Those are some very mixed numbers brought about by a small sample size. However, there is a trend for more condo sales in South Kohala than a year or 2 ago. There was a lot of building of resort condos in the area over the last decade, and the resort condo market was hit the hardest by the downturn and now shows the most room for improvement.

The median price was $330,000 compared to $320,000 last year and $305,000 in December. The median condo price was $335,000 compared to $375,000 last year and $350,000 in December.

Looking Forward...and back

Last month I posted an article in my blog from the Honolulu newspaper which showed that the market in Oahu had turned the corner. In 2010 the median price for the year was higher than the year before, after 2 years of decline. Other articles I read say that there may be a double dip, or that a double dip has already started. Every market is different as they say, and Hawaii certainly falls into that category. While some places on the mainland are struggling, and Oahu is getting stronger, we are somewhere in between. Oahu has a few factors that we do not have on the Big Island. Oahu has a strong military presence and spending, large shipping port, and is a Pacific business hub, in addition to tourism. We on the Big Island are much more reliant on tourism. As a result it is taking us longer to see the same recovery. While emailing with one client I felt the need to understand exactly where we are in terms of median price change. To put is simply, prices are still going down, but not as much as before. It looks like we will see the median price of this year equal the median price of last year sometime around the end of the year, or the beginning of next year. I have attached a graph showing the Median Price Change for the entire island over the last few years. The final median price for houses on the island in 2010 was $255,000 and for condos it was $270,000. When we hit those numbers for this year we will have seen the bottom of the market somewhere between 2010 and when we hit that number again. We are only one month in and right now the median is $220,000 for houses and $219,000 for condos. Again, January is a low month in terms of units sold, so this number will change as the months go on, sometimes dramatically.

Possible Protections from Foreclosure

Mike Drutar R(S) ABR, e-PRO — Fri, 28 Jan 2011 23:37:00 GMT

We are very far along in the process for there to be substantial changes, but here we go. This may help some people extend the foreclosure process, but at the end of the day, if the mortgage is not being paid, the house will still be foreclosed on.

http://www.kitv.com/news/26653497/detail.html

Foreclosure filings set a record for 2010

Mike Drutar R(S) ABR, e-PRO — Mon, 17 Jan 2011 18:27:00 GMT

2010 was the worst year on record, and Kona had 10% of the foreclosures for the entire state.

http://www.staradvertiser.com/business/20110113_Foreclosure_filings_hit_new_high.html

Hawaii 2010 Real Estate Review

Mike Drutar R(S) ABR, e-PRO — Thu, 06 Jan 2011 10:08:00 GMT

Prices are still down, which they will be for a while, but the number of units sold has increased significantly over 2009. That shows us that things are reaching equilibrium.

Here is the review!!!

Hawaii 2nd Quarter and July sales data, Foreclosures, Short Sales, Loan Modification

Mike Drutar R(S) ABR, e-PRO — Mon, 10 Aug 2009 23:00:00 GMT

Aloha,

I want to give you the results of the 2^nd quarter sales numbers and the July sales numbers. I’ll also go into some detail about foreclosure sales, short sales, and the home loan modification program. Hopefully this information will be helpful to you or someone you know.

2nd Quarter Data

We saw a spike in sales with North Kona residential sales hitting 79 units. This is up from 41 in the first quarter of the year. We also saw condos go from 32 to 40 sales in North Kona. The median residential price fell to $433,000. That's a decrease of 3.1% from the first quarter and a decrease of 16.8% from the same period last year. The median price for condos was $292,000 for a 13.4% decrease from a year ago.

South Kohala saw residential sales fall from 38 to 34 units, but condos gained significantly going from 12 units in the first quarter to 29 sales in the second quarter. The median residential price dropped to $386,750 for a decrease of 20% in a year.

July Sales Data

North Kona residential units sold were up to 27 from 14 in July 2008. Condos were up to 15 units sold compared to 14 in July 2008. The median residential price was $435,000 for a 16.7% decrease from July 2008. The median condo price was $200,000 for a 33% drop.

South Kohala units sold were up to 15 from 13 in the same period last year. Condos saw 12 units sold for no change from a year ago. The median residential price was $370,000 down from $400,000 in July of 2008. The median condo price was $632,500. As I always mention, the median price of condos in South Kohala will vary greatly due to sales of high end luxury condos in the resort areas. In the last year median prices there have been as low as $400,000 and as high as $2,850,000.

Summary and Opinion

Prices are down, but we are seeing more units sold. The general feeling is that we may have turned the corner on this market, in the sense that things are not in free-fall anymore. That is not to say that we will see the market get hot. We are not anywhere near a seller’s market, and I don't expect to see prices climbing fast anytime in the foreseeable future. Basically, things are getting more in balance. The properties which are selling fast (properties in escrow in less than 30 days) are lower prices houses and condos which are being sold by the banks. These foreclosures, when properly priced, will get multiple offers. Traditionally, foreclosure properties have usually been in bad condition. While we still see that a lot, we also see some foreclosure properties in good condition, ready to move in. I also expect to see more of the resort condos on the foreclosure market. Many of these properties are second and vacation homes. The owners tend to not pay the mortgage on these properties as a first step in difficult financial times. As a result, we are starting to see them on the market, and I know more are on the way. The prices in these areas are dropping pretty fast. High monthly fees have made them less attractive to potential buyers when the prices are already high. It is not unusual for identical units to be for sale with a price difference of $200,000. A general rule for any type of property is to have all your ducks in a row (have your pre-qualification letter from a lender and the money ready for a deposit) and be ready to move fast on a property. With the foreclosures being so much lower in price than other properties in the area, buyers have found the type of property they want (in a particular complex or neighborhood), and these buyers are just waiting for the next low priced listing to hit the market. These people are your competition if you are a buyer.

Foreclosures, Short Sales, and Home Loan Modifications

Foreclosure sales (aka REO or bank sales) are different now than they were a few years ago. In the past there would be an auction at the courthouse steps and the highest bidder won. The banks realized that they were leaving tens of thousands of dollars on the table with this situation, since only a very few buyers have the cash on hand to make such a purchase. Now the banks have a representative make the first bid for the amount owed on the property. This is usually more than the property is worth (after all, if the owners owed less than it was worth, the owners would just sell it). As a result, the bank always wins the auction. You can of course outbid the bank, and they will happily let you win, and collect their money from you, which will be more money than it is worth. I still get calls from people wanting to know about auctions, thinking that they will be able to buy a $500,000 house in Hawaii for only $100,000. Those days are long gone.

What the bank does now is get an agent to list the property just like any other house. The bank does want to sell it and sell it fast. They usually try to make it one of the lowest priced properties in its market segment, if not the lowest priced property. Often there will be a lower priced "short sale"...but we'll get into that in a few minutes. From the banks point of view, this system allows them to open the property up to more potential buyers. Buyers do not have to have a cashiers check and the buyers can get a traditional mortgage. This allows the banks to get more for the property and minimize their losses. This is a good thing for all of us since if the banks have huge losses, they eventually go under, taking the money which customers have deposited with them (yes these deposits are Federally insured, but in the end all of us tax-payers would ultimately have to pay ourselves back). These sales are driving the market now.

Short Sales are when the owner tries to sell the house for less than they owe, and instead of bringing a check for the difference to the closing, they ask the bank to forgive the difference or "short" amount. The banks may do this, but they do not have to. It is up to them. A short sale is a very long process. First the owner tries to sell the property. Once they get an offer, the bank has to sign off on it, agreeing to the short sale amount. For the bank, they have to decide if the sales price in the offer is as good as they can expect on the market if they sell it themselves. For example, if the owners owe $500,000 and have an offer for $300,000, the bank needs to decide if the house is really worth $300,000, or is it worth a lot more. If it is worth more, the bank will not sign off on the sale. This process, simply deciding if the short sale amount is acceptable to the bank takes 60-90 days. From there the escrow process can start if the bank signed off on the sale price.

The banks take a while for this process because they need to do their due diligence. Some short sellers have decided to list the property incredibly low, far below what it is worth. From the seller’s point of view, they don't care if the house sells for $100,000 or $400,000, either way they will not make any money on the sale and they just want out of the situation. Some of the more amazingly low listings you see are these sellers. The bank always figures this out, and they will go back to the seller and buyer and let them know the price which does work for the bank. The buyers can accept it or walk away. Oftentimes, the buyers will have already cancelled the contract; the 2-3 months of not knowing can be stressful and if they find a property they can put in escrow and know they will close on, they will usually do it. In the end, the sellers are still helped by this process since they at the very least know what price the banks want for the property. Now they can adjust their price, and the next offer will not have to wait the 2-3 months for the bank to decide.

An important note on short sales; the bank usually will not just "forgive" the short sale amount. Usually they will file a default judgment against the sellers. Also, they may take a look at the seller’s finances. If the seller has money in non-retirement investments (things besides IRA's and 401k's) the banks want the sellers to use that to pay them back. If they see that the sellers have a loan for a Cadillac Escalade or other luxury item, they will not be very willing to just write off $100,000 that the sellers do not want to pay.

Most of us know about home loan modifications or "The Obama Plan" to keep people in their homes. Most likely, all of the readers of this will know someone who has been adversely affected by the economics of the last few years. Currently, the government and the banks are working harder than at any time in our history to keep people in their homes. This is good for the banks and this is good for families. Most people in difficult circumstances already know about this program, but some don't. If you know of someone having trouble with the mortgage, do them a favor and make sure they know about this program. I know it can be a difficult subject to bring up, and that it can be rude to talk finances in polite company; however, I believe this is one of the most helpful and important programs to help families stabilize their situation in these very tough times. The modifications are not open to everyone, if the owner is not working, no amount of modification will help until they have income. If the owner makes too much money, they will not qualify. Second homes and investment properties will not qualify. The banks use 2 things to help out; a lower interest rate and a loan extension, up to a 40 year note. There is a 3 payment "probation period" to make sure the new loan will work for the owners. Usually, once they make that, the modification is finalized, if they don't make all the payments, foreclosure will not be very far off. I have a few friends who have used this and their mortgage payment dropped by over 40%. For an owner to see if they qualify, the simply need to call bank with the loan, and ask about the home loan modification program. They will need old tax returns available.

I hope this was helpful to everyone. As always, feel free to call or email me at any time.

Mike Drutar R(S)

Accredited Buyers Representative, e-PRO

Century 21 Paradise International-Kailua-Kona

Mike@MyKonaAgent.com

www.MyKonaAgent.com

Mobile: 808-895-3067

March and 1st Quarter Sales Numbers, some surprises

Mike Drutar R(S) ABR, e-PRO — Sun, 05 Apr 2009 04:23:00 GMT

Aloha everyone. The first quarter of this year has been action packed with political, financial, and real estate news. Foreclosure numbers are at record levels, and expected to continue to grow for the next year; interest rates have been their lowest ever, and look to stay down; and some segments of the local market are showing signs of balance.

North Kona

There were 41 residential units sold in the first quarter. This was a decline of 40% from Q1 2008. Condos fell from 47 in 2008 to 32 in 2009 for a 32% drop. However, there may be some good news in the next paragraph. The median price of residential units in North Kona for the first quarter was $455,000 a 19.6% decrease from Q1 2008, and a 26.6% decrease from the record high in Q3 2007. The median price for condos was $294,750, a 20.1% decrease from Q1 2008.

So what is the good news? Well, the number of residential sales increased over the last 2 months from 7 in January, to 15 in February, to 19 in March. Also, the median price of residential units increased from $381,000 in January, to $419,000 in February, to $497,000 in March. This was certainly a surprise, but be sure to look at these numbers with a little skepticism. With so few sales each month, it only takes a couple high sales to skew the numbers. Truth be told, there are still 109 active residential listings in North Kona today, which are under $497,000.

South Kohala

For the first quarter, South Kohala residential units sold saw a 22% decrease to 38 sales. The median price was $403,000 a 21% decrease from last year.

Condos were very hard hit, with 12 sales in the first quarter (including just 1 in January when there were well over 300 active listings) a 73% decrease over Q1 2008. I see plenty of value in smaller residential condos in this area (Waikoloa Village) but not as much at the resort properties. The maintaince fees with these resort condos are very high when compared to similar Kona condos. Also, with the remarkably low demand and high number of listings (many of these properties were bought as income or vacation properties) prices still have a way to fall.

Interest Rates

Everyone knows that interest rates are very low right now, but do you realize that the rates on a 30 year conforming loan have been between 4.5% and 5.125% for the whole year? Just to show you what a difference that makes for affordability, a 6% on $100,000 will cost $600 for principal and interest in your mortgage payment. Over the last 7 or so years, 6% has sort of been the benchmark. A 5% loan on $100,000 will cost you $536. That’s a savings of $64 per month for every $100,000 of the loan amount. On a $500,000 loan, that’s $320 per month!!! That’s $3,840 per year, and OVER $115,000 OVER THE 30 YEAR LIFE OF THE LOAN!!! Wouldn't an extra $115,000 be nice? Take advantage of these rates while you can.

Why are rates so low? Well, as bad off as some banks are, and as bad as the foreclosure situation is right now, there are still some very large sums of money sitting out there and the investors want to make some money, the interest. "Hey Mike, why do they want to lend money for a house when there are so many foreclosures?" Well, the banks hate foreclosures, but at least they have something to foreclose on. With stocks, all they have is paper, and the stock market is not doing any better than the real estate market. The bottom line is that at least a home loan is secured with something (the house).

The only caveat is that it takes good credit and payment history to get these low interest rates. But if you have a history of paying people back in a timely manner, the interest rates are there for the taking.

As always, call or email me if you have any questions.

Mahalo,

Mike Drutar R(S)

2008 Big Island Real Estate Review

Mike Drutar R(S) ABR, e-PRO — Tue, 06 Jan 2009 00:52:00 GMT

2008 was one of the most challenging years on record for the real estate industry. As you might imagine, the Hawaii market has suffered along with the rest of the nation. While we look forward to 2009 with hopeful optimism, now is a good time to reflect on the last year (or two), and see exactly where we are.

For the entire Big Island, sales of residential units finished with a volume of 1,138 units. 2007 totaled 1,684 and 2006 saw 2,084 units sold. From 2006 to 2008 we saw a decline of 46% in units sold.

North Kona residential sales have seen a 20% decrease in median price from January 2006 until December 2008. That actually shows strength when compared to the entire island which saw a 28% decrease over the same period.

Condos have been especially hard hit over the last 2 years. The median price in January 2006 was $426,290. In December 2008 that number was $275,000, a 35% decrease. I expect we will continue to see downward pressure on all prices, and especially condos in the next 2 quarters. Condos tend to be second homes, vacation rentals, and investment properties at a higher rate than residential units. As a result, owners with shrinking portfolios tend to sell these off first, resulting in an over saturated market.

There is some good news. Qualified buyers are seeing amazing interest rates right now. The key here is qualified buyers. It is getting more difficult to get a loan with average credit, or a debt to income ration which is not ideal. But if you have good credit (over 720) and a favorable debt to income ratio, you are golden to investors. Because of the mortgage crisis, investors are tightening up who they lend money to...they want to be sure they will be paid. However, they still have money to lend! The stock market is not a great place for their money right now, and the dollar has gained back some of the losses over the last few years. What does this mean? They want their money to make money of course, and the best option is individuals with good credit and the ability to fulfill their obligations. The result is interest rates below 5%. For anyone out there with an existing home loan over 5.75% and good credit, this might be your last best chance to refinance. The biggest obstacle to a refinance right now is the lowered equity you may have if you purchased with a small down payment in the last 5 years. If not, you would do yourself a favor to at least speak to a refinance specialist and see if the numbers work for your situation.

On a side note, if you saw a sharp rise in your property taxes over the last few years due to the real estate market going up, you may want to check and see what your property value is according to your local government tax office. They may be charging you based on a value from the peak of the market. As prices have dropped, so should your taxes.

Now is a great time to buy investment properties. Some people are doing better than others, and the lower prices and interest rates represent a buying opportunity. Banks are selling off their foreclosure properties well below market value. Some government rules and programs (Rule 137) have actually backfired and done the exact opposite of their intentions, resulting in more foreclosure properties that banks need to unload fast. Gone are the days of the auction at the court house steps. Banks are listing with agents and putting properties on the open market in order to fetch the best possible price, but with an emphasis on selling fast. I am seeing banks accepting offers that make me wish I had more money!!! The best part is that this market used to be open to only people with a lot of cash, willing to give the bank a cashiers check immediately. Now, people with less cash can get these properties financed. Some people will get rich off this market in 5-15 years.

If you have any questions, feel free to contact me at any time. Here's to a better year!

California Realtors report homes selling more quickly...and why this is important to Hawaii

Mike Drutar R(S) ABR, e-PRO — Mon, 25 Aug 2008 23:05:00 GMT

Someone once said about the Hawaii economy, "When California gets a cold, Hawaii gets the flu". Given that, this article from Pacific Business News is worth noting.

California Realtors report homes selling more quickly

The unsold inventory index for existing, single-family homes in July was 6.7 months, down from 10 months for the same period a year ago, according to a report released Monday by the California Association of Realtors.

The index indicates the number of months needed to deplete the supply of homes on the market at the current sales rate. The median number of days it took to sell a single-family home was 47.5 days, compared with 50.7 days for the same period a year ago.

In Santa Clara County the median price was $706,500, compared to the year-ago period's $852,500. Sales were up 2.8 percent in the year-to-year period.

In Monterey County the median price was $389,440 compared to $685,000 in July 2007. Sales were up 83.9 percent.

In Santa Cruz County the median price was $611,000, compared to $777,500. Sales were up 5.4 percent.

The median price of an existing, single-family home in California as a whole during July was $350,760, a 40.3 percent decrease from the $587,560 median in the same month last year. The July median price fell 4.5 percent compared with June’s $367,130 median price.

"Sales improved significantly in July 2008 and remained above the 400,000 level for the third consecutive month," said association President William E. Brown. "Deeply-discounted, distressed sales continue to drive volume in many regions of the state. July also was the first full month during which the effects of higher $729,000 conforming loan limits likely had an impact on closed sales.

"Year-to-year increases in the number of transactions ranged from a 6.7 percent increase in the San Francisco Bay Area to a 176.5 percent increase in the Riverside/San Bernardino region. In general, greater percentage gains occurred in lower-priced areas that had been most adversely affected by the market downturn since late 2005 and that are concurrently experiencing the biggest declines in prices."

Statewide, the 10 cities with the highest median home prices in California during July 2008 were: Manhattan Beach, $1.77 million; Los Gatos, $1.42 million; Mill Valley, $1.37 million; Burlingame, $1.29 million; Calabasas, $1.18 million; Newport Beach, $1.14 million; Cupertino, $1.04 million; Rancho Palos Verdes, $1 million; San Carlos, $975,000 and Danville, $930,000.

Statewide, the cities with the greatest median home price increases in July 2008 compared with the same period a year ago were: Los Gatos, 36.6 percent; Mill Valley, 28.6 percent; Manhattan Beach, 9 percent; Berkeley, 8.2 percent; Mountain View, 6.9 percent and Cupertino, 1.1 percent.

Greenspan predicts U.S. house prices will begin to....

Mike Drutar R(S) ABR, e-PRO — Thu, 14 Aug 2008 01:14:00 GMT

NEW YORK (Reuters)

Former Federal Reserve Chairman Alan Greenspan predicts U.S. house prices will begin to stabilize in the first half of next year, even as he faulted the government's rescue of mortgage market giants Fannie Mae and Freddie Mac, the Wall Street Journal reported on Thursday.

"They should have wiped out the shareholders, nationalized the institutions with legislation that they are to be reconstituted... as five or 10 individual privately held units," which the government would eventually auction off to private investors, Greenspan said in an interview with the Journal.

In a high-profile rescue orchestrated in mid-July, the federal government offered to buttress Freddie and Fannie, the two largest providers of U.S. home mortgage funding, with billions of dollars of capital if the companies were on the verge of collapse.

Greenspan acknowledged that a government backstop for the shareholder-owned government-sponsored enterprises, or GSEs, was unavoidable, the paper said.

Not only are the they crucial to the ailing mortgage market now, but the Fed-financed takeover of investment bank Bear Stearns Cos also made government backing of Fannie and Freddie debt "inevitable," he said.

As private finance has retreated from the mortgage sector, the importance of Fannie and Freddie has grown, and they own or guarantee almost half the country's $12 trillion in outstanding home mortgage debt.

"There's no credible argument for bailing out Bear Stearns and not the GSEs," Greenspan told the Journal in an interview, which was reported on Thursday.

Fear that financial markets would react poorly if the U.S. government nationalized the companies and assumed their nearly $5 trillion debt is unfounded, Greenspan said.

"The law that stipulates that GSEs are not backed by the full faith and credit of the U.S. government is disbelieved. The market believes the government guarantee is there. Foreigners believe the guarantee is there. The only fiscal change is for someone to change the bookkeeping," he told the Journal.

Last month, Congress approved a massive housing market rescue bill, offering emergency financing to the GSEs, and setting up a $300 billion fund to help hundreds of thousands of troubled homeowners.

Greenspan also offered a novel suggestion to bolster the housing market -- increase the number of potential home buyers by admitting more skilled immigrants.

"Home prices in the U.S. are likely to start to stabilize or touch bottom sometime in the first half of 2009," he said.

But Greenspan cautioned that even at a bottom "prices could continue to drift lower through 2009 and beyond."

An end to the decline in house prices, he explained, matters not only to American homeowners but is a necessary condition for an end to the current global financial crisis.

"Stable home prices will clarify the level of equity in homes, the ultimate collateral support for much of the financial world's mortgage-backed securities," he said. "We won't really know the market value of the asset side of the banking system's balance sheet -- and hence banks' capital -- until then," he said.

Greenspan's forecast rests on two pillars of data.

One is the supply of vacant, single-family homes for sale, both newly completed homes and existing homes owned by investors and lenders. He sees that "excess supply" -- roughly 800,000 units above normal -- diminishing soon.

The other pillar is a comparison of the current price of houses -- he prefers the quarterly S&P Case-Shiller National Home Price Index because it includes both urban and rural areas -- with the government's estimate of what it costs to rent a single-family house.

As other economists do, Greenspan essentially seeks to gauge when it is rational to own a house and when it is rational to sell the house, invest the money elsewhere and rent an identical house next door.

In the past, Greenspan's crystal ball has been, at best, cloudy, the Wall Street Journal noted. He didn't foresee the sharp national decline in home prices. But recently released transcripts of Fed meetings do record him warning in November 2002: "It's hard to escape the conclusion that at some point our extraordinary housing boom...cannot continue indefinitely into the future."

Greenspan is currently promoting his book, the paperback version of which is to be issued next month with an epilogue.

Weekly Mortgage News-Housing Rescue Bill

Mike Drutar R(S) ABR, e-PRO — Fri, 01 Aug 2008 21:44:00 GMT

The Fannie Mae 30-Year Fixed mortgage rates did improve slightly this week to 6.375%, down from 6.5% last Friday. One of the reasons for improving mortgage rates this week is that the initial jobless claims increased by 44,000 to a total of 448,000 which was higher than expected and is at a 5 year high. Tomorrow the unemployment rate and non-farm payroll report will be announced and could have a strong impact on mortgage rates. "WATCH THE NEWS"

President Bush signed the housing rescue bill this week that was approved by Congress last week offering mortgage relief for 400,000 struggling homeowners who are facing foreclosure. This bill also offers a temporary financial life-line to the troubled mortgage companies Fannie Mae and Freddie Mac whose recent losses have been causing mortgage rates to rise due to investor fears.

Thanks to this bill, first-time homebuyers will get a tax credit of 10 percent of the purchase price, up to $7,500. The law defines a first-time homebuyer as someone who hasn't owned a home in three years. Although this tax break is great for homebuyers right now the money has to be repaid over a 15 year period. They will get the credit through a refund on their 2008 taxes. Then the bill comes due two years later, when one-fifteenth of the amount has to be repaid each year for 15 years. This credit is good until June 30th of next year.

Real Estate Market Expected to Improve with New President

Mike Drutar R(S) ABR, e-PRO — Mon, 21 Jul 2008 23:41:00 GMT

Copied from RISMEDIA

RISMEDIA, July 22, 2008-Nearly half of all home buyers (44%) believe the housing market will improve once the new President takes office in January, 2009, according to a new survey recently released conducted by Harris Interactive® and commissioned by Move, Inc., operator of Realtor.com®.Forty-eight percent of women and 41 percent of men who plan to buy a home in the current market said they think the housing market will get better once the new President is in office.

At the same time, 81% of home buyers are still nervous about the current housing market and report the existence of barriers between them and homeownership. Today’s home buyers perceive the cost of a down payment (28%), their annual income level (20%), lack of confidence in the economy (26%) and high home prices (31%), especially in the Western states (39%) as barriers to buying a home.

Despite these reservations, the survey indicates underlying demand for homeownership is healthy. While nearly half (41%) of current homeowners do plan to purchase a home again, 80% of all renters plan to purchase a home someday with 47% planning to purchase a home within the next five years. More people who plan to move will do so for space-related (26%) and life-stage change reasons (17%), such as having children (2%) or downsizing to a smaller residence (9%), not financial ones including an increase in rent (2%) or an expensive mortgage (less than 1/2%).

Most home buyers (78%) are also willing to make sacrifices to save and earn extra income for down payments and will compromise on neighborhood features and residential amenities in order to buy a home in the current market. Many of their choices may reflect changing values, including a growing concern over the environment, the importance of community features and the rising cost of fuel.

“These findings show that despite the difficulties home buyers face in the wake of the subprime crisis and their concerns about economic uncertainty, underlying demand appears relatively strong. Consumers see better times coming,” said Lorna Borenstein, president of Move, Inc. “This is great news to us and our colleagues in the real estate industry. As the leader in online real estate, we pay close attention to consumer perceptions and behaviors. This important feedback enables us to identify ways in which we can enhance the search experience so it meets the needs of today’s consumers who will become the homebuyers of tomorrow.”

Buyers Face Barriers to Homeownership

While about four out of five home buyers (81%) say they face barriers to buying a home in the current market, the greatest single barrier to homeownership today is high home prices (31%), a concern that was much higher in the West (39%), than in the South (27%) or Midwest (26%).

The second greatest barrier keeping buyers out of the current market is coming up with the money for a down payment (28%), with lack of confidence in the economy (26%) ranking third. Financial concerns generally are higher among people in the West (45%) compared to the South (33%) and about one-third of those ages 18 - 34 said lack of money (38%) or poor credit (18%) is a concern compared to only 11% and 5% (respectively) of those 55+.

Four out of five adults (84%) say there is something about buying a home that is intimidating, and one out of three (34%) say money-related issues being a concern. Finding the right home is the most intimidating part of the home-buying process for about one out of five (19%). About two thirds of adults (62%) have visited an online real estate web site and once on the site, 23 percent are looking to purchase and 52 percent are looking at what’s on the market.

“This survey surfaced important feedback that Realtor.com addresses by delivering the largest and freshest collection of listings and new features like Find a Neighborhood and Find Home Values to empower consumers,” said Realtor.com President Errol Samuelson. “We want to help remove uncertainties from the home buying process by making it as transparent and as consumer-friendly as possible. Providing the most comprehensive information, relevant tools and connections to local Realtors are only a few of the many resources consumers will find at Realtor.com to help make the process of buying and selling a home easier and less stressful.”

Trade-offs Favor Community, Environment

Today, adults rank crime rates (56%), proximity to daily conveniences (47%) and property taxes (46%) as the top three factors in choosing a neighborhood. Home buyers are more willing to sacrifice cultural and recreational amenities (18%) than green features (16%) like solar heating and energy-saving appliances, or forego proximity to work (7%) and daily conveniences (11%) to buy a house in today’s real estate market.

Concern over the cost of gasoline and the importance of community is evident in the importance buyers place on accessibility. Only seven percent of home buyers would be willing to sacrifice proximity to work and six percent, proximity to shopping. Only three percent would give up proximity to public transportation in order to buy a home in today’s real estate market.

About half of adults (49%) say green features like solar panels, energy saving appliances and low usage water heaters are “important” features. More care about green features (49%) than luxury amenities (31%), yet some would give up green features (9%) before storage (7%), luxury amenities (7%) or numbers of bedrooms or bathrooms (6%). Women rate green features higher than men (52% to 46%) and consumers aged 18 - 34 years of age rate green features the lowest (40%).

Kitchens (67%) and the number of bedrooms (69%) are the most important features today’s buyers are looking for in a home. Storage space (66%) and the number of bathrooms (62%) rank three and four on their list of priorities.

Mortgages Are a Mystery

Understanding mortgages and the financing process during these times of change in the credit industry is a major issue with a large number of buyers. Eighty-one percent of today’s home buyers and three quarters of adults (78%) say they wish the process of taking out a mortgage was easier to understand. In fact, some say that either understanding financing (9%) or the uncertainty of the mortgage process (6%) is the most intimidating part of buying a home.

For many buyers, changes in the amount of a down payment required for a mortgage is a significant issue. The lack of cash for a down payment is keeping about one quarter (28%) of buyers out of homes–more than those who have poor credit (15%), low household income (20%) or those who lack of confidence in the economy (26%).

Seventy-eight percent of home buyers are willing to make sacrifices to save money or earn extra income in order to be able to buy a home in the current real estate market. First to go would be spending (65%) on items such as personal luxuries (46%) and clothes, shoes and accessories (43%). Next, home buyers would go out less often (52%). Nearly half would clip coupons (47%) and 27% would cancel a vacation.