We are constantly told by the media that the real estate market is in poor condition and is another symptom of an extraordinary financial collapse. It’s no secret that news organizations follow the “If it bleeds, it leads” mantra. They do so because people pay attention when they think they are in crisis. When is someone going to pull these guys aside and tell them to quit depressing us? There is good news out there! It’s too bad good news doesn’t get the attention it deserves.

 If the Hawaii real estate market is in such bad shape, then why did this article report new statistics published by CoreLogic that show Hawaii as the #1 state in the country with the greatest annual price appreciation for April. Hawaii had a 13.4 percent increase. This is the second month in a row that Hawaii posted gains, and home-buying prices nationwide have increased from a year ago.  

 It’s about time someone started writing about the good news. The truth is, buying a house when the market is on the upswing is just about the best time to buy a house. It’s too bad most people won’t realize real estate is fine until the market is booming again and it’s too late to take advantage of it.

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Where is the Good News For Hawaii Real Estate? Right Here.

Summer has barely begun but it looks like sales are already heating up for the busy summer season. The number of sales continues to be well above last year’s numbers, and this month, for the first time this year, we also saw the median price up for both single-family homes and condos. With increased market activity, this summer season promises to be a hot one! Check out our monthly report for neighborhood specific details.

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Much of this momentum is due to historically low interest rates, which are beneficial to both buyers and sellers.

What’s the big deal about low interest rates?

Low interest rates give buyers lower monthly payments and ultimately more buying power. Securing a low mortgage rate is similar to getting a price reduction in the purchase price. However, it’s important to note that these low rates are temporary and can increase at any time. With rates now under 5%, now is the time to use these low rates to your advantage.

How Interest Rates Affect Your Homebuying Power

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A Great Time for Hawaii Real Estate

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April 2010 Hawaii Real Estate Market Video

A more established trend has been the volume of sales, which have been rising since September. Last month, single-family home sales surged 52.9 percent to 286 from 187 a year earlier. Condo sales jumped 48.3 percent to 390 from 263 in the same period.

Many have pointed to the federal tax credit program which recently expired as the principle catalyst in the substantial gain.  The next several months will be indicatory of whether this notion is justified.  Undeterred by these gains, the median price fell relatively significantly for the first time this year, as expounded upon in the Star Bulletin.

But while there was more activity in the market, buyers still sought good deals, as evidenced by the slight decline in median prices. More than half of the single-family home buyers paid $563,000 or more for a home in April, which represented a 6.2 percent dip in the median price from $600,000 in April 2009. Similarly, the median sales price for a condominium fell 2.2 percent to $308,000 from $314,950

Though there is little doubt that these numbers are not as favorable as many economists had hoped, one must view the data with a degree of precariousness.  It must be noted that while Oahu as a whole declined slightly, many neighborhoods saw significant increases, such as Kalihi, Aina Haina, and Makiki; which all reported double digit percentage price gains.  Furthermore, the nature of the real estate business cannot simply be summarized with all-encompassing figures, purportedly indicitave of general market trends at a given point.  Rather, the proof is in the proverbial pudding; the real story lies within the myriad of details surrounding the market.

Each article may be accessed here: Honolulu Advertiser’s “April home sales rise as prices fall”

Star Bulletin’s “Housing market difficult to predict”

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April Proves to be a Mixed Bag, as Prices Decline and Sales Increase

Chief Executive Officer Bill Chee of Prudential Locations LLC expects a slowdown before the upcoming summer season ignites activity again.

But John Riggins of John Riggins Real Estate said he’s not as optimistic since the number of shadow listings — default notices, auction properties and lender-owned properties — is exceeding properties on the Multiple Listing Service.

“Just like the Cash for Clunkers got people buying automobiles, the tax credit got people buying homes,” Riggins said. “What remains to be seen is what happens after (the) April 30 (deadline), and we’ll know that next month.”

Similarly, the Advertiser stated its thoughts and observations on the housing market’s performance thus far, as well as what the termination of the tax credit may mean for buyers and sellers alike in the coming months.

Perhaps a bigger question that will soon be answered is to what extent the federal tax credits have pumped up the market.

The stimulus program was intended to shore up U.S. housing markets by providing qualifying first-time homebuyers up to an $8,000 rebate on the purchase of a home. The incentive, which began at the beginning of last year, initially was set to expire in December.

Federal officials extended and expanded the program this year to continue the $8,000 credit for first-time homebuyers and add a credit up to $6,500 for qualifying repeat buyers. Under the program, purchase contracts must be signed by April 30 and close by June 30.

Some market observers question how much impact the tax credit program is having, and suggest that sales won’t fall significantly after the program ends. But economists say such stimulus programs can have the effect of advancing sales that would have occurred later had there been no stimulus, and expect a drop of activity after the stimulus is gone.

Regardless of which stance you take on the uncertainty of life after the tax credit, it is certain that its repeal will reveal the vibrancy and depth of the market’s comeback with much greater clarity.  As noted, many analysts and skeptics have predicted time and again that without the first time credit, the market would have continued to slide.  Advocates of the rebound point to strong numbers across the board, including a rise in median home prices, as well as market velocity.  Perhaps the sole certainty we can expect this coming summer, is the rise in the once rock bottom mortgage rates.  As depicted in The Advertiser’s Thursday article, we may have begun to enter a period which is marked by rising, rather than falling rates.

The average rate on a 30-year loan has jumped from about 5 percent to more than 5.3 percent in just the past week. As mortgages get more expensive, more would-be homeowners are priced out of the market — a threat to the fragile recovery in the housing market.

And if you wanted to refinance at a super-low rate, you may have missed your chance. Mortgages under 4 percent are still available, but only for loans that reset in five or seven years, probably to higher rates.

Rates are going up because of the improving economy and the end of a government push to make mortgages cheaper.

Without regard to bias, there is a consensus among the real estate community that times are changing.  As the economy continues to recover and the federal intervention era concludes, many buyers on Oahu feel their time to buy their dream home must be now.  Homeowners and sellers once again have a return on their investment in their sites.  The Oahu real estate society has truly found itself at a momentous crossroads.

Each of the three articles may be accessed here: Honolulu Star Bulletin’s “Oahu housing market at crossroads”

The Honolulu Advertiser’s “Low-rates window closing for mortgages”

The Honolulu Advertiser’s “Home prices up, sales up again”

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Oahu Real Estate at a Fork in the Road

Several factors, such as interest rates, credit availability, the depth of the foreclosure problem and growth in jobs and personal income will play into whether home prices get pushed up again and to what degree. So a run-up in prices isn’t certain.

Home production, however, can be a major influence on prices, and residential building permits statewide last year sank to their lowest level since at least 1980, according to state statistics. Older statistics weren’t available.

Paul Brewbaker of local consulting firm TZ Economics said home prices could “light up” in two or three years based on the dearth of residential building permits from homebuilders last year.

Real Estate predictions made several years in advance often hold little validity due to the inherent volatility of the industry.  Despite this, whenever a term as loaded as ’spike’ is used, one cannot help but take notice.  Additionally, an expected dramatic rise in population which will be showcased in this year’s census will increase the demand for housing on Oahu.  Because of 2008’s credit crisis, this shortage has only been magnified through investors reluctance to facilitate new home projects.  Many experts in the real estate field are encouraging buyers to take advantage of the projected relatively flat rates over the next several months in order to avoid what could very well be a hostile buyer’s market in the years to come. 

 You may access the entire article here: Spike in Hawaii home prices on the horizon

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Home Prices Poised for Upsurge

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2010 Hawaii Real Estate Outlook – Scott Higashi Interview on KITV

Bernanke, in testimony to the House Financial Services Committee, essentially repeated the rationale behind the Fed’s decision last week to hold rates near zero. He cited still-fragile economic conditions, and noted that inflation is low, which gives the Fed leeway to keep rates at rock-bottom levels.

The Fed chief didn’t offer new clues about when the central bank might reverse course and start tightening credit. He said that would need to happen when the “expansion matures.” Some investors and analysts think higher rates could come in the fall.

Deciding when to tighten credit is the biggest challenge facing Bernanke, whose second term started in February. Moving too soon could short-circuit the recovery. Waiting too long could unleash inflation and sow the seeds for new speculative bubbles in stocks or commodities or other assets.

With unemployment continuing to hover around ten percent on a national scale, it is important to continue to facilitate credit lending.  The housing industry in Hawaii  has benefitted greatly from the low rates, though its current condition can still be considered sub-par of its 2007 strength.  Furthermore, many private banks such as Bank of America are now deciding to release many of their most disconsolate homeowners from the debts in which would surely lead to foreclosure.  Though our continued economic recovery is not definite, the preservation of exceedingly low interest rates will continue to be a welcomed certainty in uncertain times.

The entire article may be accessed here: Bernanke: Record-low rates needed to aid economy

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Bernanke’s Low Interest Rates to Continue

Fair market monthly rent for a two-bedroom home on O’ahu, or Honolulu County, rose 4.5 percent in the fourth quarter of last year to $1,704 from $1,631 in the same period a year earlier, according to the Washington, D.C.-based Center for Housing Policy.

The organization, a research affiliate of the nonprofit National Housing Conference, reported that rents rose in 187 of the 210 markets surveyed.

Honolulu’s rent increase was the 53rd highest. Rent rose the most in Knoxville, Tenn., where the increase was 9.8 percent.

Though the study concludes that the majority of Oahu citizens are living outside their means, few will attest to the vailidity of the data; as we all do not live remotely the same lifestyle. (A young professional on an eighty thousand dollar salary has very different spending habits than a retired couple of similar financial worth.)

A rise in rental rates is one of a myriad of reasons as to why owning your property is superior to renting. Yet, due to tempestuous economic conditions many of our residents are simply exercising their sole living option of renting their dwelling. Despite this, a great deal of renters in Honolulu can financially afford to buy their first home in the current market.

 With the federal tax credit expiring at the end of April, the first signs of a rebounding market and a rise in median home prices, one must no longer ask themselves why they should buy now, but rather; why not?

The entire article may be accessed here: Honolulu rents still 2nd priciest in U.S.

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Hawaii Rents Showing No Signs of Decline

Consistently rated the “Best Island in the World” by travel experts, this Hawaiian beauty underwent a growth spurt during the past decade that some critics bemoaned as excessive. But the southern coast, anchored by the hamlet of Wailea, has weathered it all well. One of the first master-planned resort communities in the nation, it’s a balanced blend of understated gated communities, luxury resort hotels, three excellent golf courses, a tennis center and, of course, several crescent sandy beaches. Wailea has 500 single-family homes, and their views are stunning: lush, verdant hills, brilliantly blue ocean and, after the steamy sun showers, rainbows over the horizon.

Though this may come as a surprise to many of our mainland friends, this ranking comes as no shock to those who have had the pleasure of experiencing the island of Maui. Moreover, Maui is leading the way not simply to a Hawaii revival, but a nationwide rebound. Principle catalysts behind the luxury real estate comeback include the budding of a bull market in 2010, the leveling out of home prices, as well as the general stabilization of the national economy. Bargain hunters and savvy real estate investors alike see huge potential in buying in the current Hawaii market. Likewise, primary home residence values have risen in the first several months of 2010, as well as condo sales. As the flood of positive Hawaii Real Estate news continues, even the most pessimistic of us have begun to find hope in our islands once more.

The entire article may be accessed here: 10 Best Places for Second Homes

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Maui Fever: The Valley Isle Ranked First for Second Home Locations