From the Tuesday, August 5 Honolulu Star-Bulletin

Market Stabilizing.

Versus the Honolulu Advertiser on the same date

Hawaii Median Home Sale Prices Drop 3.1 Percent on Oahu

(It’s a good thing that the Advertiser headline clarifies that the price drops on Oahu are in Hawaii. There is no redundancy in that headline nor is there any redundancy in the same headline of the newspaper the honolulu advertiser newspaper of Hawaii. That’s just poor journalism-and it gives us a clue about which article we should believe.)

The Star-Bulletin article does a good job of describing what’s going on. If anyone anyone actually takes the time to read it, they should feel much better about the market.

Both articles, however, failed to mention that sales actually increased in July 2008 over June of 2008.

When we hear about price drops from 2007-2008 we should keep in mind the fact that 2007 was a record year for prices. Of course it is unlikely that we will be able to match the record-setting median prices of 2007 in 2008. July’s median SFH price of $620,000 was not much less than July 2007’s of $640,000. August 2007 was $650,000 however, so expect sensationalist headlines about “price drops”, regardless of whether or not the situation is improving.

Post from: Hawaii Real Estate Reporter

Headlines Duke it out over Meaning of Honolulu Board of Realtors July 2008 Housing Stats

“Hawaii ranks 45th in Foreclosures” July 10th Article from Star-Bulletin.

The other is negative:

“Foreclosures up again from last year” Source: July 10th Honolulu Advertiser

What’s very curious is that they are reporting on the exact same set of statistics from a recent survey from Realtytrac.

The Glass Half Full Approach:
Let’s start with the positive one from the Star Bulletin (“Hawaii ranks 45th in Foreclosures”), the accurate one. This is the only article of the two that includes quotes from Realtytrac’s people. It’s encouraging that the writer who actually listened to the report’s author comes away with a more positive outlook.

The Star-Bulletin article states that Hawaii is 45th out of 50 States in the number of foreclosures and that foreclosures in June were down 17% from May. In the article, Realtytrac’s spokesman asserts that foreclosures aren’t a major threat to the market.

Headlines aside, we should take an objective, quantitative look at Hawaii’s foreclosure rate versus a market that is actually suffering. The difference is staggering: In Hawaii we only have 1 foreclosure for every 3,732 households. In Nevada, it is 1 for every 122 households, now that’s ugly!

The Glass is Half Empty Approach:
The dark side has spoken, and this time it’s the Honolulu Advertiser – oh no, foreclosures are up from a year ago! And what’s worse – they are up again. Not just up once, but up again, and again, and again. They had enough room. They could have added some additional ‘agains’. See, being up is not bad enough, being ‘up again’ is much worse. You must understand these things.

The article says that

“Hawaii’s foreclosure count continues what has been a steady rise in troubled mortgages.”

This is not the case. Recall that foreclosures are actually down 17% from May to June. Futhermore, Hawaii foreclosures were down 22% from April to May (Pacific Business News, June 13, 2008).

Fortunately, these numbers suggest a very encouraging trend. Unfortunately, these numbers make it harder for the reporter to tell the simplest, most sensational story-so of course they are omitted from the article, and a lot of readers are left in the dark.

Bottom line, foreclosures are not a big issue in Hawaii. We are consistently near the bottom in the number of foreclosures and they are too few to have an effect on our real estate market.

Post from: Hawaii Real Estate Reporter

Is the Glass Half Empty or Half Full? Newspapers Put Opposite Spins on Foreclosure Numbers

It seems that sales were up quite a bit. Not that the first sentence would indicate that. And of course we can’t have too much good news, so there has to be a reason for this – you guessed it, plummeting prices.

Yesterday they plunged, today they plummeted. Check out this first sentence:

“Sales of existing homes rose slightly more than expected in May as home buyers responded to plummeting home prices, according to an industry trade group.”

Source June 26, 2008 article by Ben Mooney CNN Money

What a bunch of ‘stuff’. A 2% monthly gain is in no way ‘slightly more’. It is amazing that the media just can’t stand good news. The entire remainder of the article tries to talk down what has happened. Notice the statement that homebuilders are the “authentic sellers” and yesterday’s new home sales report gives a “better view of what the market is like.” What is this guy on?

According to this article, Hawaii doesn’t even have a true real estate market because our sellers aren’t “authentic” and only ‘new home sales’ represent what the market is like.

Now here comes the amazing part of this article. The conclusion to an article about increasing home sales is –

“the housing market is probably still weakening.”

Give me a break. This article calls for not one, but two air-sickness bags. We therefore rate this article as a two-bagger.

Post from: Hawaii Real Estate Reporter

A “Two Bagger” Real Estate article From CNN

Since this article is published in a Hawaii newspaper, and the first line indicates that US home prices went down, it is natural that a reader would think this article is about Hawaii.  It isn’t.  “The Standard & Poor’s/Case-Shiller Home Price Index” on which the article was based contains no Hawaii data (it’s based on 20 US cities, none of which are in Hawaii).  Therefore the results have nothing to do with Hawaii. 

You would expect the local paper to disclose this rather important fact. They didn’t.  We should be very careful not to make conclusions about Hawaii’s market based on National Real Estate trends.  Hawaii’s unique situation (including our history of conservative lending practices, proximity to Asia, and ultra-high desirability) has shielded us from certain mainland trends.

In other words, Don’t Beleive the Hype!

Post from: Hawaii Real Estate Reporter

Alarming Real Estate Article in Honolulu Advertiser Doesn’t Apply to Hawaii

Home Equity at lowest Level Since WWII

from today’s article from the Honolulu Advertiser dated June 6,2008

Let’s start Friday off with some good old doom and gloom from the Mainland. The media has discovered that as prices fall, the equity owners have becomes smaller. Since this sounds really scary it must be good to put into news articles.

Now we have something else to worry about, being “upside down” in your home. This can be a serious issue. When you become upside down, drinks fall out of glass, everything on TV looks funny and the doggy door is in the wrong place. So keep an eye on your neighbors and be careful if you see their home flip over.

After the article scares everyone with becoming upside down, it then makes the point that 1/3 of all homes are owned free and clear and therefore can’t ever be upside down.

Also, this article is a great example of the difference between what is happening on the Mainland and in Hawaii. In May we set a record for condominium media prices and single family home median prices are stable. In 60% of the neighborhoods single family median prices have actually increased over last year. That leaves 40% where prices have declined some – but not much.

Just one more reason why Hawaii is a great place to own real estate

Post from: Hawaii Real Estate Reporter

More Gloom and Doom From The Mainland

It’s time for some good old media hysteria. As mentioned in the Honolulu Star Bulletin on Wednesday, May 14, 2008

Hawaii’s foreclosure rate tripled in April, with a 218 percent increase over the year-earlier period.
The state climbed to 36th in a national foreclosure ranking last month, with 210 foreclosures filed, or one for every 2,381 households,

My god, foreclosures up 218%! It’s time to build a bomb shelter and store food. In fact, curl into a ball right now and play dead, just in case there are any bears in the area.

The article says that Hawaii is experiencing a “relatively small number” of foreclosures. This is a tremendous understatement: 1 out of 519 US homes are in foreclosure, only 1 out of 2381 Hawaii homes are in foreclosure.

We’re in good shape with regard to foreclosures. You don’t have to be a rocket scientist to figure this out. (Although a research background in non-jet propulsion can help in any situation)

The outlook on Oahu is even better than the outlook for the state as a whole: UH’s Economist says that he thinks that the 218% increase mostly represents neighbor-island foreclosures. Among those, he says, many are probably mainland second-home buyers.

Don’t let these headlines scare you. We’re OK.

Post from: Hawaii Real Estate Reporter

Foreclosures up: “Okay, on my word, everybody panic. Wait for it . . . wait for it . . . GO!”

Yeah sure. The gas panic and all of the assorted predictions of the end of the world helps sell newspapers and increase viewer ship. But that is about all it is worth.

Take a look at this article. There is some excellent prospective in here – mixed with the craziness. Keep these perspectives in mind when you start telling yourself you can’t buy property now because it costs 20 cents more per gallon of gas. Especially in Hawaii where people sometimes have to commute as far as 12 miles to work. They finish the article with a quote from Jim Dator:

“I’m not aware of any available technology, or any other process, that can solve our problem other than conservation — reducing the demand and hopefully buying time,”

Source: Honolulu Star Bulletin Article 5/25/2008

The available technology has been around for over a 100 years, it’s called punching a hole in the ground.

Post from: Hawaii Real Estate Reporter

Some Common Sense About the Gas ‘Panic”