Hawaii Real Estate Daily

It might be hard to persuade anyone that there is a national housing meltdown when the Multiple Listing Service offers deals on Maui like this:

“Two bedroom, 1 bath older home on a small lot that is zoned industrial - access to property is by footpath only. Being sold as-is - fixer upper. $200,000.”

The aggregate statistics for the third-quarter of 2008 released by the Realtors Association of Maui on Thursday also do not portray a cratering housing market.

True, the number of transactions for the first nine months of the year is down by about one quarter, but prices received for houses and condominiums that do sell are holding up.

For single-family houses, the median price this year is $594,500. That is down $44,000 from last year, but is only a 7 percent decline, compared to hard-hit areas of the Mainland where prices are down 15 percent, 20 percent and in some neighborhoods much more.

Average prices for single-family properties are down by the same percentage, but since Maui’s average was so high last year, $945,000, the fall as measured in dollars is $70,000, down to $876,615.

Condos averaged $783,000 last year and are up 21 percent to $947,000 this year, but thousands of Maui condos are not in the million-dollar class.

The biggest concentration of middle-class condos is in Kihei, where the average is up 9 percent this year to $493,000.

The median for condo units, the point where half sold for more, half for less, is up 7 percent, to $570,000 countywide, although only 5 percent to $415,000 in Kihei.

The most expensive condos are in Wailea-Makena, averaging $2,184,013 this year, which is up an impressive 37 percent, but that may reflect the late recording of sales contracts that were inked for new construction years ago.

Still, there is little sign that the South Maui luxury condo market is swooning. The number closing this year is 160, only 16 fewer than in the first three quarters of 2007.

As a resort, Wailea is an outlier, commanding room rates almost a third higher than any other luxury resort in the state. It may be an outlier in luxury condominiums as well.

The average condo sales price in Kaanapali this year is off 18 percent to $1,164,364, and the average in Kapalua is down 30 percent to $1,070,794.

In Kaanapali, the number of closings has fallen from 45 to 33, and at Kapalua from 27 to 17.

Lanai is also a market unto itself, where there were only two transactions, but for nearly $2 million on average.

Although prices received are waffling around what sellers received last year (which was down from 2006), the smaller number of transactions means the aggregate value of the turnovers is well down.

The total of condo transactions this year (672 closings compared with 916 at this point last year) is down by $80 million to $637 million.

The number of single-family closings is down from 893 a year ago to 706, and the aggregate transactions are off $226 million to $619 million.

Notice that the number of single-family closings topped the number of condo closings. That is a dramatic change from any year before 2006. when the number of condo sales was often nearly double the number of single-family sales.

The number of days on market is also down sharply from last year. In 2007, it ranged between 74 and 131 for single-family and between 73 and 115 days for condos.

This year, the wait has been between 57 and 95 days for house sellers, 48 and 95 days for condo sellers.

Terry Tolman, the chief staff executive of the association, said that the drop in days on market shows that “properties priced right will sell in a reasonable time frame.”

He also noted that the number of active listings “has grown considerably in the last 12 months,” though the rise has leveled off recently.

Active condo listings this month are up to 1,600, compared with 1,283 in October 2007. Active single-family listings are 1,114, up from 1,016 a year before.

Tolman said median prices in September were down across the board, which might be because buyers are now not able to qualify for as much or because sellers are willing to accept lower offers.

Credits: Maui News

Coldwell Banker Pacific Properties is planning to reduce current asking prices on home listings starting Friday as part of a first-ever, nationwide event designed to stimulate the real estate market.

Nearly 100 homes, which represent about 15 percent of Coldwell Banker Pacific Properties’ listings on Oahu, will be reduced from 5 to 20 percent from Friday to Oct. 19.

The move is part of an initiative to jumpstart the local and national real estate market.

Oahu’s home sales slumped last month, according to statistics from the Honolulu Board of Realtors, even as median prices dropped to $590,000, its lowest point in 31/2 years.

“We felt this was perfect timing,” said Chason Ishii, president of Coldwell Banker Pacific Properties. “It’s our hope that the Coldwell Banker 10 Day Sales Event will move buyers off the sidelines and into the market.”

Ishii said due to higher inventory, historic low interest rates and declining list prices, this is a great time to buy a home on Oahu. First-time homebuyers also have the added incentive of a $7,500 tax credit due to recent legislation.

Oahu homes participating cover a broad range of neighborhoods and property types.

For instance, a two-story Wilhelmina Rise home, previously listed at $1.1 million, will participate in the event at a price of $990,000. A 4-bedroom Makakilo home, previously listed at $635,000, will participate in the event at a price of $604,000.

In total, the estimated list price reductions will amount to more than $4 million, Coldwell Banker estimates.

During the local sales event, participating agents will also collect donations for the Institute for Human Services, a nonprofit that runs homeless shelters and programs.

In a recent survey of 3,379 Coldwell Banker real estate professionals across the nation, 56 percent said listing prices in their market remain above where they need to be to attract qualified buyers.

The survey also found: 77 percent agreed the majority of sellers in their market still have unrealistic expectations regarding the initial listing price for their homes; 79 percent agreed appropriately priced homes in their market are attracting more buyers and moving more quickly; 76 percent feel that a 10 percent or less reduction in listing prices in their area is all it will take to help push these homes over the “tipping point” to a sale.

Credits: Star Bulletin

Condominium sales on Kauai plunged 60 percent in September, compared to last year, while sales of single-family homes on the Garden Isle fell 42 percent.

Prices also fell in both categories, according to statistics from Hawaii Information Service.

The median price of a single-family home on Kauai last month was $525,000, a 22 percent drop from September 2007, when it was $672,500. Year-to-date prices fared better, declining by about 4 percent to $632,500, down from $661,000 during the first nine months of 2007.

The median price of a Kauai condo in September was $495,000, down 16 percent from the same month last year, when it was $590,000. Condo prices remained flat for the first nine months of the year, with a median price of $560,000, which was the same as for the same period in 2007.

There were only eight condo units sold in September, a 60 percent drop from the 20 units sold in September 2007. Year-to-date sales were down by 40 percent, with just 144 units sold during the first nine months of the year, compared to 241 units sold during the same period in 2007.

Single-family home sales fell 42 percent in September, with just 21 Kauai houses sold compared to 36 houses sold during the same month last year. Sales for the first nine months of the year were down 33 percent, with 226 homes sold, compared to 335 homes sold during the same period in 2007.

Credits: Biz Journals

Thousands of Oahu real estate agents feel the impact of our slowing economy as deeply or more deeply than anyone.

The good news is Hawaii’s real estate, depending on your neighborhood is not in the kind of trouble seen in many mainland markets.

The bad news, more than 70% of Oahu real estate agents have sold two homes or fewer this year. That’s a direct and big impact on them and their families.

Oahu home and condo prices are down only 3% from last year, which means Hawaii is doing a whole lot better than other parts of the country.

But sales dropped almost a third, which means you have a whole lot of real estate agents who can’t generate enough income to get by.

The people who live in this Kaimuki house are ready for Halloween.

They’re also ready to move.

The Matsudas who live next door say, they’ve seen a real slowdown in the housing market.

“It’s been going downhill gradually,” said Karen Matsuda.  “And from last year, it’s definitely been down.”

Along a stretch of Pahoa Avenue, only two other homes for sale.

Quite a difference from a few years ago, when properties were bought and sold on a regular basis.

“In the real estate market, that has a definite effect on real estate agents because they’re looking at the number of transactions they’re putting into escrow,” said Real Estate Executive Scott Higashi.

In the past year, 40% of Oahu real estate agents made zero transactions, which means no home sales.

That’s about 2,000 agents.

The reason is because homeowners like the Matsudas are staying put, and not taking on additional risk.

“I wouldn’t take a chance on picking up another house, taking a mortgage out on anything at this point right now,” said Matsuda.

But Higashi says, as the market slows down, it’s time to act fast.

“People do think twice about, maybe should I wait, should I not move forward at this time. The reality is, owning a home is still a good idea and interest rates are really cooperating,” said Higashi.

Trying to make sense out of an industry that depends on dollars and homes.

Just in the Kaimuki area, the average home price is just under $900,000, so home prices are holding steady.

But the board of realtors thinks the slowdown will continue for at least a couple of years.

Credits: KHNL

Credits: Star Bulletin

The bailout package includes more aggressive steps to help troubled borrowers keep their homes by requiring the government to do more to reduce loan balances and interest rates.

The bill calls on the government, as the owner of mortgages, mortgage-backed securities and other assets backed by real estate, “to implement a plan that seeks to maximize assistance to homeowners and use its authority to encourage the servicers of underlying mortgages, and considering net present value to the taxpayer, to take advantage of…available programs to minimize foreclosures.”

Such measures could reduce monthly loan payments for homeowners and, in theory, increase the likelihood that borrowers keep up mortgage payments. It could also slow down the growing number of foreclosures.

The new requirements could represent a significant departure in the way the government has dealt with troubled borrowers in the past.

Until now, most government efforts, including its Hope Now program, have relied on voluntary measures by mortgage lenders and servicing companies. Critics say Hope Now hasn’t done nearly enough. “The vast majority of homeowners do not receive any meaningful relief from their mortgage servicer, and in some ways, this problem is only getting worse,” said Mark Pearce, deputy commissioner of banks in North Carolina.

Although the latest plan may evoke anger among taxpayers who pay their mortgages on time, economists say helping those in trouble could benefit all taxpayers by blunting the impact of the financial crisis on the housing market and local communities.

After a tentative agreement was set over the weekend, a $700 million Wall Street rescue plan could become law. But there are still holdouts and plenty of public anger. Fox’s Doug Luzader reports. (Sept. 29)

Getting borrowers back on track could help reduce the cost of the bailout to taxpayers. In recent years, troubled loan portfolios have yielded about 32% of book value, compared with more than 87% for loans in which the borrower is current, Federal Deposit Insurance Corp. Chairwoman Sheila Bair told Congress this month.

In an effort to maximize the value of the loans it controls and to reduce foreclosures, the FDIC is sending letters to roughly 28,000 delinquent borrowers with loans from IndyMac Bancorp, which the government took over this summer, offering to rework the terms of their mortgage. The modifications are designed so that the payments on a borrower’s mortgage don’t exceed 38% of gross income.

There are more questions than answers about how effective the government’s program will be. If the government buys entire loans, it will have more control of terms for homeowners than if it buys pieces of mortgage-backed securities. “Unless they own all of the tranches of a given offering of mortgage-backed securities, they won’t have complete authority to direct the servicer to engage in any loss mitigation strategy they choose,” said Thomas Deutsch, deputy executive director of the American Securitization Forum, an industry group. If the government has a majority or supermajority stake in a particular bond deal, “it may be able to amend the underlying documents” that govern the trust so that more can be done to help borrowers.

Another crucial unanswered question is how many borrowers will be helped by stepped-up loan-modification efforts. “There’s a great deal of skepticism about the ability of modifications to improve the performance of loans,” said Rod Dubitsky, head of asset-backed securities research at Credit Suisse. “Investors think these loans will all redefault in a year or a couple of years and the losses will be higher.” Historically, modifications haven’t done that well, Mr. Dubitsky added, “but the key question is what will happen if you do mods that are a different flavor than before.”

One fear is that if mortgage companies or the government, is too liberal in offering help, more borrowers who might otherwise stay current on their loans will fall behind to get a better deal. “What we don’t want to do is undertake some kind of program that changes the behavior of those many, many people who undertake extraordinary effort to pay their mortgage and make sure they can stay in their home,” said Karen Weaver, global head of securitization research at Deutsche Bank.

As many as 40% of homeowners, or about 20 million households, will owe more than their home is worth by the time the housing market stabilizes, Deutsche Bank estimates. Sorting out who needs help and who would actually benefit from it, Ms. Weaver added, is “a complex, Herculean task.”

Consumer groups and some government officials say the success rate would be higher if mortgage companies were willing to reduce borrowers’ monthly payments. An analysis of 144 mortgage modifications by the Massachusetts attorney general found that none reduced mortgage balances and only a handful reduced monthly payments. Even with interest-rate reductions, the study found, borrowers wound up paying more because missed payments, penalties and fees were wrapped into the loan.

It is difficult to measure the performance of modified loans, in part because there are no firm standards. Often, mortgage companies don’t report what are known as trial modifications. Excluding such arrangements can boost the success rate because it eliminates borrowers who fall behind before their workout is formalized. Mortgage companies also have different policies regarding how far behind a borrower must be before help is given and what types of solutions they offer.

Still, the preliminary evidence suggests that loan modifications would help some homeowners. Deutsche Bank recently looked at subprime loans packaged into securities, most of which were modified in 2008. It found that roughly 35% of the loans were at least 60 days past due roughly six months after the modification.

Another recent analysis, by Credit Suisse, found that certain tools appear to be more effective than others. Some 34% of borrowers who were put on a repayment plan that resulted in a higher payment — typically because missed payments and fees were added to their loan balance — were at least 60 days past due after six months, according to the analysis, which focused on subprime mortgages packaged into securities that were modified in the fourth quarter of 2007. But the percentage of borrowers who were behind after six months dropped to 17% when lenders reduced the principal of the loan, and to 13% when mortgage companies froze the interest rate of adjustable-rate mortgages.

The Credit Suisse study also suggests lenders may be getting better results from more recent modifications, perhaps because they are doing more to restructure loans instead of simply relying on repayment plans.

Credits: WSJ

August sales for Maui’s real estate sector continued to trend downward; however, there were pockets of optimism as August’s median residential and condominium sales prices rose to nine-month highs.

Last month, 65 single-family homes changed hands in Maui, a 21.7 percent drop from 83 in the prior year.

Single-family home prices fared better, dropping only 2.3 percent to $625,000 from the year-ago $639,996.

There were 50 condominium sales last month, a 56.5 percent drop from 115 in the same month in 2007. However, the median price paid for a condominium rose 6.8 percent to $632,500 from $592,000 in August of 2007.

“The market shows a continuing, general cooling trend,” said Terry Tolman, chief staff executive for the Realtors Association of Maui.

Unit sales in all three classes (residential, condo and land) dropped noticeably following July’s residential high of 97 homes sold, Tolman said. And, active inventory has grown considerably in the last 12 months, he said.

However, while unit sales are lagging, median prices are holding up and days on the market show that properties which are priced right will still sell in a reasonable time frame, Tolman said.

To be successful, sellers need to be realistic and offer properties that are well priced and in better property condition than the competition, he said.

“Unrealistic sellers continue to follow the market down and miss current opportunities that later become woefully apparent,” Tolman said.

While the market is cooling, interested buyers should not try to time the market, he said.

“Buyers waiting for the ‘bottom’ may also miss unique properties/opportunities as market forces, qualification requirements and rates may fluctuate,” Tolman said.

Credits: Star Bulletin