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Oahu Real Estate - Business as Usual?

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It’s a bright and sunny day here in Kailua for a change. A little windy but I am enjoying the sunshine! I am sitting here at an Open House in Aikahi Gardens Town Homes for a unit that has been on the market for 202 days. Wow. The last time I was here I think I had all of one person come to the Town Home and she was an owner worried about her falling equity. It was pretty slow back then in November. It got even worse in December. The sales reports for December of ’08 looked like the script of a Horror Movie.

But it is a new day and a new year here in Kailua and things are not looking as bad in the real estate market as one might think. The activity level is up all over the Island as young and older investors alike are snapping up some real bargains. This is especially true in the Foreclosure and Short Sale market. I learned this week from a news bulletin issued by the National Association of Realtors that 49% of all sales taking place in the Nation right now are Foreclosures and Short Sales. I find this amazing. I do not think that it is much different here in Hawaii as of my last count a couple of weeks ago I tallied up over 500+ Foreclosure and Short Sale properties For Sale on Oahu alone. You can find a somewhat dated list of these on my website at http://www.hawaiirealestatestatistics.com/.

What else has changed in today’s real estate market? Well, my marketing for one thing. I no longer work hard to obtain $1million+ property listings for one thing as in January ’09 they, for the most part stopped selling. It is primarily the low end in both Single Family Homes (SFH) and Condo/Town Homes that are selling now. You can see the proof of this in my Neighborhood and City Real Estate Reports for all over Oahu on my website.

I too have switched over my marketing and I am now heavily marketing in the Foreclosure and Short Sale market. I have established a new website http://www.foreclosuretoursoahu.com/ and even though I have recently joined with another full time realtor/broker as a partner, we cannot keep up with the leads and requests we receive daily for properties headed to foreclosure or short sale. Yesterday we took on an assistant to help us.

We have also aligned ourselves with a Loss Mitigator, otherwise known as a trained negotiator specializing in stemming losses for owners who have found themselves up side down in their mortgages. This means they have most likely purchased after 2005 and now owe more on their mortgages than what their properties are worth on the market and they can no longer afford their mortgages for various reasons. The loss mitagator will negotiate on behalf of the owner with the lenders when the owner has decided to sell their property and try to get out from underneath their debt. Our loss mitigator is fabulous and is worth her weight in gold to any owner who finds themselves in this unfortunate position.

Most prospective buyers are currently either getting involved with these distressed properties or they are waiting for the new President to save us all with his economic stimulus package which include some measures that I think just might help the current condition of the real markets throughout the U.S.

One of the measures on the bill includes a new 4% mortgage for first time home buyers from what I understand. Also there are numerous measures to forestall Foreclosures, Short Sales and a $15,000 tax credit for first time buyers. I think that if these measures are passed it will benefit many in the Nation. But on February 4th the $15,000 credit was dropped from the bill.

In a political climate similar to Hawaii’s, Washington D.C. as well seems to be ‘doing business as usual’ with additional measures added to the Economic Stimulus Bill like $140million+ to Veterans of W.W. II nationals of the Philippines. Although this might be a good idea and long over due, somehow I just don’t understand how this particular measure and others like it will stimulate the U.S. Economy. Nor will these types of measures change my belief that the politicians voting for this type of Pork, while we are in these dire straits, should be allowed to remain in office. There just is not enough outcry from our citizenry to our elected officials to dissuade them from allowing this ‘business as usual’ to stop occurring. Although the good parts of the bill will help many, the shear numbers that will increase in Foreclosures, Short Sales and those who will loose their incomes in the months to come will far outweigh any measures taking place now. I encourage anyone and everyone to be part of the solution and let your opinions be known to our elected officials.

Who has the money now? The Chinese have the money now and they are coming to Hawaii in increasing numbers seeking real estate investments. The number 1 Nation with more ‘hits’ than anyone else on my website: China. There are many other nations out there seeking Hawaii real estate as well and this will help us all in the months to come. We are an International destination and this is one thing we do have to our advantage over many of the Mainland markets.

There are disadvantages in owning Hawaii real estate when it is time to sell however if you are a non-resident or a Foreign National. For one, if you are non-resident of Hawaii, but a U.S. citizen and you sell your property under common conditions you will be charged an extra +5% Hawaii sales tax off the Top. That’s an additional +5% of the Sales Price. If you are a Foreign National you are charged +15%.

Now we all know that our Property Taxes are much lower than in the Mainland. That is great. But how long do you think that is going to last with the horrifying, increasing State Tax deficit? Is the answer to this condition just going to be ‘business as usual?’ Are we just going to raise our Property Taxes and every other conceivable tax in an effort to balance the budget? I think you can count on it in light of not only our current Hawaii legislators but our present U.S. Government. The fact is, State Bill 1277 now before the Hawaii State House proposes just that, a raise in our Property Taxes. See? It’s just business as usual, again.

As of today's posting the State of California has no budget and is reducing the size of their State Employees by -20%. Gee, I wonder if our Politicians currently in office here in Hawaii have the fortitude to do the right thing like California? Na! Let's just the taxes!

I didn’t intend this article to be my personal tirade expounding my political beliefs but I am very concerned for our economic future despite some promising news and current sales figures for the Hawaii real estate market. I believe that if you have similar views it is time to speak up. Personally, I believe our past leadership has put us into this position and I just don’t believe the same entity is capable of solving this problem when they so heavily contributed to our current demise. In short I believe that unless more citizens speak up to effect a much needed change any measures to help real estate are simply not going to be enough.

I wanted ‘change’ too…but I would have preferred a change for the common good, not ‘business as usual.’

Now for some stats:

Oahu



Kailua



Hawaii Kai


Mililani Mauka

These graphs and other's like themare available on my website for areas all over Oahu and Kauai.

I hope you have enjoyed this report. If you have any questions please feel free to contact me.

Mike Gallagher
Broker in Charge RE/MAX Honolulu
mikeg@hawaii.rr.com or 808-384-9015


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Comments

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HawaiiRealEstateGuy — Sunday, November 8, 2009
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Hey Mike, Great graphs and charts. Very useful stuff.



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Regarding the Kilauea volcano lava flow.




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