After recapping what the Short Sales, Foreclosures, Probate, Lender Sales, other wise known as “Distressed Properties” were doing at the end of year 2009, I thought it might be time to see what was happening with these distressed properties for the first couple of months of year 2010.

A.C.S. stands for Active Continue to Show and this is a category used for offers that are in Escrow as Just Accepted Offers. Since this category is usually no older data than four days, I have chosen to track this ‘fresher’ data as it tells me how well a market is doing in terms of activity and sales.

The A.C.S. % is derived by dividing the current inventory For Sale by the amount of Just Accepted Offers.  In the case above and below for Condos, we can see that the A.C.S. percentage is way above last year and that a large part of the inventory is in Escrow with Just Accepted Offers.

The A.C.S. percentage rises and falls due to the amount of Just Accepted Offers as well as the amount of total inventory For Sale. Lower inventory and high activity in terms of buyers putting homes into Escrow will drive up the A.C.S. percentage.

In thinking in terms of “Distressed Properties”, you have to have a little ‘different’ mind set. A lowering of the Average Sold Price in this case indicates that buyers are still looking to purchase in the lower price ranges.

The interest in Distressed Properties remains high and this is particularly true of the Waipahu and Ewa Areas of Oahu.

The declining graph is misleading as when you first begin to research Distressed Properties the “Active” or For Sale Listings begin at 365 days which is a typical listing period in this market. This then causes the subsequent months following the initial tracking starting point to decline as more months are added. Eventually this graph will even out and become an important piece of accurate information.

We are starting to see some ‘flattening out’ of these graphs now since January 2010.

The sad news is that Distressed Property listings are on the rise. This is certainly not good for sellers, but does allow buyers to get into homes for much less than Market Value in most cases. 

Again, you have to employ a ‘different’ mind set when interpreting this graph as this Distressed Property Average For Sale Price of New Listings, increasing, show us that the problem is not just in the lower end of the market’s price ranges but is now climbing upwards into the higher price ranges of the market.

Now we are about to go into the crux of this report, so you will have to be paying attention to glean all of the pertinent facts.

December 2009

February 2010

The following areas have increased in Distressed Property For Sale inventory since December 2009: Kaneohe and Waipahu (Waikele Area).

December 2009

 
February 2010

The following areas have increased in Distressed Property For Sale inventory since December 2009: Kaneohe, Mililani Area, the Leeward Area and the Pearl City Area.

December 2009

February 2010

When we look at what buyers were choosing to purchase and put into Escrow for December 2009 vs. February 2010 we see the main difference is that buyers were choosing Single Family homes in larger percentages in Ewa, Metro, Hawaii Kai, Kaneohe and the Leeward Area.

What I believe we can surmise from this data is that more and more buyers are choosing Distressed Properties to purchase and that the Distressed Properties are no longer just a ‘Ewa thing.’ Distressed Properties can now be found in almost every neighborhood on the Island. This is the big difference between year 2009 and so far this year of 2010.

It should also be noted that when we compare what is “In Escrow” with what is “Sold” we need to remind ourselves that “Sold” homes began the Escrow process approximately 60 days ago. So this is old data.

When we look at “In Escrow” data the data is only four days old. So “In Escrow” data is where we are headed vs. “Sold” data is where have been.

December 2009

February 2010

It is readily apparent that conditions are not good in Mililani Area with the big influx of Distressed Properties available and going into Escrow. The Leeward Area increased as well. Makakilo Distressed Properties are abundant as well.

Let us now look at the Sales Data or Solds

December 2009

February 2010

We can now see that there is a huge increase in Distressed Property sales in Kailua Single Family Homes, Kaneohe, the Leeward Area and the Pearl City Area.

What I believe this indicates, which is a departure from last year, is that buyers are this year are also stepping up into higher price ranges to obtain Distressed Properties in higher priced, more affluent neighborhoods.

December 2009

February 2010

There is now in February 2010 large increases in Solds for Metro Condos, Makakilo and Pearl City.

Another way to look at this is that it is the Condo Market that is ‘taking it in the ear’ right now. I have always said that Condos would lead the way in the current downturn and they have. It is not something I have ‘looked forward to’ but at least, now, we can begin to see some adjustment in Single Family Home prices due the drop in the Condo Market has, in my opinion, seen the worst.

Condos will still decline for the remainder of this year but their slide will be much less pronounced than the decline over the past two years. I expect Condos to decline in Median Sold Price by another 5-6% by the end of the year.

The Single Family Home market has declined, but I am not sure if we have seen the worst of the decline yet. If it is to come, I believe it will be in the Fall of this year.

I expect the next few years to remain almost ‘flat line’ in terms of Median Sold Prices as the market recovers and solidifies where For Sale Prices make sense. This ‘recovery’ if it is a recovery, will amount to a much longer protracted time frame in terms of market recovery than what we have ever experienced in most of our life times.

However, I must caution readers that much depends upon the Economy, not only in the United States, but on an International level. Much Depends upon jobs, jobs and more jobs. Much depends on taxes, taxes and more taxes as we all fight our way out of this economic disaster.

What I have seen from not only Washington but also from our legislators locally however is not any legislation that will create a healthier economy, more jobs, but a worsening of the job market through misguided legislation and a dramatic increase in our personal and business taxes. This current mind set must stop and immediately, as the very fabric of our Nation is at stake.

I cannot emphasize enough that if you are interested in Real Estate or your personal finances and well being, ‘stay connected’, contact your legislators and make ‘informed’ decisions.

Ultimately, the only change you can effect is when you Vote. This is the only time you can make a ‘difference for change that is right for you and your Nation.’

Where are the Distressed Properties by Price Range?

Higher priced homes are now going into Escrow.

Higher priced Condos are going into Escrow as well.

I sincerely hope that you have enjoyed this article and that it will tie into any plans you may have in Real Estate investing over the next couple of years.

In closing, I would just like to make a few more observations concerning the market. The first is that I know why the inventory For Sale is so low and that is because most owners do not have the equity to sell successfully, who want to sell and these owners are now waiting for the market to get better. I believe this is going to be long wait.

The Economy is getting better, but like a ship in a storm, it is hard to control the rudder due to the ever changing winds and waves that batter it. This is a very fragile recovery and it will take time for us all to reach ‘safe harbor.’

If you need a great Realtor, Broker with strong analytical back ground, sales skills and high Ethics, please give me a call.

I wish you all much Aloha,

Mike Gallagher
Broker in Charge, Abe Lee Realty
Ethics Committee Complaints Review Committee Member

808-384-9015, mikeg@hawaii.rr.com
My Websites: http://www.hawaiirealestatestatistics.com/ and http://www.aroundhawaii.com/