It was with total amazement as I stared at the Headlines of the recent Honolulu Star Advertiser. My pulse quickened and my respiration went into overtime. I started to hyperventilate!

I asked myself, how could this be true? Did I miss something? Do I need go back through my own analysis of what the market is doing and see where I might have gone wrong?

As I put my morning coffee down in order to hold the new ‘slim style’ paper with both of my shaking hands I read with absolute horror that ‘gosh, prices are going up?’  If you believe this article is true you should know it is nothing less than irresponsible, erroneous reporting; then I have bridge I would like to sell to you!

The Honolulu Board of Realtors in their infinite wisdom changed their wonderful statistical providers. No, the Board does not do it themselves. They hire out to individuals and firms to collate the previous month’s data in order to produce a Sales Report.

The Honolulu Board of Realtors recently hired in March 2010 a Company on the Mainland called 10k. Ten Thousand what, I do not know. But this company is now supplying the Management of the Board and subsequently all of their members who are making the report available to the public.

The old reports were fabulous, detailed, easy to read and well done. The new reporting is not any of this. It is unimaginative, hard to understand and instead of one comprehensive report, like the old one, it comes in three terrible reports.

To add insult to injury the previous month’s statistics are not collated and released to the Management of the Honolulu Board of Realtors until 10-12 days after the beginning of the new month! Gee, let’s look at a report that is almost two weeks old when we get it and almost two weeks into a new month.

My website, www.hawaiirealestatestatistics.com has the statistics available for the previous month’s sales for Oahu no later than the 2nd day after the end of previous month. It is easy to read and to understand and I think the color graphs and content are nothing short of fabulous. But that’s my opinion.

If you want to know what is really happening, go to my website and find out.

Newspapers, like services and such are paid for by Sponsors or Advertisers. Individuals like you and I are charged through the nose to run an Ad. Large Real Estate Companies like the ‘Big Boxes’ we see in Town get special rates when they contract to a yearly expenditure of Advertising.

Along with their Advertising these ‘Big Box Brokerages’ predominantly advertise in the Sunday Edition of “Homes” and the Star Advertiser gives these ‘Big Boxes’ the opportunity to run Ads that look like Real Estate Reporting. In fact you will usually see these Ads, cleverly cloaked as Real Estate Reports on the Front Page of the Homes section, written by Lisa Somebody of “Custom Publishing.” Hmmmmm….Custom Publishing. I wonder what that means?

Andrew Gomes who wrote this particular feature for the Star Sunday Edition of Homes makes a great effort to write honest and accurate evaluations of the Real Estate Market by interviewing various Realtors around town and for the most part I believe his reports are ‘fair and balanced.’ It is the Headline that is a total fabrication and is misleading and this is done by design to sell more papers and to meet the ‘agenda’ of its Sponsors or Advertisers who spend Big Bucks with his Star Advertiser.

“On the Rebound”
(Prices on the Rebound)

O.K., lets take a look at this title and see “What is Really Happening in the Oahu Real Estate Market.” I have devoted the last three years to writing about What Really is Happening in the Oahu Real Estate Market for my website and Oceanic Cable www.aroundhawaii.com

We need to first look at the differences between “Medians” and “Averages.”

I believe the truer ‘picture’ that is accurate is derived by use of “Averages”, not “Medians”, which is what the Honolulu Board of Realtors relies upon.

 
Here are some examples of Averages vs. Medians around Oahu:

What should be clear to you is that the Averages are much higher than the Medians. The Averages portray an accurate picture of what is happening in each of these Areas on Oahu.

This should also tell you that there are a lot of High Priced Listings on the Market For Sale.

After reading the reports from 10k that the Honolulu Board hired in March 2010 I decided to switch all of my data collection and reporting to Averages and I chose to no longer use Medians.

We also need to understand that when High Priced Inventory is For Sale or Sold they skew the data upwards by raising the Averages.

The whole point of this article is to correct the erroneous Headline of the Star Advertiser that implies that the Market is rising and no longer going down. They are implying that the Real Estate Market is “Rosy” and nothing could be further from the truth.

Let me explain to you with the use of the following graphs and give you the real story of the Oahu Real Estate Market. 

That is 62% of the entire Inventory is priced at $600,000 and Up.

• 13% of the entire Inventory Sold for the Month of May 2010 is priced $1,000,000 and Up.
• 40% of the entire Inventory Sold for the Month of May 2010 is priced $600,000 and Up.

That is 54% of the entire Inventory Sold at $600,000 and Up.

Let’s look at a reference point here:

Ewa Average Sold Price: $502,899 - 36 Unit Sales or only 13% of Total SFH Sales.

• 11% of total Inventory For Sale is priced $800,000 and Up.
• 13% of total Inventory For Sale is priced $500,000 and Up.

That is 24% of total Inventory For Sale is priced at $500,000 and Up.

We also need to consider that the Average Sold Price for an Oahu Condo for May 2010 is $455,325. Seems pretty high, yes?

The Average For Sale Price of an Ewa Condo for May 2010 was $362,943.

Condo Unit Sales in Ewa accounted for only 7% of total sales for the Island.

I think it would be safe to conclude that there is a lot of High Priced Inventory of Condos and Town Homes on the Market For Sale right now.

Let’s look at the Sales:

• 4% of the entire Inventory Sold in May 2010 was priced $800,000 and Up.
• 25% of the entire Inventory Sold in May 2010 was priced $400,000 and Up.

That’s 29% of the entire Oahu Condo Inventory Sold in May 2010 was priced at $400,000 and Up.

Here are two more statistics we can use for reference points:

Ewa Condo Average Sold Price May 2010 $342,680

Between January 2010 to May 31st in just Kakaako alone and only for 2 Bedroom F.S., the total dollar sales were $65,000,000 Sold.

The Average Sold Price in Kakaako Condos for May 2010, 2 Bedroom F.S. only, was $968,750

What do you think these sales do to Averages?

Let’s take a look at this one more way. I call it the “Long View.”

Look at the rise in higher priced Inventory For Sale.

As for New Listings coming onto the Market, here are the following graphs:

Pay particular attention to the $2,000,000 and Up price range.

I think you get the “Picture” now. The Single Family Home Sales Prices as well as the Condo Sales Prices are not rising. That is, home values are not going up as ‘some’ would have you believe.

Frankly, things are better than they have been a long time. Almost anything is better than the Real Estate Year 2008.

I have always told my clients that I have no “Crystal Ball” and I do not know everything. I hate to be wrong and I do have my opinions which I share, sometimes to my detriment.

There are lots of so called “Experts” out there who expose figures and projections on the Economy and the Real Estate Market and on a given day on the internet you can pull up news stories from these “Experts” that will contradict one another on any given topic it would seem. Try it and you see what I am talking about.

You just cannot believe everything you hear and read. You have to do your own “Homework.”

I think the market will stabilize and get better and I think that this Fall we might see the Market in the best shape we have seen in three years.

What I am concerned about is the rising National Debt. Individual States are near bankruptcy, some already are in bankruptcy and the similar conditions exist in Nations Worldwide.

Unemployment which Officially is near 10% is a joke, because the real life figure is more like 17% unemployment is not going down.

Our Federal and State Taxes are already taking every dime we have and anyone left with a Dollar or two will be demonized as Rich and mandated that they will have to give those dollars up for the Social Welfare Benefit of All.

This is the kind of news every responsible investor, home owner, tax payer needs to seek out and be cognoscente of. 

I am starting to believe that “Yes” we are headed for a “Double Dip Disaster” that has the potential to be worse than the one we are now in.

Oh, what a doomsayer! “I hope I am wrong.” I really do, but I think I might be right.

Check This Out:

I have a friend who is a Short Sale Expert, she is trained and she is Certified by the Feds to be a Short Sale Expert. She wrote a brief the other day to share with all the members of the Honolulu Board of Realtors Ethics Complaints Review Committee of which I am member of.

“The Word on the street is that Fannie Mae is no longer postponing foreclosure auctions, even if there is a Short Sale in process, Fannie Mae is taking the properties to auctions.”

“Three different lenders (and two negotiators at one lender) confirmed that they are indeed seeing Fannie Mae is not postponing foreclosure sales. The Bank Officers do not know why, they do not know if it is an ‘Official’ directive. They are just saying it is what they are seeing.”

“They are doing this even in cases where there is Short Sale Approval Letter.”

Three banks according to her research confirmed this trend: Sun Trust, Bank of America and G.M.A.C.

I find this a little scary. I guess we will see if the Foreclosure rates for all States start to go up soon.

On the Political Front…

Here is how our recent Senators Voted:

If you go to this site and subscribe you can actually see how your Senators are voting for their Constituents. (Oh, please, what a Laugh. I know enough now to know they don’t vote for their Constituents. They VOTE TO GET RE-ELECTED!)

Really, this “Is” their voting record for the following Bills in Congress below:

Oh Good Job to both Senator Inouye and Senator Akaka for voting “NO” to overturn the finding on Greenhouse Gas Emissions.

Yes, we all know that the Green House Gas stuff is a crock. Well, we do, but Senators and Inouye and Akaka are still voting the Party Line! Good On Them! Both are Shining Examples of TERM LIMITS!

Hats Off to Representative Hirono for now forcing the F.H.A. to require much more down payment from their borrowers for the MOST POPULAR LOAN IN THE COUNTRY RIGHT NOW. Gee…that should help Business / Real Estate Sales
A Whole Lot! (Not!)

It’s Time for Real Change Everyone….get our there and VOTE this year like your LIFE DEPENDENED ON IT!

I wish you all much Aloha and Mahalo for reading my articles.

Please visit my website at www.hawaiirealestatestatistics.com  for much more on What Is Really Happening in Hawaii Real Estaste.

Copies of these graphs and charts are on my webiste along with this article if you need to see them in a larger size.

Mike Gallagher, Broker in Charge, Abe Lee Realty
Ethics Complaints Review Committee Member, Honolulu Board or Realtors

808-384-9015, Mikeg@hawaii.rr.com