Gary's Blog

Thursday, July 23, 2009

More Positive Economic News!

Sales of previously occupied homes rose for the third month in a row in June, the National Association of Realtors reported. That hasn't happened since early 2004, during the boom. "The turnaround in the housing market appears finally to be here and indeed may be gaining some speed," wrote Joel Naroff, president of Naroff Economic Advisors Inc.

Stocks jumped on the news, with the Dow Jones industrial average rising above 9,000 for the first time since early January.

Home sales rose 3.6 percent to a seasonally adjusted annual rate of 4.89 million last month, from a downwardly revised pace of 4.72 million in May. Sales were up in all four regions of the country. It was the highest level of sales since last October and beat economists' expectations. Sales had been expected to rise to an annual pace of 4.84 million units, according to Thomson Reuters.

In another encouraging sign, the share of foreclosures on the market is shrinking. About one out of three homes sold in June wasforeclosure-related, down from nearly half earlier this year.And the glut of homes up for sale dwindled to 3.8 million. That's a 9.4-month supply at the current sales pace and another important sign of a recovery. A bit better than the 24-month supply we were seeing not long ago!

One last exciting statistic: prices have risen for three straight months in about half of the 55 major metropolitan areas tracked by the Associated Press-Re/Max Housing Report, also released Thursday.

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Sunday, July 19, 2009

PMA

Napoleon Hill in his book "Think and Grow Rich" says one of the keys to success in life is a PMA- a Positive Mental Attitude.

I realize with all the bad press out there, it is difficult to maintain a positive mental attitude. Well, my broke brother-in-law will tell me, "I'm POSITIVE that the end of the world is near!" I don't think that is what Napoleon had in mind.

I scour the media for that positive news. I don't believe in watching Constant Negative News CNN. There are sources out there with the good stuff, although those sources are few, and they are careful not to have a bent in that direction.

Here is some of that Positive News I found over the past couple of days:

1. Hawaii foreclosure rate fell in June by 13.5% from May! 706 properties in June went in foreclosure vs. 816 in May.

2. The jobless rate in Hawaii for June was 7.4%, unchanged from May.

3. Stocks ended the week with an enormous gain, about 7% for the week!

4. New Home construction across the U.S. rose in June to the highest level in SEVEN MONTHS! Up 3.6% from May! This was the second straight monthly increase.

5. Bank of America joined other major banks in reporting better-than-expected second quarter earnings on Friday.

6. Friday I saw Paul Brewbaker, chief economist for Bank of Hawaii. Paul said that the bottom of Oahu SFR sales happened in January, and inventory has been shrinking ever since. He pointed out that increased sales and decreased inventory always precede increases in prices. He also pointed out: "Wouldn't you be an idiot to miss the $8000 tax credit from the Federal Government, these historically low interest rates, combined with these phenomenal prices and still crazily negotiable sellers??!!"

We may never see an opportunity like this again in our lifetimes.

All in all, folks, the end IS near. The end of all the BAD news, that is! Hallelujah!

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Tuesday, July 14, 2009

Good News Doesn't Sell Newspapers!

An associate was recently showing her prospective buyer properties here in Wailea. The prospect owns a newspaper in the Midwest. The Realtor suggested to her client that he start a newspaper her on Maui called "Maui's Good News", since we are so much lacking any good news in our existing publications. Her client said "Good news doesn't sell newspapers. It would never fly!"

Do you wonder why the Maui News has such a hard time talking about the good news?

Why not talk about the fact that real estate values went up year after year from the mid 90's through 2007, before we had some correction. No, the newspapers must have huge headlines about how we are in a depression!

How about the fact that since the early 90's through 2007, Maui tourism increased every year, except for a short downturn after the 9/11/01 terrorist attack. No, it is more important that we know that last year saw 12% decline.

How about the fact that the median sale price for a residential home on Maui ROSE from $487,500 in May, to $499,053 in June '09. No, instead, the news is that the number of residential homes sales declined in the first six months of '09, compared to the same period the year before.

Ever heard that numbers don't lie? Well, that's a lie! Numbers can say whatever you want them to say, if you look hard enough. The Maui media looks long and hard for the negative angle whenever possible.

How about that the Department of Labor and Industrial Relations Director just noted that the construction industry actually showed a modest move to positive territory, with 100 new jobs across the state in June? No, let's talk about UNemployment, not employment! Hawaii's unemployment rate is still 2 percentage points lower than the national average. But let's not mention that, that is the GOOD side of the news.

And GOOD news doesn't sell newspapers!

Well folks, I choose to believe that we are in GOOD times. And I also choose to believe that what we expect is what we get. As a result, and for the grace of God, I am having a great year!

I see that I am not the only one with a positive attitude. According to a new Associated Press-GfK poll, debt-related stress was 12 percent lower this year than in 2008. "People now have some optimism that the worst is behind them", according to Paul J. Lavrakas, a research psychologist and AP consultant who analyzed the results of the survey.

So when someone in your family wants to turn on Constant Negative News - CNN - turn it off!

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Saturday, July 11, 2009

Pent-up Housing Demand Continues to Build

A recent nationwide poll shows about half of potential homebuyers are skittish about making the move, their number one concern is job stability.

Realtor.com released the survey on Thursday, showing 53% of the people who would be buying a home in the near future, are not quite ready yet.

This is quite an optimistic report for those of us who are active in the market, for two reasons:
1. If we are still alive (!), we can see the pent-up demand is building, and it is just a matter of time before all "heck breaks loose"
2. Because the number of sales are down, there is an incredible number of bargains to be had out there right now. The inventory provides excellent choices, unlike the '05 rally, where buyers took whatever came up, just to get into the screaming market.

Among those who are planning to buy in the near future, they don't expect prices to drop further, and they want to take advantage of the government incentives while they are here. These incentives are over effective 12/1/09.

If you would like to see the whole article, just shoot me an e-mail titled "skittish buyers", and I'll shoot it right back to you.

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Wednesday, July 8, 2009

Why Do You Need a Realtor to Sell Your Property?

"What is a Realtor and why do I need to use one when I buy or sell property?"
One reason to use a Maui Realtor is to tap his or her knowledge about the local market and various government programs that can help get a family into a home. This includes assistance to first-time homebuyers who are currently eligible for an $8,000 tax credit on home sales that close by Dec. 1.
In addition to their market knowledge, Realtors are trained and state-licensed professionals who are constantly updating their skills and knowledge of the market. Maui Realtors also subscribe to a strong multiple listing service that provides them with the latest information on what is for sale and for how much.
State law requires real estate agents to pass tests that require considerable schooling to obtain a license. They are supervised by the state Real Estate Commission.
The term Realtor is a registered collective membership mark that identifies a real estate agent who is a member of the National Association of Realtors (NAR). Realtors who are NAR members must adhere to the association's strict code of ethics that determines how we must honestly and faithfully work for the best interests of our clients. Non-realtors are not governed by this code.
When you're ready to buy or sell your property, ask yourself the following questions: Do I have the time, energy, sources of information and contacts to do the job myself? If you are a do-it-yourself person, will the results be as good or better than they would be if you had professional assistance? Would the deal have gone smoother? Would it have given you more personal time? Would you have purchased for less or sold for more if a real estate agent was involved?
Real estate agents, or brokers, generally are paid through the sales commission paid by the seller when a transaction closes. The property buyer does not pay for the services of a Realtor when buying property.
A real estate agent can assist in the selection of a home by providing objective information about each property available. Agents who are Realtors have access to a variety of informational resources. Realtors can provide local community information on utilities, zoning and schools, etc.
There are a myriad negotiating factors, including, but not limited to price, financing, terms, date of possession and often the inclusion or exclusion of repairs and furnishings or equipment. The purchase agreement should also provide a period of time for you to complete appropriate inspections and investigations of the property before you sign the last document. Your agent can advise you as to which investigations and inspections are recommended or required.
With a negotiated purchase agreement in hand, it is time to complete the evaluation of the property. This could include inspections for termites, dry rot, asbestos, faulty structure, roof condition, tests of septic tank and wells, just to name a few. Your agent can assist you in finding qualified, responsible professionals to do most of these investigations and provide you with written reports. You will also want to see a preliminary report on the title of the property.
Title indicates ownership of property and can be mired in confusing status of past owners or rights-of-access. The title to most properties includes some limitations such as easements or access rights for utilities. Your agent, title company or attorney can help you resolve issues that might cause problems at a later date.
Finally, there is the closing when the property actually changes hands and the proceeds are distributed. Every area has its own unique customs. In Hawaii, a title or escrow company will handle this process. Your real estate agent can guide you through the process and make sure everything flows together smoothly and there are no last-minute problems that could derail the sale.
Real estate transactions involve one of the biggest financial investments most people experience in their lifetime. Transactions today usually exceed $300,000. If you had a $300,000 income tax question, would you attempt to deal with it without the help of a CPA? If you had a $300,000 legal question, would you deal with it without the help of an attorney? Considering the small upside cost and the large downside risk, it can be foolish to consider a real estate purchase or sale without the professional assistance of a Realtor.

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Thursday, July 2, 2009

Local Real Estate & Economic Update

It was a great month for Coldwell Banker Island Properties! Last month, June '09, our four offices put 56 homes, condos, and land in escrow on Maui. Six to eight months ago, we were putting 3-4 units in escrow per month. One year ago, June '08, our company put 30 units in escrow. So activity is double this year over last! It looks like buyers have finally said "How low can it go???"

Economics in the news are a little hard to decipher. Bankruptcies are up 65% in the State of Hawaii for the first six months of '09 vs. the same period in '08. But unemployment figures are looking optimistic. And today's increase in the manufacturing index is a positive indicator.

Longer-term positive statistics come from the lack of construction spending. Nonresidential building is strong, but a decline in housing construction bodes well for long-term values. Demand may be down short-term, but we all know the pent-up demand eventually has to be met. And with little or no new construction taking place on our beautiful island, which direction do you think prices have to go when the market breaks loose?

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