Michael Hege RA, CDPE

For those of you paying attention to the calendar, what seemed liked the distant future in January is quickly coming. The best guess is that there are currently 130 +/- reservations in place for the remaining 120 units. Conventional wisdom is that there will be enough fall out from those parties with reservations that there will still be available units with the current count of reservations.





What is unknown is that assuming the Developer's intention to sell all the units is still soundly in place, what the developer will be willing to do to achieve that goal. More than ever, I think it is important to place yourself in the position to have the opportunity to say yes or no. I am not convinced that as we speak now, we know the final terms and incentives that will be placed on the units and we certainly don't know what the ultimate prices will be.

Everything I've heard is that the bulk of the interest is in the lower priced units and I think that a reservation placed in the near future will still have an excellent chance of being able to purchase some of the nicest units in the buildings. Depending on how they set the ultimate prices, there may be opportunities to purchase Ocean Front luxury fully furnished condominiums for as little as $1.625 MM which were selling for $2.8 as recently as 6 months ago.

If you would like to look at some pictures of these units, here is a link to several on Flickr Beach Villas on Flickr .

There is a lot to talk about regarding the sale event and time is drawing to a close, so I would love to hear from you if you would like to spend some time on the phone to hear about them. If at the end of the conversation, if you are still interested, we can take if from there. To quote Woody Allen, "90% of life is showing up".

There are also some great rates available during the event at the Beach Villas themselves and at the JW Marriott Ihilani Hotel. Both are having rates under $200/night plus tax, although the Villa rates are based on a minimum 7 night stay. Still, I think that may be the least expensive rate I have ever heard of at the Villas and apparently includes their entire inventory of units which would mean to me that you should be able to get a unit that is great for you or your family.

This sale is a product of the current housing enviornment and could be looked back on as a "What was I thinking? " when the opportunity passes and the results are in. Lenders are in place with sharpened pencils and if nothing else, it will be a fascinating event to participate in on June 6th and 7th.

For earlier articles on the Beach Villas by myself, follow these links:


Introduction to the Beach Villas at Ko Olina

Announcement of the Final Sale event in February

March Final event update

If you want me to mail you more information, you can reach me at Contact Michael





Aloha

In almost any conversation I have with people who are interested in Real Estate, the question always comes up as to whether we are at the bottom of, nearing the end or expecting to continue the current declining market. It is a question that I don't know the answer to. The data that I read seems to indicate that in our local market, that we are closer to the end of the downturn than the beginning, but I think it would be premature to say that we are in the rebound stage.

Hawaii in general and Oahu in particular seems to have been uniquely positioned to better weather the financial storm that descended into the real estate market over the past few years. Factors benefiting Oahu seem to be the combination of employment, supply versus demand of housing and a lower than average of number of subprime mortgages. That said, in the latest analysis of subprime mortgages in Hawaii shows that 10.87% of the mortgages in Hawaii were subprime mortgages as compared to other state averages from 16% (Florida and California) to 4-5% in states like North Dakota, Montana and South Dakota. So, that sounds promising.

Unfortunately, of those 10.87% subprime mortgages in Hawaii, 19.22% of them are seriously delinquent as of the 4th quarter 2008. As a state, Hawaii falls into the middle of the pack with the highs in Florida at 36,4%, Nevada at 31.4%, California at 28.9% and Arizona at 27.3%. Those are the top for states with "serious delinquencies", and while we are way below Florida, we are not nearly as far below Arizona for instance as I would like to be. With 20% of 10.87% of the subprime mortgages heading toward foreclosure, that would carry through to 2.2 % of the entire mortgage market in Hawaii. Add to that the simple fact that VA, FHA and Conventional mortgages are not immune to foreclosure and that translates to a continuing large portion of the marketplace being made up of distressed sales which traditional places downward pressure on prices.

For a great nationwide analysis of the Real Estate market follow this link to The PMI research site and review one of the best analysis's available of the downside analysis.

As to Oahu, my favorite subject, April had continuing declines in the Median Price range and the number of sales in both the single family and condominium categories as compared to April 08:

Single Family Median Price -8% Units sold -32%

Condo/Townhouses Median Price -7.3% Units sold -42%


As always, these numbers reflect the closed transactions. What I am hearing and seeing in my travels of showings, conversations with agents and experiencing on my own listings is that Buyers have reappeared and there is much more activity than there was a few months ago. Multiple offers on well priced listings, lower "Days on Market" and higher numbers of "Active Continue to Show on the MLS listings and it seems that buyers are coming back into the market and that our market is more robust than it has been for a while.

My favorite stat that the Board of Realtors provides is the months of inventory remaining. Since December '08, here are the numbers:

Month Months of Inventory Months of Inventory
Single Family Condo/Townhouses
December 08 12.0 13.1
January 09 9.8 10.3
February 09 15.8 15.8
March 09 14.7 16.1
April 09 9.7 10.1

April had a very significant drop. These numbers reflect the relationship between the number of active listings in a given month and the number of closings for that given month. The lower the number, the higher the odds are that a listed home will sell in a given month. A Hot seller's market has numbers like 2 and 1 which we say in 2004 and 2005. A pure buyer's market has numbers over 20 months like we saw in 1995 to 1998. Most of 2008 was in the 7's and 8's. During that time, with approximately 6,670 closings and 14,700 listings (single family and condos combined) the odds of selling your home if you listed it were 44%. It will be interesting to see how 2009's odds begin to develop.

The Oahu market had not crossed 10 months until the fall of 2008. The last time the inventory had been in the 10 month area had been the spring of 1999. How long we stay in the 10 month area, whether we trend higher or lower over the next several months will all begin to tell the story of that original question... "Where is the market going".

The short answer is this. There are a lot of properties on the market that are currently priced below the current market value. There are a lot of properties that are currently priced at market value. I am a believer that this is not the best time to pay retail for a house. Determine the type of home you are looking for and watch the available listings until a well priced distress sale property becomes avaliable that meets your needs and be ready to make your offer. That would include having a preapproval in hand, being familiar with the current and past sales of the area you are looking at and being mentally prepared to act if what you are looking for becomes available. If you are able to purchase a property for 10 to 15% below market, you have the advantage of taking advantage of todays interest rates and having some cushion in the event the market continues to adjust. The question isn't really "Is this a good time to buy?" I believe the question continues to be "Is this a good house to buy at this price?"

For the full Honolulu Board of REALTORs April 2009 statistical analysis which was the source of some of this data, Click Here

As always, if you would like to contact me, I may be reached at Contact Michael

Aloha

I've been asked a few times about the shopping center that is currently being built in Ko Olina in front of Coconut Plantations. While I had the leasing information, I had never really explored what was going to be there and who the tenants were going to be. The best part of this "cyberworld" that we live in is the ability to have information shared and passed from one to the other. Such is the way I learned enough to post some details on Ko Olina Center and Ko Olina Station.

My thanks to Doc who sent me the following links:


Honolulu Advertiser article

Ko Olina Station leasing information

Ko Olina Center Information

As the article from the Advertiser details, there will be a 56,000 sq foot center in 2 buildings and will save us from having to leave Ko Olina for an impromptu meal or to do a little shopping. Tenants will include:

Nick's Fish Market, a gourmet supermarket (my Favorite)
Kimo Bean Coffee Co.
Home furnishing store Blue Lobster Cottage
Z Pizza
Ko Olina Barbeque
Walking in Paradise

These should be great for both the people who live here and the guests who are staying at the local resorts and hotels since the options within the resort were a little limited before the addition of these stores.

Originally planned for 80,000 sq feet, the Center has been sized down and will no longer include a gas station and is scheduled to open in September of 2009. We look forward to welcoming our newest neighbors.

Saturday February 28th marked the last day existing owners were able to complete their reservations and have their priority on the owners list. As such, it was absolutely wild around the sales office! At 4:30 pm on Saturday when I left with my clients I believe there were 10 people in the office who were waiting to meet with the marketing staff. I was both startled by the crowd and glad that we were time stamped with the last of our reservations. With the unofficial tally estimated between owners and new purchasers combined at 70+ including my last three, the marketing staff is well on their way to having over 200 reservations by the Sale Event in June.

Those are impressive numbers for a sale event that was started at the end of January and was promoted from the ground up by the marketing staff of the Beach Villas at Ko Olina. With 120 units available and 70 reservations already in place, it is turning into quite a successful promotion considering there is still quite a bit of time until the sale event on June 6th and 7th.

If you have been curious about the units or would be interested in seeing some more pictures of the Villas, I have posted some pics on Flickr that were taken on my last tour on Saturday. Special thanks to Bobby for taking the pictures! Here is the link:
Pictures on Flickr

If you are from out of town and would like some pictures taken of a particular unit, the surrounding area or if you have any questions about the Sale Event itself or how a particular unit is looking on availability, please don't hesitate to contact me and I'll see if I can't answer your questions. Ask Michael

It seems that the heaviest interest in the first 70 reservations has been in the lower priced units with good availability still predicted in the more exclusive units. For instance, of the 5 premium Beach Tower units with unobstructed views of Lagoon #2, it's guestimated that there are 3 buyers for those units currently registered. With the last published price at $2.8MM for these units and the anticipation of Sale event prices below $2 Million, it's a good time to throw your hat in the ring if you are interested in picking up one of only fourteen of these premium and exclusive Villas.

There are also 5 penthouse units still available on the Ocean Tower in both 2 and 3 bedroom models that seem to have a predicted availabilty at this time. With the arrangement of this tower's elevator, there are several pairs of units from the 7th floor up that might be available where the elevator would stop at the foyer between the two units, one a 2 bedroom and one a 3 bedroom unit. This would give one a feeling of owning the floor and if privacy and/or security are one of your interests, a combination like this would be as good as you could hope for. These units have views of the mountains and golf course out of the bedroom windows and lanais. These units overlook the pools and ocean from the front lanai, kitchen and main living area.

It's an exciting event, a unique product and potentially a once in a lifetime opportunity to purchase these units at roughly half of their initial pricing. All it takes to secure your place for the sale event is a $50,000 refundable deposit. If the unit you hoped for is unavailable or if the pricing isn't as attractive as you had hoped at least you had the opportunity to say no. I can say, that of the people I've worked with who have placed deposits, they wished they had done it sooner versus later as the list continues to grow and the earlier their reservation is time stamped, the greater choice they will have of the units to choose from.

If you have the time and the interest, give me a call at (808) 225-3660 and see if these are what you've been looking for. Remember that Hawaii is 5 hours earlier than the East Coast if you're reading this over your morning coffee. It's not that I won't answer the phone, it's just that it may take me a few minutes to wake up : ) . On the other hand, if it's late where you are, it's probably early where I am and I'm just waiting to say hello.

Now that the shouting is over and the new Stimulus law has been passed, I think many of us are wondering what it all means. As REALTORs I think it's very likely that we will receive many benefits from legislation that is at least partially concerned with improving the housing market.

Just being knowledgeable and knowing where to send our friends and clients to look is often the best approach. Real estate 101 tells us that we are not tax experts and we always give the caveat to not rely on us for tax advice, but it's always nice to have a source for them to go to for their own information.

Below, you will find a link that I think is a good source of those basic parts of the Stimulus plan. There are a lot of moving parts in this program and I think one for us to be sure to mention is the First Time Home Buyer program.

The first-time Home buyer credit for eligible buyer is a tax credit equal to up 10 percent of the purchase price but can not exceed $8,000. The time frame of the purchase needs to have occurred between January 1st, 2009 and December 31st, 2009. I can already see the closings that have to get closed between Christmas and New Years next year or the client loses an $8,000 tax credit!

This should not be confused with last years which required repayment over 15 years. This one doesn't require repayment and that's a big change. One must give and take though. This one does phase out for individuals with incomes over $75,000 or for married couples with incomes of over $150,000 who file their taxes jointly. There is also a forfeiture of the credit if you sell the house within 3 years.

Now, as I write this, I get to call a client of mine who is scheduled to close and tell him that I think he may be entitled to an $8,000 tax credit without repayment. I will of course tell him to check with his tax consultant, but I can certainly put him on the trail. These are the types of things that give me sheer joy in the business. Mortgage Certificates, tax credits, tax deferred exchanges... I love being able to make people aware of savings that they might not have been aware of. It is my favorite definition of value added services.

Here's the link to the New York Times article,http://www.nytimes.com/2009/02/13/your-money/13money.html?_r=1

I hope you get to make some "good news" calls!

Did I mention that I am not a tax consultant, I do not play one on TV and you should not rely on any of the above as any form of tax advice and should of course seek the assistance of a tax professional!