Kona Kohala Blog

Prices continue to decline in North Kona and South Kohala.  In North Kona the median prices are declining much less than the 20% we were experiencing, now down only about 4% for both Single Family Residences (SFR's) and condos.  In South Kohala, the full on slide continues unabated at over 30% for SFR's.

The number of sales is still climbing, as has been the case.  Most of what is selling is still lower end properties consisting of foreclosures and short sales.  Of the 19 SFR's sold in North Kona so far this month, 14 of them have sold for less than $500K; keeping in mind that under $500K is affordable here.

Of the 14 condos that have sold, 12 of them sold for less than $400K.  It seems that as long as there are lower priced properties out there, buyer will show up.  There is no sign of the number of foreclosures and short sales slowing.  We've been warned by Bank of America that the number will increase in the first quarter of this year.

It's a good thing the president is focusing on jobs now rather than health care.  Jobs are what is going to pull this country out of the recession we're in.  Health care needs work, no doubt there, but putting people back to work is by far the most important work for the president and the congress.  Unshackling the hands of business by reducing taxes would be a good first step; we have one of the highest corporate taxes in the world right now.

There's an experiment going on in Oregon that will show us the good or bad of raising corporate taxes, again.  Oregon wants to tax the big hitters more.  Phil Knight, founder of Nike and a long time supporter of the state is asking them not to.  This is a time to be cutting taxes not looking at band aid fixes, short term income that could result in the biggest tax payers leaving the state for greener ground.

All legislators, state and federal, should be required to read Atlas Shrugged by Ayn Rand as one of the insights into the economy.  It's business, both big and small, that can save us not new taxes and more government employees.  Being from Oregon originally means I'd like to see them thrive there but taxing is not the way to do it.

Where the real estate market is going on Hawaii Island is anybody's guess.  Island wide Single Family Residence (SFR) sales are up 45% and condos are up 25%.  Median price is down <12.57%> for SFR's and up 27.28% for condos.

In South Kohala, the sale of SFR's are down <14.29%> and condos are up 400%.  It's not quite as dramatic as it sounds because there was only one sale at this time last year and in 2010 we've had 5 sales.  The median price for South Kohala SFR's is down <33.78%> and condo prices have dropped <50%>.

In North Kona, SFR sales are up 185.71% and condo sales up 36.36%.  The median price for SFR's is down a mere <4.33%> and condos down just <4%>.

It could be a good year if the children in the White House and the congress will quit fighting and work on the employment situation.  Obama has made a small step in the right direction by offering small businesses $5,000 per hire tax credits.  That's a good short term move but we need long term changes also, credits that will encourage business to invest in equipment and software, especially that made in the U.S.A.

It appears that we have pretty much run out of first time home buyers.  Some of the best properties on the market have been scooped up and we're left with some less than attractive pieces out there.  More is coming on all the time but our inventory is down from where it was just a year ago.

There is much to be revealed in the first quarter of this year. 

The people have spoken, long live pluralism.  There is now once again hope for our economy.  The significance of the Massachusetts can not be over stated.  All year there has been a growing discontent among American voters aimed at the health care overhaul yet no one on capital hill seemed to hear.

It wasn't until a little know guy by the name of Scott Brown ran for the U.S. Senate seat left vacant by Ted Kennedy on the narrowest of platforms.  He said that if elected, he would make sure the health bill would not be passed (the senate needed its super majority of 60 votes to pass the bill and without the Kennedy seat it only had 59), nothing more.  On that one promise he was elected in a historically democrat state, into the seat held by "the father of health care in this country", Ted Kennedy, and the first Republican in 30 years elected to office in the great state of Massachusetts.

Not only has the Obama health care bill been shot down but the democrats can no longer ram rod anything they want through the senate.  We the people can now look for some positive change in this country.  The people have spoken and those in office who wish to keep their jobs had better listen; it's no longer what Obama or Pelosi or Reid want, it's what we the people want and what we the people need, someone has to gauge that.

Now that both sides of the aisle are represented once again we will hopefully have some positive dialog about turning this country around.  Come November of this year we will see more people from the hill looking for work and in a couple more years we'll see a new president come into office, one who will be less concerned about himself and more concerned about we the people.  We had become complacent but I think we are now awakening.

It's individual effort that made this country strong, it was entrepreneurship that build our industries and our businesses.  With two sides of the house and senate now in play we should see ideas sparked that will again revitalize those industries, businesses and entrepreneurs.  Once that happens we'll see people going back to work and then we'll see our economy turn around.

Scott Brown's election was a giant step in the right direction, a wake up call to all those who felt insulated from the American People in their ivory or marble towers standing high above the swamps of Washington D.C..  It's time to listen and time to act, not in your best interest Mr. and Ms. Congressbody or Senatebody but in my best interest.  You work for me and your longevity depends on the job review I give you.  Work for me or find yourself on the street and it won't be K Street.

It's been a long time and much has happened in the last 16 days.  I hope you all had a warm and wonderful Christmas and a Happy New Year.  With any luck at all, the new year is starting out right for you keeping in mind that 90% of our perception is attitude.

Looking at the big scope, things continue to go to hell in a hand basket at the federal level.  There has been so much outspoken opposition to the health care bill that it's now being taken behind closed doors to be worked out and then a) presented to, b) rammed down, c) shoved down, and d) crammed down the throats of the American people.

It's amazing to see some of these democrats committing political suicide as they vote for this polarizing and unpopular bill then walk the plank at the orders of the long sought after miracle working prophet now floating around the White House and pretty much the rest of the world.  It's been rumored (my rumor) that the cost of Obama's travels could offset 80% of the federal deficit if he stopped flying around the world and sat at his desk.

On the local scene, we have our liberal state government still clashing with state unions.  Remember the NIMBY's of the 80's, we want a missile defence but Not In My Back Yard?  Today's version are the unions who say they want to help fix the budget deficits but not at the expense of any of their protected jobs or benefits.  Let the civilians, the non-government people, the working class stiffs and those not unionized pay.

As an aside, why is it that the states, counties and cities are all facing huge cut backs but the federal government just keeps hiring even though it's more broke and in debt than all the rest of us combined?  Doesn't fiscal responsibility apply to the feds?

And we wonder why the real estate market is taking a second hit; take away the free money from the feds and there is none left to buy property.  We've even noticed car sales are tanking since they removed the "cash for clunkers" program.

It would be nice to see all the hiring at the federal level if it did any good but it doesn't.  Federal employees do provide a service but we maxed out the number of them needed for that service in the 70's with Mr. Peanuthead in office.  These people provide nothing for the economy except as consumers and while that does make up a big part of the GDP, I'd rather let them go, save the taxpayer money they're getting and let me stimulate the economy if and when I choose to spend what is now tax money taken from me to pay some government lackey.

So you say, what doesn't this have to do with real estate, right?  Everything.  Even a simpleton like me understands that if big brother is giving you money and saying go spend it, the economy will look good.  When he stops and puts his money back in his pocket or in this case, turns of the printers in the mint, I can't spend any more money.

Right now we're on the verge of the second slide down in the "W"; first a little recovery at the expense of taxpayers and the government then the spigot is shut off and the economy tumbles again.  It's real simple folks, nothing is different than it was except for the amount of the national debt.

It's said that one definition of insanity is doing the same thing over and over again and expecting a different result.  It's time to try something different, something that has a proven track record.  It's time to review the actions of Ronald Reagan when he inherited the gynormous mess made by Mr. Peanuthead.  It worked, is it so hard to look back at the proof, adopt the methods, put the spin doctors to work to change it to Obamanomics and correct what's wrong here?

The only reason I can think of for not correcting things is that maybe, someone wants us in this condition.  When you're drowning in the ocean you'll grab at most anything to save yourself, even something you wouldn't touch under normal conditions.  Could it be we're being set up to grab that something thinking it will save us?  Maybe a life vest woven of socialism or fascism, not long term, of course but just enough to get us to shore.  Is our current economy an accident.  What sectors are still doing well?  Finance?  Who's hurting the most?  Taxpayers?  Nancy Pelosi spent Christmas at the Four Seasons in Hawaii, how was  your Christmas?  I got's my questions as Galliger used to say.

We are poised for continued declines in the median price of property here in Hawaii.  Sales over $3 and $4 million are still pretty brisk but not much else until you move down to the $400K bracket.  Our low end is moving fairly well although I do expect that to slow down.  There was a group of people who had some money who took advantage of the First Time Home Buyer Tax Credit but that pool of buyers may be dried up.  There was a surge in buyers in the last half of '09 but not enough to make the year end positive.

November was a big surprise for the official prognosticators when they got hit with a 16% decrease in the number of pending sales of existing homes in the country.  This will keep downward pressure on prices which will be problematic for those hoping to hang onto their homes after having survived the first round of foreclosures.  We expect, according to Bank of America, to see upwards of three times the number of foreclosures in the first quarter of '10 that we had in '09.

The only good news out there besides the rapid decline in the number of democrats jumping ship, is for buyers.  This level of affordability hasn't been seen in almost 8 years.  Keep an eye on interest rates, however, and expect them to start creeping up no later than March.  It may be a short lived rise since any hint of a recovery will disappear as quickly as it peaked its head over the dark horizon.