Kona Kohala Blog

A couple of good reports and the "experts" are saying the recession is over, let's all celebrate!  People are too impatient today and too quick to jump to conclusions on everything from fashion to economics.

It takes time, trends must continue beyond one report from the Department of Labor or one month of less than expected unemployment filings.  The least little bit of good or bad news signals a weeks worth of headlines and all the pundits come out of the wood work to chime in on the latest salvation or death knell.  Remember when journalists and newspapers reported the news?  Today, they have to make the news then comment on their creation heavy with speculation about its future.

Today's headlines are all about a huge jump in the number of sales of existing homes with a little side note that the bulk of those are multifamily homes i.e., duplexes and small apartments, up to 4 units.  Most of the people buying such existing homes are investors with the remaining properties being bought by first time home buyers cashing in on the $8,000 tax credit.  Because they are being pushed and shoved into their new homes by a giddy administration who's again called for a relaxation of the lending rules, these same people that are first time home buyers today will be first time foreclosures within the year.

Fortunately, Hawaii is somewhat buffered from such radical gyrations in the market.  The areas around Kailua Kona, Holualoa, and Kealakekua all the way up to Waikoloa, Waimea and the Hamakua Coast are dependent on tourists, second home buyers, some investors and retirees to effect the housing market.  With the great bulk of the real estate oriented population hinging on work related to the service/tourist industry, we're not going to see a recovery here until unemployment numbers start to rise.

All the other quirks, a jump in consumer spending, a bump up in industrial output, durable goods increase in production and such are just that, quirks.  None of these or any other indicator will stay positive until businesses start hiring again and that's not going to happen as long as the cost of doing business continues to rise.

If the itty-bitty brains riding on the shoulders of the powers that be would just pick up a copy of the Ronald Reagan play book they would have us out of this mess within 6 years.  It is too bad that today's politicians are so partisan.  Instead of working in the best interest of the American people, they work in the best interest of the DNC or the RNC and all too often in the best interest of themselves alone.

Remember when elected officials were public servants that meant they worked for us.  Since when do our employees get to vote themselves raises while we struggle?  Since when do our employees get better health coverage than we get?  Since when do our employees get better retirement packages than we get?  Maybe they forgot who they work for.  Maybe we forgot that we are in charge.

Just like in too many households the kids call the shots, in this country we have the employees calling the shots.  It's sad that when Americans come out in droves and tell these clowns what our concerns are, what our fears are, and what we want from them, they say we are not representative of the American people.  I, personally, am looking forward to next years elections.  I think there are going to be some very surprised politicians looking for work.  It's a good thing that they're covered for life after serving one term with retirement and health insurance because one term is all some of them are going to get.

How about a double dose of good news for a change?  First, for those interested in condos in Hawaii, the Kona Board of Realtors is actively working with the various condo association management companies to correct some very faulty information that has been costing consumers money.

When applying for financing of a condo, the lender looks the number of owner occupied units versus those in short term rental programs.  In the past, this number has been determined by looking at the tax records and any unit with a tax address other than Kailua Kona was deemed to be a rental.

The Kona Board has intervened and instead of just looking at tax records, they now go to the association and its board of directors.  Because condo by-laws require owners to register occupied units, for various reasons some concerning safety, the board of directors knows that actual owner units rather than rental units which the tax records don't necessarily show.

Our first success through the Kona Board's efforts was the Kona Pacific Condominiums.  It had been reported that only 30% were owner occupied, however, after talking to the association's board, it was determined that the real number was over 70%, many as second homes that were not rentals but owner occupied units.  This can make as much as a 2% difference in financing since they are no longer classified as investor units.

The other good news, really good news, is that there is a pizza place in town that rivals my own which I consider to be the best in the world.  Normally, we don't go out for pizza because ours is so great, no you can't come over for dinner but you can get one that's just as good at Pizzeria Zacchini.

After numerous recommendations from many friends and clients we happened to be near Costco and hungry after a long day and decided to try it.  I may never make pizza again.  We had a fresh, loaded with croutons and aged parmesan cheese Caesar salad that was soooo refreshing followed by the best ever vegetarian pizza ever created outside my kitchen.  The secret, as always, is in the crust and Ms. Barbara Zacchini's crust rivals mine, incredible.

You can check this one out on line at www.pizzeriazacchini.com.  It's so good it's worth driving out to the Koloko Industrial area to taste.  Anytime you're at Costco forget their pizza and swing by Pizza Zacchini, you'll be ever so happy you did!

How's that for good news?  Lower costs and killer food.  aloha

The list of foreclosed Single Family Residences (SFR's) and condos has just been updated.  For this list, click here.

Foreclosures are still on the rise but are selling quickly considering the market we're in.  Banks are pricing them below market value and relying on multiple offers to get the price up to where it belongs.  For those that don't sell within the first three weeks or so the price is lowered weekly until it does sell.  There is a large back log of foreclosed properties and banks want to get rid of them as quickly as they can.

This is good advice for all sellers since foreclosed properties are their biggest competitors.  It's too bad that foreclosures are driving down the overall price of real estate but it's a fact.  It's all about supply and demand; the banks have a large supply and there is little demand ergo, prices must come down.

Already, after only a couple of semi-positive reports, the "experts" are saying the recession is over.  One of the reports they point to is the unemployment report; did anyone think about the fact that the number of people filing for unemployment may be down because we're running out of jobs to lay people off of?

On the mainland, this is translating into improved sales of homes in some of the hardest hit areas.  The second quarter has shown improvements in both the number of sales and the median price, just like our condo sector in West Hawaii.

There are some very good deals in condos right now but you do have to be cautious.  There are some complexes in both Kailua Kona and the Waikoloa Beach Resort where lenders will not lend due to high numbers of delinquent owners not paying their maintenance fees.

Other complexes have over 50% of the residents being renters rather than owners which makes the complex an investment property for a buyer.  So even if the person is buying to use the property as their primary residence, the lender is charging much higher interest rates and more junk fees because they consider it an investment.  Not fair but a reality.

Until people go back to work, look for the Hawaii market to remain behind the mainland recovery except for the smart few who protected their investments during the down turn.  Those people are in good position to buy long term investments that can be used as rentals for all the people who need a place to live but can't afford to buy.  There's opportunity in every crisis.  aloha

There was a surprising shift in condo sales in the second quarter of '09.  Contrary to popular belief, the number of condos sold actually rose compared to last year's second quarter.  Not only that, the median price moved up as well.  This may be a freck a blip on the screen but it was a positive sign for those looking for such things.  It will be interesting to see if this trend continues.

What we're all waiting for is the unemployment figures to reverse and head into positive territory for a change.  The administration is pointing to the less than anticipated number of just 247,000 first time filers and saying, "see, the recession is over" which is like falling off a building and breaking fewer bones than spectators had expected.  It may just be that we're running out of jobs to lose.

A lot of our future depends on what happens when those wonderfully representative representatives return from their August break and start voting on some of the issues before them.  Watch for unemployment to stay in the negative numbers unless there are some tax breaks for business, heck, who can afford to hire anyone today?  The real estate market is primed for a recovery once people go back to work; prices are down, interest rates remain low and we have large inventories to choose from.

There are some items on the Obamacare health plan that are scaring some people, actually, just those reading the plan not our representatives.  Whether you're a democrat or republican, please learn about this plan that will be voted on probably in September.  Don't listen to what's being said about it, read the pages and inform yourself.

For example, on Page 59, I saw some language suggesting that the federal government will have access to all individual bank accounts for health-related electronic funds transfers.  Do you want the government to have that information?

On On Page 30, I discovered that a government committee will be established to decide what treatments and benefits I get. However, unlike an insurer, I see no evidence that there will be a process to appeal their decisions.

On Page 50, I read some non-discrimination language, which seems to suggest that all non-US citizens, illegal or not, will be provided with free health care services.

On Page 127, I read that the government will now set wages for physicians.  Will that really encourage the best and most capable physicians to practice in the United States?

Obama has said that regardless of what people say, he's going to have this bill passed because he knows what's best for us.  I was hoping we'd have some say in what's best for us.  If you're okay with all that's contained in the bill, no worries.  If you're at all concerned, read the plan and contact your representative.  You'll be labeled a rabble rouser, a disruptive activist and be reported to the white house (did you know that) but hey, that's just so they will be able to give you the right information.  They said we shouldn't believe the words in the plan that their intentions are good and we should accept that.  Hmmm, who's your daddy?  aloha