Kona Kohala Blog

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.