Kona Kohala Blog

Median price has slowed from an average 20% decline per year to just over 3% in January compared to January of 2009 in North Kona for Single Family Residences (SFR's).  Condo prices which were also dropping at about 20% per annum are down to 4% this year compared to last.

In South Kohala, however, not much has changed and prices continue their downward moves at around 20% per year.  In both North Kona and South Kohala the sales activity does continue to climb.  Most of the sales remain in the lower prices ranges which make up first time home buyers and people looking for second homes and investment properties.

According to Title Guaranty Escrow in Kona, only roughly 20% of the sales in the last month have been to owner occupant buyers.   My guess is that it's about evenly split between second/retirement home buyers and investors for the remaining sales.  There are quite a few people looking ahead a few years to retirement and buying now when prices are down.  Some will rent out their purchases until they actually move and others will save them for their own use until that magic day arrives.

Problems for the first time homebuyer credit and the "movin' on up" credit.  Since the first offering of the $8,000 was for a short time only, most of those who could did.  The number of takers on the extended offer are few.  Most of those who would like to take advantage of the $6,500 offer is they sell and move to a new home are unable to do that, their current home isn't worth what they owe on it so no sale.  Both tax credits were good ideas but poorly thought out.

There doesn't appear to be any long term thinking going on at the federal level.  Short term band aid fixes for small business are going over like the proverbial lead balloon; $5,000 tax credit for new employees, etc.  The ill timed home buyer credit isn't going anywhere and the loan modification programs have been a dismal failure.  It's like their heart's in the right place but there's no intelligence to go along with it, no one smart enough to make it work.

I'm still watching for unemployment figures to improve before I'll believe there is a recovery.  I don't believe we're going to see that until there's a major overhaul of the tax payer system and a refining of our business tax laws.  Positive changes there may boost the building industry and once that gets moving the entire economy will start an upswing.

It's scary to think that the longer we wait the more outdated becomes our manufacturing capabilities.  Our factories are old, our technology is old and those skilled in the business are even older.  If the unions want to be in business 20 years from now they better smarten up.  Companies can not possibly be expected to stay in business when half their payroll is for people no longer working but receiving handsome salaries and full benefits.

Times have changed but little of our thinking has kept up with it.  It's time for new business models and a new middle class.  Not everyone has to have everything.