Kona Kohala Blog

When people aren't freaking out about obamacare or worried about having a job they sometimes follow the real estate market.  When following that market recently, there has been much talk about having hit the proverbial bottom.

I think we're in for a number of bottoms, one of which we may be at right now.  I think there will be more than one just because you can't have a true economic recovery without people going back to work and despite the administrations raving about the millions of jobs they've saved and/or created, the last two weeks have seen more loses than the "experts" have anticipated.  You can not have a sustained jobless recovery, period.

Today's bottom is supported by the decreasing inventory of both Single Family Residences (SFR's) and condos in North Kona.  Combined with the increase in sales of both categories and a leveling off of the decline in median price may indicate a bottom.

This bottom will not last.  Once there is any indication of a recovery the banks will begining to release more of their "shadow inventory".  These are the thousands of homes waiting to be foreclosed upon.  The banks are holding off so they don't flood the market driving prices even further south.  We will see them come trickling on to the market as current inventory is being gobbled up by prudent investors and those looking for a home to live in.

I have been searching the Waikoloa Village area for clients and almost half of the homes we're looking at under $400K are foreclosures.  There are also many others that are short sales, homes on the market attempting to not go into foreclosure even though the owners owe more than their homes are worth.  We're also seeing banks becoming more willing to negotiate prices on these properties.

I was surprised this morning when a very nice home in Keauhou Estates, listed at $899K, showed up with a price increase to $999K.  Bank of America evidently believes the crisis is over and prices should go up.  I think this false belief is based on the bonuses they received this year and not on the actual real estate market lurking far below their ivory tower.