Saturday, November 28, 2009

Hawaii Kai Condo Market may face challenges

Proposed changes to a federal mortgage loan program that now accounts for a substantial number of all new home loans have Hawai'i lenders concerned that many condominiums in the state could become ineligible for such lending. The proposed changes stem from an effort by the U.S. Department of Housing and Urban Development to reduce fraud and risk in lending through the Federal Housing Administration.

The Mortgage Bankers Association of Hawaii fears that 545 Hawai'i condo projects will automatically lose their eligibility for FHA lending next year under revised rules proposed by the agency.

FHA loans are available for single-family home and condo purchases. For condos, the loans are limited to projects that meet certain requirements, such as those with no less than 50 percent of units occupied by owners, no more than 15 percent of units delinquent on association fees and no more than 10 percent of units owned by one investor. But in some cases these requirements haven't been reviewed after condos obtained initial FHA lending approval years or decades ago.

Under proposed rule changes, all condos automatically would be removed from FHA's approved lending list two years after a project was placed on the list. In Hawai'i, that would mean virtually every condo project on FHA's approved list, or 545 projects, would be removed.

The Mortgage Bankers Association of Hawaii had asked that previously approved condos in the state remain on the FHA's approved list for two years to allow time for more orderly reapprovals. Initially, the removal was slated to take effect Dec. 7 upon implementation of the new rules. However, recently the agency granted a grace period of one year before condos with old approvals will become ineligible for FHA loans unless they are reapproved.

Contact me for more information on how this proposed change may affect your purchase or sale of a Hawaii Kai condo.

Barbara Abe, Realtor

(resource: Honolulu Advertiser)

Friday, November 20, 2009

Hawaii Kai Real Estate Outlook for 2010

Home sales will increase 15 percent to about 5.7 million units and REALTOR® income will be up 20 percent in 2010, predicts NAR Chief Economist Lawrence Yun. He credited the home buyer tax credit with stimulating sales on the lower-end of the housing market this year, bringing up to 400,000 first-time buyers into the market who wouldn't have bought otherwise. That influx tightened inventories of starter homes, shored up prices, and helped reduce households' fear over continuing price drops.

This cycle will continue now that the federal government has extended the credit to mid-2010 and expanded it to make a smaller credit available to repeat buyers and to households with higher incomes. “The key is stabilizing prices and preserving household wealth,” he says.

More applicable to Hawaii home prices, Yun predicts the supply of homes to stabilize at the historic norm of six to seven months. Homes above $500,000 will remain elevated in the near-term, but that weakness will be offset by a hefty drop in starter-home inventories, which are running at about a five months supply. The tightening inventory at all price points will help improve market performance by bringing supply into better balance with demand, but the added sales, particularly on the higher end, will also increase the number and quality of the market comparables used by appraisers to assign valuations. Once appraisals improve, foreclosures will ease, blunting their drag on the market and making it less likely that Fannie Mae, Freddie Mac, and even FHA will need help from the taxpayer.

The good news is that the 1st Time Buyer Tax Credit has been extended, and a Homeowner Tax Credit is now available. Contact me for details.

Barbara Abe, Realtor

Thursday, November 5, 2009

Real Estate Sales for October, 2009 in Hawaii Kai and Oahu

Plenty of homeowners and economists are happy with the news about October, as sales reached a 19-month high island-wide, as reported by our Honolulu Board of Realtors (HBR). Still fewer in number than the recent hooming years, volume continues to build from the low levels of late 2008 and early 2009. Condo sales as well as single family home sales increased.

The current rate of sales for both single-family homes and condominiums were both slightly up in October, which is truly encouraging in light of the current economy," said Sandra "Sam" Bangerter, president of the Honolulu Board of Realtors. "The median prices for single-family homes were up a bit and down for condominiums, but still within relatively stable price ranges. The first-time homebuyers federal tax credit has been helpful in raising buyer awareness."

There were 281 sales of single-family homes during October, or almost 16 percent more than a year earlier. It was the highest volume since March 2008, or 19 months.

  • The median price of single-family homes was $605,000. Although that was down from last October's median of $625,000, it marked a high point for this year. The median is the point where half of the prices are below and half are above.
  • There were 381 sales of condominiums, the most since May 2008, or 17 months.
  • The median condominium price was $295,000. That compared with the year earlier median of $325,000.

Kapahulu/Diamond Head, Kahala and Hawaii Kai posted their highest single-family home sales of the year.

In October, months of remaining inventory for single-family homes fell to 4.6 from the prior year's 9.8, according to the HBR. Likewise, remaining condominium inventory fell to 4.8 months from the year-ago 8.7 months, HBR said.

The Board publishes very extensive statistics for every community on Oahu. Contact me for your free copy.

Barbara Abe, Realtor