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
barbara@barbarashawaii.com
808-226-2537
www.movetohawaiikai.com
www.barbarashawaii.com