The Oahu real estate sales numbers are out for October, and you may have seen a not-so-optimistic article in the Star Advertiser today.  However, I could not be more sure that our market is about to JUMP UP in sales, because the Star's article missed the most important statistics. . I outline them below.  

Yes it's true that the median price stayed at about $600k last and the number of sales dropped 17 percent to 241 (read: A LOT) compared to from 290 in October 2009. 

As the article points out, that was because last year at this time, the effect of first time buyer credit was in at its height.

No kidding.  The Federal gov't created a false market, so OF COURSE sales were lower this October.  But October is ALWAYS a lot slower than spring and summer sales,  while last year there were more single-family home sales in October than in any other month.  In fact, December had the second-most sales last year, when usually December is one of the slowest months.

But the real story of the Oahu real estate market is in these numbers:

• The year to date number of sales through October is up 15.6 percent for single family homes and 16.3 percent for condos.
• The average home sells in 35 days, while last year it took 52 days.  In Hawaii Kai, it takes just 26 days!
• PENDING SALES ARE UP 28.5%!!!  There were 329 Pending sales in October, compared to 256 last October, and 177 in October '09, which means November and December sales will be a lot higher than last year's. 
  
• Homes sold in October with 94.4% of the list price. Last year, they sold at 92.7%
• There are only 1472 homes for sale, last year there were 1660, In Oct 2008, there were 2386!
• There is only a 6.2 month supply of homes for sale, compared to 7.8 last year and 10 months in Oct 2008.
• Through the first 10 months of 2010, median prices are actually UP to $590k, from $585k last year.

Two years ago I predicted the bottom of the market in this blog, and some people thought I was crazy.  They were wrong.  Sales went up, prices went up, everything got better.  I didn't use a crystal ball.  I used the one statistic that matters most: The number of pending sales. 

Pending sales are currently about DOUBLE what they were October 2008, which means November and December of this year are going to blow away last month, and we are going to end this year with a huge jump in sales.  

Why is this true?  Because once again the government has intervened, this time in the form of buying billions of dollars worth of its own bonds, to artificially lower interest rates. 

So thanks Fed Chairman Ben Bernanke, whether we agree or not, there is no denying that you are helping the real estate market big time!

Nanea Kai is a complex in the heart of Hawaii Kai built in 2003.  This $625,000 unit is 3 bedrooms, 2.5 baths, and 1582 sqft inside, plus the open lanai.  Plus the maintenance fees are under $350 a month!

It has 1 attached garage and 1 open parking spot.  Hardwood and laminate wood floors, corian counters, stainless appliances, and a large loft that serves as a family room or play room.  Nanea Kai is just a couple minutes walk to the Hawaii Kai town center and the Safeway center. 

Check out the beautiful complex built in '03, trees starting to grow a bit.

This nice kitchen great room opens up to thelarge living space.  Nice stainless upgrades. 

Via Advertiser: News yesterday that Southwest Airlines might begin flights to Hawaii!

CEO Gary Kelly said the company will make a decision before the end of the year on whether to add larger Boeing 737-800 airplanes to its fleet, which would "bring us the opportunity to consider a destination like Hawaii."  Kelly said the earliest Southwest could take delivery of the 737-800s would be 2012.

State tourism liaison Marsha Wienert:  "With their network of flights, especially in the Midwest, it opens up a whole new market that has been virtually untapped for some time," she said.

"Keith Vieira, senior vice president for Starwood Hotels & Resorts in Hawaii, echoed the sentiment.  "This opportunity with Southwest will enable us to better reach their customer base in the Southwest area of the United States, which is a very good market to Hawaii. ... It will be a definite boon to travel for us if they're able to connect to us directly," he said."

Adding Hawaii would also provide a destination for regular Southwest customers redeeming their frequent-flier credits.

This is great news for the economy of Hawaii.  More flights mean more tourists = more money for Hawaii. I have often heard people in the midwest and mountain states wish they could use their Southwest miles to fly here.  Now they just have to wait a couple years and hopefully they can! 

This also tells us that Southwest thinks the Hawaii tourism industry is rebounding enough to make a big committment like this. 

All good news!

The interest rate on my first home loan was 9.875%.  In my early 20's I bought my first condo and was happy that my loan was not over 10%, since I had no credit and little job history. 

To put it in perspective, if you borrowed $500,000 at 9.875% on a 30yr loan, your payment would be $4341/month.  At today's 4.5% rate, the payment is $2533/month. That's a difference of $1808. 

Now home prices are about double what they were 10 years ago, but the cost to own a house is only 31% higher, not 100% higher, due to the lower interest rates. 

Average 30 yr mortgage rate (Reproduced with permission  Mortgage-X.com)

Today           = 4.25%

Oct 2000     = 7.875%.

Oct 1990     = 10.25%. 

Oct 1984    = 13.5% !!!

Let's see how that effects our monthly mortgage payments.

House price in 2000 = $300,000.  Payment at 7.875% =  $2175/month, principle and interest.

House price today   = $600,000.  Payment at 4%        =  $2864/month, principle and interest. (31% higher)

I doubt we will ever see rates like again this in our lifetime.  In 10 years, I think people who have 4% interest rates on their mortgages will be laughing all day long, as inflation kicks back in, and we go back to the historical average, which is closer to 9-10%.  I recall in 1999 when I could get a 10yr CD at my bank that paid 10%.  

The government is printing money.  Nations are racing to the bottom with their currencies.  The Fed has said they want inflation, even though it already exists when food and oil prices are included in CPI.  The Fed is creating inflation by printing and spending money buying their own debt,  under the guise of "quantitative easing." Read: "we have to pay for everything somehow."  

You may want follow suit and borrow as much money now as you can (within your budget, without over extending.)  As soon as inflation starts really ramping up, that money may seem like it's free. 

Today's rates from a local lender:

Loan Program   Interest Rate      Points       
30 Year Fixed     3.875%           2.250
30 Year Fixed     4.500%           0.000
30 Year VA         4.250%           -0.250
30 Year FHA       4.250%           -0.250

In June I listed this nice 2 bedroom Kailua condo at Poinciana Manor $350,000. This morning the patient buyer finally closed for $356,000, the price approved by the lender.

People always want to know how long short sales take, and the answer is apparently.... about 4 1/2 months. I've had some short sales take about 8 months, and others about 6. This is actually the fastest I have ever had one close.

To be able to buy a renovated 2 bedroom condo in Kailua town for $356,000, just a few minutes bike ride to the beach, is pretty amazing.

Congratulations to my sellers, who are thrilled to be done with this saga. Various financial difficulties meant that the short sale was their best opportunity to be get out from under a mortgage they no longer could afford. Like so many other Americans, the economy, the market, and in this case, their job transfer, made it impossible to stay. They are now very glad to be pa`u!

The Harris poll released their latest results and found that Hawaii is the 2nd most desired State to live in.

From their site: "Notwithstanding its economic and political problems, more Americans would like to live in California than in any other state. For the seventh time in a row since 2002 California tops the list of states where the most people would like to live if they did not live in their own states. The next most popular states are Hawaii, Florida, Colorado, Arizona, North Carolina, Oregon, Texas, New York and Washington."

Well, since California will be bankrupt soon, and overrun by illegal immigrants within a few years, I think it's safe to say that Hawaii is probably the place that most Americans would like to live. Not surprisingly, people over 46 chose Hawaii as #1 instead failing California.

The good news is, homes in Hawaii are cheaper than areas of California like Orange County, LA, San Fernando Valley, San Diego, the Bay Area, Santa Barabara, etc. And since Hawaii property taxes are about 1/8 of CA taxes, it's actually a lot cheaper to live here than you might think.

So what are you waiting for? It's a free country, anyone can live in Hawaii!

The Star reported this morning that a new study confirms Vog (volcanic fog) causes resperatory problems, among other things. 

"The risk of upper respiratory problems increased significantly on the
Big Island during high vog events -- and children were the most
sensitive to the bad air -- according to a new study that compared
clinic visits in communities hardest hit by volcanic emissions before
and after a new Kilauea vent opened in March 2008."

"It found that during thick vog there was a sixfold increase in the
number of people with acute airway problems that required emergency
care, up to 300 percent increases in severe sore throats and headaches,
and a 56 percent increase in people with coughs."

Bottom line - people have been moving away from the effected Big Island areas, like Kona. I have had clients call me from the Big Island looking to move over to Oahu.  Here on Oahu we have hardly any vog at all, except on the rare days when the Trade Winds stop blowing.  That only happens about 20-30 days a year.  (Just a guess on my part). 

The reality is that breathing the Vog in Kona feels a lot like living in LA.   Want clean, fresh, ocean air to breathe?  Come to Oahu! 

I've written about the Waikiki Landmark before, but after spending nearly an entire week viewing Waikiki Condos with a client of mine, I think the Waikiki Landmark is back at the top of my list.

You might think of Waikiki as full of condos, but if you're looking for something very nice or luxurious, there aren't too many choices.  First of all, if you're thinking of Ko Olani, Hokua, or Nouru Towers, or Yacht Harbor Towers, those are all in Ala Moana.

This week we viewed several units in the $600k-$800k range, with at least 2 bedrooms, 2 full baths, 2 parking stalls, and 1100 square feet.   We visited several buildings including Waipuna, The Windsor, the brand new Allure, Lanikea, and a few others in Ala Moana as mentioned above.

After much searching around, we found a great unit at the Landmark with 1308 square feet and a 170 square foot lanai.  It has a great view of the Manoa valley, the Ala Wai Canal, and a little peak of the ocean.  Here is the view of the pool and the canal. The Landmark has one of Waikiki's best swimming pools, maybe the best. 

The Landmark was Built in 1992, at the top of the Japanese bubble, so even though it was constructed to be the best building in Waikiki, the prices have never reflected what the builders hoped for.  Now that they are 18 years old, some of the units at the Waikiki Landmark feel outdated and are a little too simple—particularly in
the kitchens.  It's now time for all the units to be renovated, and so the values in the building are probably lower than they could be. 

My very happy client is now in escrow on unit 1902, listed at about $737,500.  At the height of the market, this unit would have sold for around $900k. 

 Congrats to my happy buyer. Enjoy your new home Nancy! Here is her new living room!

Kona Coffee is one of my favorite truly locally grown Hawaiian products. The good folks at Kona Comfort coffee help me get out of bed in the morning with their freshly roasted Kona beans, and I thought I might just give a little help to a company I really believe has a great product - way better than anything you can buy from a big nationwide brand.  

Kona coffee is grown on the slopes ofHualalaiandMauna Loain the North and SouthKona Districtsof theBig IslandofHawaii. It is, in fact, the only place that coffee grows in all of America as it is the only land we have that falls in the coffee belt. The incredibly rich volcanic soil combined with Hawaii's sunny mornings and cloudy afternoons creates just about the best environment this world has to offer for growing coffee beans.

The big island of Hawaii is called "big" because it's about 5 times larger than the other islands of Hawaii.  Still it is a relatively small chunk of land just over four-thousand square miles, and, as I mentioned above, the beans only really grow on one side of two hills on the whole island. This means true Kona coffees are really limited in supply and the prices elsewhere in the world will reflect just how special this coffee is.

As for roasters, the people at Kona Comfort are really good at what they do.  When I order from them, the coffee is so fresh that nothing else can compare. They roast the coffee in small batches so that it's always fresh and although that might sound like marketing mumbo jumbo, they literally roast the beans one day and ship them to you the next. If you order coffee from Kona Comfort, you can be drinking it within 24 hours of the beans coming out of the roaster, no matter where you are in the States.

You might have tried Kona coffee blends, which are usually made up of about 10% Kona beans and mixed with other beans from Columbia, Brazilian or any other country in the coffee belt.  Read: totally bogus.  But Kona Comfort is 100 percent Kona beans, all the time.

Unlike some of the larger brands, Kona Comfort has a decisively stronger but not burnt taste.  They manage to give a unique and really delicious flavor to one of the world's rarest and most sought after coffee beans. And they do all this using 100% USDA certified organic Kona coffee beans.

All that stuff is great. True, the product is unbelievable, but what really strikes me is their customer service. This week I got a hand written letter of thanks on the back of my receipt and every time I deal with them, it always seems like a very personal experience; much more so than from other coffee roasters. These are good people who make a quality product and I recommend you give them a try.

Here they are:Kona Comfort