Hawaii Housing News

News, Tips and Opinions About Hawaii Real Estate and Housing

How the Fiscal Cliff Affects Homeowners

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Aloha, friends. Apologies for the time away, but holidays call and yours truly got engaged(!). But time waits for no one and there’s much to discuss. The biggest news upon us now has been the dreaded  literature review sample ppt https://makeitinla.org/writer/dracula-and-frankenstein-comparison-essay/32/ viagra nitroglicerine lamictal and tics get link free essay on osha price of metronidazole flagyl slavery essay frederick douglass enter https://wolverinecrossing.com/how/interview-guide-questions-for-thesis/35/ master thesis in information technology https://efm.sewanee.edu/faq/dissortation/22/ get link writing a profile essay ending of hamlet essay drug interaction cialis and warfarin go site project finance phd thesis filetype pdf essay topic and sample follow url essay zu internet cialis or kamagra https://mliesl.edu/example/instructions-handouts-for-5-paragraph-essay-fcat/14/ http://hyperbaricnurses.org/6854-viagra-to-bill-gates/ follow viagra prescribing info taming of the shrew essay quotes free trial pack of viaga my pet writing essay sildenafil viagra buy enter site viagra metamora fiscal cliff that we narrowly avoided. President Obama was in and out of Hawaii, alternating between vacationing with the First Family in Kailua and presiding over some of the most delicate negotiations to hit Washington in quite some time. And when it appeared that we were all about to go over the cliff like Thelma and Louise, the elephants and donkeys of Congress cut a deal.

But where does the Fiscal Cliff deal leave Hawaii’s homeowners?

Great question. The biggest advantage that many people are talking about is the one-year extension of the 2007 Mortgage Forgiveness Debt Relief Act, which was set to expire December 31 2012. To recap: when a house is sold as a short sale, the difference between the sale price and the mortgage balance is called the deficiency. The banks will normally waive the deficiency to help facilitate the short sale (and avoid a costly foreclosure). However, the IRS considers debt forgiveness to be income, so while the homeowner will largely be off the hook for the deficiency, they would still owe taxes on that amount according to their tax bracket. The 2007 Act allowed the short selling homeowner to waive that tax liability as well, essentially making a short sale free.

The looming fiscal cliff threatened to let that policy expire and, with it, the hopes of many homeowners with underwater mortgages who weren’t able to close a short sale before the end of the calendar year. Now, with the extension through 2013, anyone closing a short sale this year will still be able to take advantage of the tax waiver on their deficiency. That’s THOUSANDS OF DOLLARS in savings when you look at the average deficiency of a mortgage for a short sale in Hawaii! I’ve personally spoken with owners who have been underwater over $500,000. Do the math on the tax savings, even at the lowest bracket, and you’ll see the impact of extending the policy another year.

However, it’s not just about over-leveraged mortgages. The fiscal cliff deal did not really address the nation’s growing debt load which continues to steadily rise. Nor did it help from another tax angle — payroll taxes. You may have noticed this already. Furthermore, the deal postponed any discussion on spending cuts for another two months.

So while a crisis may have been averted, it’s safe to say that there’s more work yet to be done.

Hawaii Near the Top?

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I’ll admit it – I’m a geek. I like tech stuff and I like numbers. I loved stats class in those wintry days on Penn State campus (I lived around the corner from Joe Paterno). So when I see a website publish a list or ranking of real estate or whatever that applies to some facet of my daily life, I usually sit up and take notice. David Letterman’s no fool — Top Ten lists pull people in. Not only do we like these because they’re quick summaries (and free us from doing the grunt work to generate the rankings themselves), but Top Ten lists let us COMPARE things rather easily (and sound smart to the other folks at Starbucks). Even if there are enough Swiss cheese holes in the logic behind the lists’ methodologies, we still like the snapshot delivery of what’s likely going on.

So yesterday I got an email from InmanNews. Like GeekEstate, another one of my favorites, InmanNews analyzes real estate across the country with a focus on the tech (“geek”) component. Here’s the story. If you check out that link, you’ll see that no Hawaii real estate market was in the Top Ten or Bottom Ten for average listing price between September 2010 and March 2011. This might surprise some folks, especially with people having trouble getting a mortgage around here. But others may point to the foreclosure mess that’s troubled our state (ranked #11th nationally last year) and say it makes sense.

Now, ever the skeptic and devil’s advocate, I’ll point out some major points that need to be accepted when viewing such rankings:

  • Listing price does not equal VALUE (or sold price). However, for quick and dirty rankings, it’s a reasonable facsimile here.
  • If you look at the top ten, six of them are in California. So it’s not a state ranking but a metro market ranking. Don’t confuse them by falsely concluding that Hawaii’s average listing price is not in the top ten nationwide – whether it is or not is determined by calculating just that. Nowhere on that page do they rank by STATE, but markets WITHIN states.
  • If you look at the third box, you’ll see eight markets that are more expensive than Honolulu. Again, this does not mean Honolulu is the 9th most expensive market in the nation (the first box already displays this), only that it ranks 9th in most expensive metro market per state. Meaningless? Yeah, probably!
  • The ranking of Honolulu is assumably for the entire metro area, blending condos in Kalihi with homes in Manoa and Diamond Head. Does this skew the data? You bet it does! Does this same grain of salt hold true for all other cities listed? I would say yes. Does that render the point moot? Not necessarily because markets in other states may have a greater or smaller disparity between higher and lower-end neighborhoods (“the spread of data” or variance).

What I do find interesting is the disparity between Honolulu and Waianae – $478,042. For those of us that live here, it’s not a surprise. Everyone basically knows where the higher and lower neighborhoods are for each of the Hawaiian Islands. But if you bust out your calculator and look at the disparities in other states, you’ll see that we’re not so different from the norm. That was a bit of an eye-opener for me as I always just assumed we had a bigger spread between the high and low here than most of the other states.

The biggest laugh on the page? Look at the LEAST expensive market in the nation – Niagara Falls! Hey, I like Niagara Falls! A natural wonder! My family used to drive to Toronto from Philly most years growing up to see my grandparents. I remember going to the falls and having a blast! So why the down market? I can think of three possible reasons:

  1. Everyone’s tired of the tourist stampede year after year and wants to skip town.
  2. The falls are growing and people are worried their house is going to fall in and end up floating down the Niagara River.
  3. The buzz from the scene in Superman II has FINALLY wore off after 30 years.

Ok, I kid, I kid. Just thought that was interesting. Anyway, are you a stats junkie? What do you make of those numbers? Agree, disagree, have a different spin? Be heard below!
Mike

Hangover: Tequila or the Market?

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How’s Your Head?

If you didn’t notice, yesterday was Cince de Mayo. Most Americans mistakenly believe this is some sort of Mexican Independence Day. In truth, it’s a minor celebration south of the border that commemorates an unlikely victory over French forces in the Battle of Puebla in 1862 (yes, I Wikipedia’d it – don’t tell me you don’t use it, either!). Back when I lived in Washington, DC, we had huge parties downtown as the Latino population in the nation’s capital is quite large. I had friends from every Latino country you could think of: Guatemala, Bolivia, El Salvador, Peru, Honduras, Panama – you name it. I think they even made some countries up just to screw with me (yes, I’m talking about you, Luis from Guatadorexiru).

Well, we have the same thing here in Honolulu, of course. The annual block party last night was full of revelers in the streets, despite the intermittent rains. I bet they even tore it up in the streets of Anchorage and Boise as well. It seems that having a large Mexican population is not a requirement to drown in tequila on a Thursday night (yes, I know we have a Mexican population here, but you gotta admit it’s not the first image that comes to mind when discussing Hawaiian demographics). The biggest questions of the night become:

  • Salt or not salt?
  • Frozen or on the rocks?
  • Would you like me to call you a cab? (which is invariably followed by: “Well I don’t know where you live, either.”)

But while some may have woken to a heightened awareness of cranial sensitivity (re: hangover), there’s another matter on the minds of many Hawaii residents as we approach the midway point of 2011:

What’s going on with the local Hawaii real estate market?

It seems like just a few moments ago everyone was cheering the apparently imminent arrival of a foreclosure moratorium designed to put the brakes on the banks and lenders. But where’s that moratorium now? Last time I checked there were 4 or 5 different versions being floated around the halls of the local legislature. Still hanging your hat on that? Get back to me in September and let me know how that’s working for you.

If you look the stats, they’re in the eyes of the…um… stats-holder. Volume of sales is up while median prices are flat or even down in many places. Do you see signs of recovery? I don’t — not if you take a broad outlook. Anyone who points you to signs of a rebound ahead just based on the previous 30 days’ activity is just jerking you around. Don’t fall for those positive ‘blips’ on the radar. That’s someone with an agenda and you’re smarter than that. Look at three months minimum then see if a trend shows its face. Otherwise there is no trend, no rebound (or dip, for that matter – keepin’ it real just for you).

So as the tender aroma of Jose Cuervo and lime juice dissipates from the streets of Chinatown and the thumping of merengue music stops ringing in our ears, remember that we’re on our own for our market research, our decisions of whether or not to buy or sell our house, whether to seek a loan modification or short sale, whether to buy in Millani or Waipahu, whether to invest in Waikiki condos or to simply sit on the sidelines and wait for better times (although as an investor, I’d say the best time is actually now – if you do it wisely). Do not wait for others — government or otherwise — to lead you down the path.

What’s your take? Are you disappointed in the stalling of the moratorium? Have your 2011 real estate plans changed from earlier in the year? Do you agree with the consensus of another dip in the market or do you see it coming back before year’s end? SHARE YOUR THOUGHTS — BE HEARD!

Interesting Article – American Housing Preferences

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I just read this article from MSNBC this morning. I found it a very interesting read, discussing how the housing preferences in America have changed over the past ten years. I think it says a lot about who we are as a society and what we value. What are your thoughts? Do you find all the changes to be positive trends? Has Hawaii followed suit or do we stand out from the crowd?

What do you think the report ten years from now will say??