Happy Fourth of July!

July 3, 2012 by Michael Borger

Happy Fourth of July! I have to apologize for the delay since the last post. On a personal note, I’ve been back and forth to Japan a bit for family reasons and it’s tapped the writing brakes a bit. But wow, look at what’s happened in the past month!

1) Banks Take a Hit. Many of the big banks were recently whacked by authorities and downgraded by creditors. They’re now taking one more step towards an ounce of transparency. Will it make much of a difference, these financial ‘living wills’? Some are even calling for an end to the money system as we know, although I think that idea is right up there with the upcoming Mayan doomsday. (check this out, too, for a good laugh )

2) Foreclosures Crank Up. And now here comes the word that the banks are ready to ratchet up their foreclosure process. It’s been all ‘drip’ from the inventory faucet lately but that may be changing very shortly. The banks (yes, the same banks) know that they have to get rid of these non-performing assets at some point. They can’t release them all at once because a flooded market will depress the entire housing scene. But they simply have to start moving inventory.

Another interesting point of…well….interest: Hawaii was one of the few states with an increase in foreclosure inventory, according to CoreLogic just this past Friday.

3) The Oracle Arrives. As in Oracle founder Larry Ellison who bought just about every grain of sand and remaining pineapple on Lanai. Will he hold true to his pledge that he won’t come in and give the island a ‘digital makeover’? He doesn’t have the reputation of just letting things be, but aside from some local improvements to infrastructure and such, that’s apparently what the island residents want from their new neighbor. Let Lanai continue to be Lanai — will he?

4) SPORTS (why not): The Los Angeles Kings won the Stanley Cup for the first time — ever. A lot of my ex-Flyers are on that team (I’m a Philly boy). It only took 45 years but they did it. Sure, hockey’s not big in Hawaii but we have enough mainland imports here that probably follow the NHL. I certainly can’t be the only one (I hope). Plus, LA is about as close a hockey team as we have. And they were playing New Jersey — and no one wants to see NJ win again. Ever. No one. Ever again.

In other sports news, and speaking of Philadelphia, the Flyin’ Hawaiian, Maui’s Shane Victorino is struggling along with the rest of the Fightin’ Phils, batting only .251 as we hit the halfway point of the baseball season. Come on, Shane, let’s start rallying the boys!

Rocky still believes...

5) USA! USA! USA! Last but most definitely not least, let’s take a moment to celebrate our country, the good ol’ USA. No country is perfect, ours included, but it’s a pretty darn good one and we should be proud to call ourselves American. Whether you agree with who’s running the ship or not from 1600 Pennsylvania Avenue in DC, it’s the spirit of America — the idea of it — that unites us and gives us our strength as a unified people.

Happy Fourth of July!

March 2012 Hawaii Foreclosure Info

April 20, 2012 by Michael Borger

In the wake of news that former “Friends” star Jennifer Aniston just sold two of her New York City condos at a loss of over $500 million, we’re sometimes reminded that the drop in housing affects everyone. Now, I’m sure none of us are crying for Jennifer or other celebrities like Nicholas Cage and Jennifer Lopez who are being foreclosed upon or losing money on their mega-mansions. In fact, I’m sure there are more than enough people overjoyed to see the rich folks take their share of the housing mess!

However, watching the big guys take a fall doesn’t really do more for those of us in Hawaii than provide a nice diversion and maybe an “I told you so”. So with that being said, let’s look at the March foreclosure info for Hawaii.

Looking at the data, it’s no surprise that most of the foreclosures were on Oahu. However, the Big Island had the highest foreclosure rate with 1 out of every 460 housing units in foreclosure, mostly in Kona. Maui was right behind with Lahaina and Kihei contributing to the 1 out of 514 foreclosure rate. Statewide, bank repossessions (REO) more than doubled from 102 to 214!

Yet at the same time, inventory is dropping under the 6-month mark and prices have creeped upwards. It remains what will be done when the statewide moratorium on non-judicial foreclosures comes up for renewal in July , but it seems obvious that this will have a tremendous affect on the future of Hawaii housing and real estate.

With Bank of America, a major provider of home loans to Hawaii residents, revamping their short sale process this past week, now might be the best time to get out from an over-leveraged mortgage if it’s crippling your family’s budget, especially with the 2007 debt forgiveness act still in effect through the end of the calendar year.

2012 Predictions – What to Watch Out For

January 4, 2012 by Michael Borger

Aloha, friends. I hope everyone enjoyed a safe and happy holiday season as we bounce into 2012. I’ll spare you all the recap everyone else is giving you of the 2011 calendar year, which is old news, and jump right into what I see happening in the next 12 months.

Flipping Houses Just Got Easier

If you didn’t notice, the FHA just extended its anti-flipping waiver. That means it doesn’t matter how long the current owner has held the property if a buyer is using FHA financing. Those 90-day seasoning periods are gone for at least another year, so house flipping investors with capital should step up the plate because you just increased your buyers pool and reduced your holding costs. With the economy of the last few years, not everyone is a Cash Buyer (if you are, then get on this list!). Marketing to FHA buyers not only helps people get a new home but should also help the banks plow through their backlog of REO inventory.

The Hawaii Foreclosure Moratorium Backfires

I’m not saying I want this to happen, but I fear the intended objectives may not be attainable. I still get calls from people in foreclosure asking about their options because they’re getting taken through the judicial foreclosure process. Keeping someone in a pay-option ARM mortgage isn’t always the best decision for anyone, especially the homeowner. I know it’s a process that needs to take its course, but I’m skeptical. I’m wary that people in trouble before will be put right back in a situation of not being able to make their monthly payments and need foreclosure help all over again. Another downside to this is that it will clog up the banks’ property pipeline, likely delaying a Hawaii housing market rebound.

Landlords Line Up

There’s been a lot of talk lately about the “Nation of Renters” that’s headed our way and I think there’s a lot of truth to that. Investors are getting creative again in how they purchase and sell properties, and this includes the Lease Option. It’s no secret that Hawaii has some of the highest housing prices in the nation. As such, many people who’d like to buy simply can’t do so the conventional way, but a lease option gives them a way to get their foot in the door. What does that mean? It means landlords and cash flow investors should reach out to this group of buyers who will take better care of their place because they see themselves as the future owner and will pay a rent premium for that right. Until the economy comes around, it’s a specialized yet profitable niche.

Investors Will Step Back From Stocks

Ok, this may not be housing related, per se, but there’s a correlation, of course, between real estate prices and the stock market. The S&P 500 reportedly finished right where it started twelve months ago. Let me repeat that another way — the market gave out DIDDLY SQUAT for the entire year. When you consider that most people are taught that stocks and bonds are the only way to grow your portfolio, it’s outright depressing. A year wasted.

My friends over at New Direction IRA just reported phenomenal growth for another consecutive year in their Self-Directed IRA business (SDIRA). These financial instruments allow people to invest in much, much more than the stock market. You can invest in gold, silver, startups, and, yes, real estate. Flip houses, earn cash flow or grow at 12% or more as a private lender for real estate investors — all inside your IRA. With the growth reported, I predict that more and more people will step out from behind the tightly-controlled veil of commodities brokers and embrace the freedom of a Self-Directed IRA. Education is empowering.

Need another reason to watch out for the market? The next country in Europe to go belly up or Arab country to get overthrown or natural disaster in who-knows-what corner of the globe affects your return on investment. Scary, isn’t it? I agree.

One Giant Leap for Mike…

I also predict that my wonderful girlfriend Nanae will move here in early April from San Diego and start a very successful career as a Honolulu piano teacher (here’s her current site in SD). Know any kids needing lessons? Let me know!

That’s all I have on this Wednesday afternoon before I head over to the FAMES Hawaii monthly event at Dave and Buster’s. Let’s all keep a watch out in this first month for some signs of where the new year is taking us.

2012 Economic Outlook, Luxury Market and Turkeys

November 18, 2011 by Michael Borger

Aloha, friends. Getting ready for Thanksgiving? More on that below! Let’s get right to it…

APEC is done and many are more than a bit ‘thankful’ for traffic to return to its normally sticky state. Driving 10mph through Honolulu is better than standing still, right? I was conveniently in San Diego (and Idyllwild – great mountain town!) last week, so I luckily missed all the craziness. Still, in hindsight it’s always nice to put our state on the world map. As a vacation hotspot, we can never have enough press.

2012 Economic Thoughts

Just last week KITV ran an article on some economic expectations for 2012. Now I’ll be upfront and say that I’m not an economist, but I found some good tidbits in there. Firstly, I think most people understand that the world is more global now than ever before. Yes, local economies are often heavily driven by local policies and activities, but we’re more intimately connected around the world now than ever before. That means that economic bailouts in Greece, Portugal, Italy and elsewhere in Europe can substantially impact your investments while shopping in Lahaina. The domino effect of this year’s “Arab Spring”, as the revolutionary efforts of Tunisia, Egypt, Yemen, Bahrain, Jordan and now Syria are termed, is a particular shocker for me, having once lived in the region (Tel Aviv). If Assad is overthrown in Syria, the fallout from regional uncertainty could ripple through your IRA while you’re hiking Waimea Canyon on Kauai or tending to your bromeliads in Hilo.

So while real estate is definitely driven by local markets, whether Hawaii or elsewhere, it’s definitely worth keeping your eye on world events. And yes, I know the news is often depressing and I’ve often considered a “news fast”, but “no man is an island” — even on an island (bad pun, I know).

Jobs (not Steve)

However, there’s some good news in there. You may or may not know, but the current Hawaii unemployment rate is one of the lowest in the nation, hovering around 6%. Compared to our mainland neighbors, that’s a promising number. The trick will be whether that sustains into the new year, but on the surface it is a possible signal of a potential housing rebound. The thinking is that the more people are working, the more income there is which leads to greater affordability of houses. Of course, there are always other factors at play but it’s something to at least keep our eyes on.

Visit Hawaii – PLEASE!

The other side of the Hawaii economy coin is almost always our travel industry. The same article points out a higher uptick in visitor numbers than expected. Right now, any growth at all is to be celebrated. We’re a luxury market, and it stands to reason that most people need to be financially secure in their own home and household before taking a vacation to Hawaii. You could call us a “secondary market”. Again, we can look to China and other promising economies to fill in the visitors gap of the mainland.

Again, here’s an opportunity to remind those of you who sell Hawaii real estate to look beyond the good ol’ USA for your buyers. China is HOT right now. If you don’t speak Chinese, there are countless resources here to hire or partner with someone to help get you hooked into the Chinese market. Of course, Japan, Korea and Canada remain great sources or international buyers. And of course, we have to hope that the collaboration of world leaders will provide benefits to us all into the future.

Turkey, Turkey

Turducken (duck in a chicken in a turkey) - it's delicious!

As I sit here writing this article in my favorite neighborhood coffee shop, Thanksgiving Day sits just 6 days away. This will be my 6th Thanksgiving in Hawaii and while I’d love to be with my family back in Pottstown, Pennsylvania, I’m happy to be able to celebrate it here with some great friends. I’m also thankful that I’m not responsible for preparing the turkey. I’m a fan of all things culinary — including people with better culinary skills than this guy here — so I’ll do my part, but I’ll leave the turkey to the others (don’t be this guy).

So to all you turkey chefs, what are your tips to preparing the best bird on the block? Is there a magic temperature or time for cooking that leads to no-fail perfection? Some secret glaze or do you use one of those ‘flavor injectors’? Any turducken cookers out there? Share your tips below…