“Buyers And Sellers Are Watching The Market And Making Better Decisions.”
There’s good news and bad news in the Hawaii real estate market. The good news is that median prices remain steady for both single family and condominium resales on Oahu and the number of homes sold has been surging upward. However, Hawaii’s foreclo-sure rate became the 10th highest in the nation in December, and the interest rate on 30 year fixed rate mortgages has increased from the high four percents to the low fives.
Help-U-Sell Honolulu Properties President and Principal Broker Richard Cricchio said prospective buyers should take note of changing conditions and take advantage of the many excellent opportunities that currently exist.
“Right now there are really good buys out there and favorable financing programs for first time home buyers, move up buyers, and investors,” Cricchio said. “Even though interest rates have increased slightly, conventional, fixed rate mortgages are still available in the low to mid five percents for those who have good credit and can make the down payment.
However, the Fed has indicated that it plans to elevate rates gradually to combat inflation…how high they will go no one really can confirm.
“In terms of financing, VA and FHA continue to offer the best deals available for those who are eligible. The FHA down payment rate is currently holding at three and a half percent, up from three.”
Cricchio noted that the looming expiration of the Federal Home Buyer Tax Credits is a major factor in the escalation of current market activity. Buyers who have not owned a home for the past three years are eligible for the extended $8,000 tax credit, and a $6,500 tax credit can be claimed by buyers who have owned and used the same home as a primary residence for at least five consecutive years of the eight year period ending on the date of purchase of the new home as a primary residence.
“As Realtors, we are getting the word out to prospective buyers that they are looking at an expiration date of April 30 to get a home into escrow in order to record on the property by June 30. The most frequently asked questions coming into our office and from callers to our Wednesday morning real estate show on KHVH Radio concern the tax credits. Everyone want to know if there is a possibility the deadline will be extended, and, at this point, it doesn’t seem likely…but you never know. The government has changed parameters on this program several times already.
“Now with the recent report on Hawaii’s 183 percent increase in foreclosures, we are also getting a lot of inquiries about buying foreclosed properties. One reason for the increase is the lifting of a Federally issued 90-day moratorium on foreclosures, so the lenders have been notifying delinquent borrowers of impending foreclosure and these actions are being recorded. There are probably many more to come.
“Although you can sometimes make a good deal on a foreclosure bought at auction, REOs or ‘Real Estate Owned’ properties and short sales are safer. They are usually in better condition than a fore-closed property that may have been abandoned and vacant for some time…remember, you are buying it ‘as is.’ In some cases the owner or a renter is still living there, which presents another set of problems.
“If a foreclosed property doesn’t sell at auction to a third party, the lender takes it back, restores it to salable condition, and puts it on the market as an REO. A buyer can inspect it prior to purchase.
“A short sale also represents an excellent opportunity for a buyer and we’ve been very active and successful with this type of transaction. If an owner sees no alternative but default and foreclo-sure, they should contact a Realtor to help them negotiate with the lender. At Help-U-Sell, we have a system set up for short sales…we consult with the owner and the lender, do a market analysis, negotiate a listing price with the lender, and put the property on the market. Keep in mind that the lender would rather see the property sell than go to foreclosure.”
Cricchio noted that his company recently closed the sale of an REO property, a three bedroom, two and a half bath townhome with a two car garage in Phase I of the Peninsula at Hawaii Kai at $590,000. “This was an excellent price for a seven year old home in good condition in this neighborhood,”
Cricchio said. “Another typical scenario reflecting current market conditions was our sale just this week of a two bedroom condo in Aiea at $300,000. We had four offers and one $10,000 over asking. It went to local first time home buyers.
“We are seeing a trend of much more educated and financially responsible buyers. They are watching the market and making better decisions.”
Richard Cricchio has been in real estate since 1990 and established Help-U-Sell Honolulu Properties in 2000. He serves on the Professional Standards Committee of the Honolulu Board of Realtors. Located in the Interstate Building, the company periodically conducts home buyer and home seller seminars for the public. Cricchio co-hosts a weekly radio show with Rick Hamada on KHVH NewsRadio AM830 on Wednesdays from 8 to 9 a.m.