Impacts of Increased Interest Rates

Almost everyone knows that the Fed has increased interest rates and will continue to to do so for the short to mid-term future. I call this a transitional time because we are moving from historically low interest rates and, as I write, it is difficult to tell what all of the impacts of higher mortgage costs will be. In this video, I discuss some of what I see happening and I try to project what may happen. Feel free to call me to discuss how these rates may impact you.

How To Value Your Home

There are many methods to come up with a value for a house. Before you consider how, it is important to ask what you need it for. Is it to list the home for sale? Your annual trust valuing? For a certain date range? Or for estate purposes and the value at someone’s death?

After determining what you need the evaluation for, the estimation of a sales price or value of a property should be science and can involve some art. In this video, I discuss various tools for coming up with the correct value of a home.

Fuel To Drive The Oahu RE Market Higher?

Traditionally, the Oahu real estate market has been driven by the significant play of off shore buyers (Japanese, Canadian, Californian, Australian, Korean & Chinese). 99% of the sales on Oahu during the Covid years (2020 & 2021) were driven by local on island purchasers.

Now the travel has opened back up, could we expect a further run up in the market? Is there pent up demand by off shore buyers to make up for the missing the last two years? Could geo-politics make Oahu a safe haven for international funds? Time will tell…

Buying Foreclosures – Not For The Faint Of Heart

Over the years, many people have reached out to me to discuss the idea of buying a property at foreclosure. It seems they view this as a way to get a good deal.

Foreclosures are for the experienced investor because it involves an initial auction, subsequent court approval and the the possibility of overbidding by other parties. On top of these complexities, a buyer has to make a deposit of ten percent of the bid price and this deposit could be forfeited.

This video outlines how four attorneys almost lost their $80,000 deposit.

Beware of Buying Foreclosures

Over the years, I have had many people wonder about buying foreclosures to get a good deal. Not only can it take a great deal of your time, because most of the sales require a Court confirmation to close and you many not end up being the ultimate buyer of the property. In this video, I discuss a specific sale in which four buyers purchasing a property as partners (all attorneys) could have have had a very bad day.

Keahi’s Market Murmur – Is the market slowing? Impacts of inflation?

Anyone can quote the statistics put out by the Board of Realtors. My goal in this section is to provide unique insight on trends that may not be readily apparent in the numbers. I call it a “Market Murmur” because over the years I’ve noticed that the brokerage community smells shifts and changes in the market well before most pundits can quantify them. Here are this month’s Market Murmurs.

For the last few months, nearly every agent I talk to asks if the market has slowed. The mere asking of the question is evidence that the brokerage community is feeling a shift. A reputable local economist confirmed that his numbers showed a market peak in July.

Should you be concerned? If you are a seller, you are going to sell fast and get a great price as compared to 2020 and prior. The market still favors sellers, but not as insanely as before July.
If you are a buyer, you still need to be ready to act quickly because desirable properties in good locations are still going fast. Buyer’s may be competing against 3-5 offers instead of 10-20 offers. Though the market is different, it is still a very good seller’s market.

According to my insider economist, 99% of Oahu’s Covid period buyers have been local. This means the market was overly hot with very little input from “off-shore” buyers. As these travelers return, could they fuel another run up in prices? Does the “off shore” buying community have pent up buying motivation? We will see.

Prior to Covid, Honolulu saw significant purchasing activity from mainland China. To me, it seemed many Chinese nationals were concerned about the direction of the Country and wanted to use Hawaii and the USA as a safe harbor for their cash. Given the shifts in Hong Kong and the Chinese Communist Party (CCP) move away from freedom and liberty, could there be even greater urgency to move money to Hawaii? If the CCP tightens the economic grip on its people, will the urgency to shelter assets accelerate? Time will tell.

For the first time in decades inflation is in the economy. I entered real estate in 1983, the tail end of the last significant inflationary cycle. What did I learn from this?
#1 People with cash bought real estate because it is a hard asset and it gave them a hedge against inflation.
#2 People without cash couldn’t buy because the 18.75% 30 year fixed rate financing made it nearly impossible for them to qualify for a loan.
#3 As a result of high interest rates, the pool of renters grew dramatically, sharply driving up demand and hence rental prices.
#4 Seller’s with high equity positions (very small existing loans) were selling with owner financing. They would ask for 20% or more down payment and the buyer would make monthly payments at the low rate of 12% per year. Owners that did this deferred capital gains taxes (which may be possible today) and received excellent returns as compared to most other investments at that time.

For now, we are blessed with low interest rates and, I believe, the market could absorb some increase in interest rates. The challenge we face is there have be 30’ish years of low and declining interest rates. The long-term low rates have shifted the perception of what is a high interest rate. Since the Fed uses interest rates to kill inflation, is 5% or 6% now considered a high interest rate? I’m not sure what the actual rate is, but I am sure that it is significantly lower for millennials than the generations before them. If this is true, then a rate of 5% or 6% could be perceived as very high and the buying community could begin to balk at purchasing.

In closing, we are in a time of more and more uncertainty and if you have not yet done it, I recommend reviewing all the interest rates on your loans and seeing if you can lock in the lowest possible long term rate. This will protect you as rates rise and, over time, you will look like a financial genius. If you don’t yet own a home, now is the to purchase. This will allow you to lock in of low interest rates and avoid potentially rising rents.

Let me know what think and what murmurs you hear. Feel free to pass this on

Beachfront Beauty With Wide White Sand!

Your paradise found! Enjoy gorgeous weather & a luxurious 2 story beachfront home. Wide sparkling white sand with easy swimming, surfing & paddling. Use as a 6 bedroom 4 bath or two 3 bedroom 2 bathroom quarters. Views include sunsets, teal ocean & waves, surf, city lights, coastline, Diamond Head, Waikiki, Friday night fireworks & more! Covered lanais, rolling lawn & an open air gazebo make this perfect for hosting meaningful events. Designed for the open air lifestyle. Cool yourself with the fans & trade winds or indulge in ample air conditioning. Finishes include polished cement floors, ceramic tile, vinyl planking, double pane windows & sliders, granite counters & elegant cabinets. Love the laundry room. All the details are done! It won’t last, call to schedule your private showing.

Does failing to plan mean planning to fail?

Earlier this week, it occurred to me how important planning is to success and how its’ lack leads to most failure.  In this video, I discuss how at NextHome KU Realty we collaborate to build solid executable plans for each of our associates.  Once the plan is put to paper, we then focus on it and pay attention those activities that lead to success.  With regular reviews, we are able to accelerate growth and avoid significant downturns.  Feel free to call me at 398-3220 if you would like to discuss your plan.

 

A Quantum Leap!

At the beginning of 2017, I wasn’t looking for a national real estate franchise.   By accident I came across NextHome and my world began to change. I liked the logo and my morbid curiosity made me Google the company. The NextHome corporate website was clean, simple, professional and compelling. NextHome’s CEO James Dwiggins offers an introduction video at the NextHome.com and at the end of that short video it I felt as though he had summarized the way I’ve always thought a real estate company should be operated. The more I researched the company, the more I liked it. Then I looked into buying the franchise.

Charis Moreno is in charge of NextHome franchise sales, our initial conversation led me to want more information and she put me in contact with a number of current franchise owners. All of these real estate brokers were like me, successful and former owners of other national real estate franchises, all of them couldn’t think of one bad thing to say about NextHome.

It was time to get my wife involved and for me to present the case for considering owning a NextHome franchise. In the initial information gathering stages, I was hesitant to share it with her without having all of my own concerns addressed. Now that I was on board I wanted her former CPA mind to play devils advocate to my optimism. Guess what, she thought it was a fantastic opportunity! Charis made a comment regarding the type of person NextHome wanted as a franchisee that closed us on moving forward, she said “We don’t want and okole’s!” Call me if you want an explanation of okole.

Well, it has been 4 months since the decision was made and August 1st marked the transition from KU Realty, LLC to NextHome KU Realty. As I see it, NextHome KU Realty brings the best of KU Realty and adds a quantum step up in technology services, branding and support. After selling real estate since 1983, it is amazing to feel the energy this new opportunity brings to me, my clients, associates and Honolulu’s real estate market. I am excited to see the vision of a very special real estate come to fruition. Saddle up, buckle up, hang on and watch this grow!