Rates on 30-year fixed mortgages at Hawaii's three largest banks fell this week.
First Hawaiian Bank, Bank of Hawaii and American Savings Bank each saw 30-year fixed rates fall an eighth of a percentage point to 6.125 percent, according to Honolulu Board of Realtors data collected through Wednesday.
First Hawaiian and American Savings Bank both charged two points for the loans, while Bank of Hawaii charged 1.875 points, according to the data.
Nationally, 30-year fixed mortgage rates averaged 6.52 percent with 0.4 points, according to Freddie Mac on Thursday.
"Interest rates on conforming long-term fixed-rate mortgages and one-year adjustable rate mortgages trended down by about one-tenth of a percent in the past week," said Frank Nothaft, Freddie Mac vice president and chief economist, in a news release. "This is as a result of yields on Treasury securities coming down, and the Fed's decision to cut the discount rate by half a percent to 5.75 percent last Friday."
Just days before the Hawaii Superferry is to begin interisland service, the Hawaii Supreme Court on Thursday ruled 5-0 it must complete an environmental review.
Attorneys for the plaintiffs, the Sierra Club, Maui Tomorrow and the Kahului Harbor Coalition, said they would ask a Maui circuit court for an injunction to halt Superferry operations until the environmental impact study is finished.
The study could take between six months and one year to complete.
Jeff Mikulina, Sierra Club director, said Superferry officials were well aware that state law required complete disclosure of environmental impacts.
"They made a conscious choice to ignore the law, despite calls from neighbor island communities, lawmakers and environmentalists," Mikulina said.
Superferry officials said, "For more than three years, we have met all the requirements of the state Department of Transportation, including provisions pertaining to environmental review. The company complied with, and in many instances, exceeded Hawaii and federal environmental regulations."
Earlier this year the Hawaii state Senate approved a measure calling for an environmental study, but it was killed in the state House.
The Superferry's first vessel, the Alakai, is scheduled to begin service Tuesday between Oahu and Maui, and Oahu and Kauai. A second vessel is expected to add service between Oahu and the Big Island beginning in 2009.
Barring a court injunction halting that service, environmental groups have said they will greet the ship's arrival on Maui and Kauai with protests. They argue the Superferry will increase neighbor island traffic, transport invasive species and threaten whale sanctuaries.
In another setback Thursday for the Superferry, a Maui judge ordered the state D.O.T. to implement traffic mitigation measures to improve vehicle traffic at Kahului Harbor on Maui. The measures include restriping of a nearby intersection before the Superferry docks at Kahului.
Several key players have rung in on the decision by the Office of Federal Housing Enterprise Oversight (OFHEO) to retain limits on the mortgage portfolios owned by Freddie Mac and Fannie Mae.
The two government sponsored enterprises (GSEs) had petitioned OFHEO, its regulator, last week asking to be allowed to raise those portfolio ceilings in order to offer some relief to lenders in the current mortgage credit crunch. Both the head of OFHEO James Lockhart, III and President Bush stated that the GSE's should clean up the remainder of their accounting problems dating back to 1994 before they are allowed to increase the size of their portfolios. The President also said that the free market was better suited to handling the current crisis than were Freddie and Fannie.This week the Mortgage Bankers Association (MBA), the National Association of Home Builders (NAHB) and the National Association of Realtors® (NAR) sent a letter to OFHEO urging the agency to take action to temporarily increase the caps on the GSE portfolios "'with appropriate controls,' to inject needed liquidity and stability into the mortgage market."
According to a press release issued by the MBA, the joint letter states that "The nation's mortgage markets are facing a liquidity crisis of a force and magnitude not seen in decades. The chill will have far reaching effects throughout the housing market if stability is not restored. A temporary increase in the allowable size of the GSEs' loan portfolios for the purpose of easing this credit crunch would help stem the crisis.
"An increase in the portfolio caps should be appropriately targeted to assure that GSEs use the increased capacity to help lenders meet the most urgent credit needs, including the private label mortgage-backed securities (MBS) market and mortgages for creditworthy families who would otherwise find it difficult or impossible to obtain a mortgage loan. The authority should be consistent with safety and soundness and include appropriate conditions concerning how long this new capacity will be available to the GSEs, the specific size of the increase, the types of assets eligible for purchase, appropriate reporting and monitoring provisions, and a reasonable schedule for returning to the current limits to avoid future disruptions to the mortgage market.
"Quick and reasonable action is urgently needed to provide liquidity and stability to the mortgage markets and to serve the financing needs of America's current and aspiring homeowners."
Also weighing in was Senator Charles Schumer (D, NY), a member of the Senate Banking, Housing, and Urban Affairs Committee. On Tuesday the Senator wrote to James B. Lockhart urging him to temporarily raise the limit on purchases of home loans by the GSE's. Then with the announcement that the nation's largest mortgage lender, Countrywide, had drawn on and perhaps even drained its huge emergency credit facility coupled with bad news on housing starts and permits coming from the Census Bureau and the Department of Housing and Urban Development, Senator Schumer renewed his call that Fannie Mae and Freddie Mac to allowed to ease the liquidity concerns in the mortgage markets.
"We cannot afford a 'wait and see' approach when it comes to a credit crisis that threatens to derail our economy," said Schumer in a press releases on his website. "The Bush administration continues to ignore one tell-tale sign after another that the subprime woes are threatening the broader mortgage markets. Fannie and Freddie are uniquely positioned to inject badly needed liquidity into the economy, but the President won't let them do their job. These companies need their caps lifted now. If the Bush administration won't act, we will."
Schumer said that "Liquidity is virtually nonexistent for loans that do not conform to Fannie and Freddie's portfolio standards (e.g., "jumbo" loans), which is hurting current and aspiring homebuyers' ability to access lending."
If the regulators do not take action to allow Fannie Mae and Freddie Mac to perform their critical role as market stabilizer, Senator Schumer said he would introduce legislation in September to temporarily raise the portfolio caps. "This emergency measure is not only important to restore confidence in the mortgage market for current and aspiring home buyers, but it would also allow Fannie and Freddie to engage in subprime foreclosure relief efforts across the country before the 'October surprise' of subprime resets further shocks the mortgage markets."
Mortgage News Daily 8/22/2007
With stagnant prices and elevated inventory in many markets, home sellers are no longer automatically turning up their noses at offers that come in far below their asking price.
But buyers who do ask for deep discounts still risk offending sellers to the point where they quash any deal. So before making an aggressive offer, some homework is in order, real-estate professionals say. And buyers will need to effectively explain why the price of a home should be lower.
Pat O'Heron was able to negotiate a steep discount with a seller who relocated for a job, in a neighborhood in Ann Arbor, Mich., that had two year's worth of inventory on the market.
Mr. O'Heron says before he even made an offer, the asking price had already dropped by about $80,000. He eventually bought the home for $270,400, with about $11,000 in other credits. The price ended up being $115,000 below the initial asking price.
Mr. O'Heron was able to take advantage of a market in which buyers decidedly hold the upper hand, with its excessive for-sale inventory due, in large part, to job losses in the area.
But even though housing is in a slump in many parts of the U.S., those tactics won't work in markets that remain healthy. And there's always an inherent danger in going too low. A low offer could insult the seller to the point that they'll refuse to counter, Realtors say. And the seller could easily make the assumption that the buyer isn't committed to making a deal.
"When you're making the offer," says Jon Boyd, Mr. O'Heron's agent and president of the National Association of Exclusive Buyer Agents, "if you justify that offer with outside data, then it's much less likely to be perceived as being an insult or [the buyer] not as serious."
Here are three guidelines on how -- and when -- to make an aggressive bid:
1. Learn how motivated the seller is to make a deal.
Certain sellers are going to be more willing than others to negotiate a low offer -- and there are several giveaways that might indicate more leeway on price.
For instance, if the sellers have already purchased another home and that sale has closed, they're likely to be more willing to make a deal, says Dick Gaylord, president elect of the National Association of Realtors and a broker with Re/Max Real Estate Specialists in Long Beach, Calif.
If the property has been on the market for a long time, sellers will be interested in entertaining any offers, he adds.
Mr. Gaylord says he talks to the seller's agent to get as many details as possible about how motivated the seller is.
Overall local market conditions also play a role. The housing market in which Mr. O'Heron bought, for example, was sluggish. The home he purchased had been on the market for about a year.
Because of the job relocation, the seller needed to move and wasn't in the position to take the home off the market until conditions were more favorable, Mr. O'Heron says.
2. Make your case with hard facts.
When putting together an aggressive offer for a client, Mr. Boyd doesn't just hand the seller a purchase agreement with the price the buyer is willing to pay -- he creates a cover letter explaining exactly where that number came from.
In addition to citing comparable sales in making the offer, it also could be important to include details regarding the amount of inventory in the immediate surrounding area, he says.
"If we just looked at the relative values of the houses that sold, we would end up paying too much for that house because we know that the values are going to fall," Mr. Boyd says. "If we see two years' worth of inventory, we should be buying 5%, potentially 10% less than what houses have sold for in the past year in the neighborhood."
Buyers may even personally write a letter to the sellers to make their point, as they did when the market was hot and they aimed to stand out from the crowd, Mr. Gaylord says. That way, they can detail what they like about the house but express their fear of future dropping values.
3. Prepare for the possibility of rejection or negotiation.
Ultimately, a real-estate agent working on behalf of a buyer needs to honor and facilitate the offer that the buyer wishes to make -- even if it seems to be too low.
Mr. Gaylord warns buyers making very low offers that the seller might refuse to negotiate. On a "super aggressive offer," Mr. Boyd says he might tell a client "there's a one in five chance there will be a positive response."
Still, there's that potential for a seller to make a counteroffer, especially if there haven't been many other bids.
Danielle Kennedy, a real-estate sales coach and author based in Pacific Palisades, Calif., advises sellers not to think of a low offer as an insult but as "a sign of interest."
It "begins the dialogue regarding the purchase of your house," she says.
Not all hope is lost even if a seller doesn't bite immediately.
Sometimes after time elapses, the seller comes around and decides to negotiate, Mr. Boyd says. New information -- such as the sale of a comparable home at a lower price -- also can nudge a seller to give an aggressive offer a second look and open the negotiation process.
Email your comments to rjeditor@dowjones.com.
Home prices on Oahu continue to rise as the number of sales drop off, according to a new report that looks at the past three months.
There were 1,007 single-family homes sold during the May-July period this year, an 8.6 percent drop from the 1,102 homes sold during the same period in 2006, according to the report released Thursday by Prudential Locations.
Condominium sales fell by the same percentage, with 1,558 units sold from May to July, compared to 1,704 units sold during the same months last year.
Median prices, however, rose for both categories.
The median price of a single-family home sold from May through July was $665,000, up 2.3 percent over the same period last year, when the median price was $650,000.
The median price of a condo during the May-July period was $335,000, up 7.4 percent over the same three-month period in 2006, when the median price was $312,000.
"Since the Hawaii real estate boom peaked in 2005, we attribute this downturn in sales as part of a normal market trend," said Scott Higashi, Prudential Locations' executive vice president of sales. "Even though there are fewer buyers and sellers in the market, the values of the homes that are selling are continuing to show positive growth."
West and Central Oahu saw the highest number of single-family home sales, while East Honolulu and West Oahu areas saw declines, Prudential Locations said.
For condo sales, Hawaii Kai posted the strongest numbers, while the Leeward and Ewa areas were the weakest.
Prices in Honolulu rose 5 percent over the past year but the rate of inflation appears to be slowing.
Inflation eased in Honolulu in the first half of 2007, with consumer prices rising a moderate 2 percent, according to figures released Wednesday by the Bureau of Labor Statistics.
The lower inflation rate, measuring the change from the last half of 2006 to the first half of 2007, comes after 24 months of fast-rising prices for everything from housing to fuel.
The slowing of inflation is something of a surprise, since local economists have said they expect prices to rise between 4 and 5 percent for the full year. The latest numbers may nudge the local forecasts slightly downward.
The latest figures show that for the full year from June 2006 to June 2007, local prices rose 5 percent, more than twice the national average of 2.4 percent. That's an improvement over 2005-06, when prices rose 5.8 percent.
Some of the increases noted in the report for Honolulu are:
Formaggio Grill in Kailua will open in mid-December after more than a year's delay because of a stalled construction permit.
The much-anticipated restaurant, at 305 Hahani St., will be the second Formaggio restaurant. The first, Formaggio Wine Bar at Market City in Kaimuki, opened in 2003.
Owner Wes Zane told PBN that he is thrilled to finally start construction on the 2,225-square-foot restaurant, which he initially planned to open in August 2006. It is expected to cost just under $1.5 million.
"I'm certainly elated because now I have a reasonable idea as to when the project will be completed," he said. "I would get asked, 'When is Kailua going to open?' at least a dozen times a day and now there is the light at the end of the tunnel. We have had a tremendous amount of interest from the community and that certainly is much appreciated."
The restaurant will seat between 75 and 100 customers. The Market City location seats about 66. The Kailua restaurant also will have a full-service kitchen and offer a varied menu of steak, seafood and Mediterranean-styled comfort food, Zane said.
North America's largest solar energy services provider has purchased Kailua-based Island Energy Solutions Inc., an electrical contracting and energy company.
The company, Beltsville, Md.-based SunEdison, did not disclose the terms of the deal, but said its interest in Island Energy stemmed from Hawaii's alternative energy push.
"Hawaii is an important market for SunEdison, as the state most likely to reach grid parity first," said Jigar Shah, chief executive officer of SunEdison, in a statement issued Thursday.
Keith Cronin, president and chief executive officer of Island Energy, will continue as president of SunEdison's operations in Hawaii.
"We look forward to deploying solar PV systems throughout the state of Hawaii," he said. "In addition we look forward to contributing ideas successfully used here in Hawaii to SunEdison that can be rolled out on a global scale."
Island Energy offers its customers flat-rate pricing, rather than a price based on an hourly rate, according to the company's Web site.
Downtown Honolulu is the eighth most expensive place for monthly parking, according to a new survey.
Honolulu's median monthly parking rate for an unreserved space in 2007 was $209.42, which places it just below Seattle and Washington, D.C., in the North America Parking Rate Survey by Colliers International.
Honolulu was ranked 12th last year. Its monthly rates went up 10 percent from last year's rate of $190.50, according to the Colliers survey of 49 U.S. markets and 10 Canadian cities.
New York once again topped the list for a monthly unreserved space, with rates of $630 for midtown and $500 for downtown. Boston followed with a median monthly unreserved rate of $460, and San Francisco with a rate of $350.
Seattle's median monthly unreserved parking rate was $275, followed by Washington with a median rate of $240. The national median rate for a monthly unreserved parking space was $152.38.
When it comes to daily parking rates, Honolulu once again ranked third with a median daily rate of $32, a $2 increase over last year's median rate. New York was the most expensive to park, with median daily rates of $42 for midtown and $34 for downtown, while Boston ranked second with a $33 daily rate.
The report also said rates are likely to increase with an improving economy and a limited supply of parking in downtown business districts. Honolulu was rated "limited" for its availability of parking, and the report noted that no new parking garages are planned for the central business district in the next two years.
HOME AND CONDO SALES QUICKEN IN JULY**July 2007 Residential Resales Statistic Released**
Released: Thursday, August 2, 2007
HONOLULU - Sales of both single-family homes and condominiums sped up in July with the days on market indicators setting record paces for 2007 according to the statistics released today by the Honolulu Board of REALTORS®. According to the analysis conducted by the Board, using data collected from its computerized Multiple Listing Service (MLS) system, the statistics are:
July 2007 Residential Resales Statistics for OahuSingle Family Home Resales
During July, sales of 339 single-family homes and 457 condominiums were reported through the Board's MLS, decreases of 10.6 percent and 8.2 percent respectively, compared to the same month last year. This brings total single-family home sales on Oahu to 2,241 for the first seven months of 2007, a decrease of 6.5 percent over the same time period one year ago. Total condominium sales through July were 3,435, a 14.4 percent decrease from last year. The year-to-date median prices paid for Oahu properties in the first seven months this year were $645,000 and $325,000, respectively, increases of 1.6 percent and 4.8 percent over the 2006 prices of $635,000 and $310,000. The total dollar sales volume generated in the housing market for the first seven months of the year was $3.075 billion, a decrease of 7.2 percent or $238 million, compared to the $3.313 billion produced one year ago.
"The sales pace quickened in July, even though fewer sales were recorded for the month," said Berton Hamamoto, President of the Honolulu Board of REALTORS®. "The average days on market for single-family homes dropped down to 37 days, the fastest this year and almost a week faster than last year. The average days on market for condominiums were just 35 days, also the speediest of 2007 and three days faster than a year ago. Median prices declined a bit, but this is more related to where sales occurred geographically than any significant depreciation in values. Fifty-five percent of single-family home sales this month were in the more affordable Leeward Oahu area, compared to 44 percent last month, which helps explain the variances we experience in median prices."
"Condominiums on Oahu set another record with the median price escalating to $335,000," stated Harvey Shapiro, Research Economist at the Board of REALTORS®. "Condominium prices have been steadily increasing since last October when the median was $310,000. The cost of financing a home purchase has been rising. A 30-year fixed rate mortgage today is about 6.25 percent, about a half-percent higher than at the beginning of the year. This rise has had a significant effect in our housing market since our mortgage balances are among the highest in the nation."
Prices dipped slightly for houses, while condos broke last month's record high, according to statistics released Thursday by the Honolulu Board of Realtors.
The median price for a condo on Oahu in July was $335,000, about a 2 percent increase over the same month last year, and just $1,000 more than June's record median price of $334,000.
Board research economist Harvey Shapiro noted that condo prices have increased steadily since October, when the median was $310,000.
The median price of a single-family home dipped to $640,000 in July, down 3 percent from the July 2006 median price of $660,000, and more than 6 percent lower than last month's record high of $685,000.
"Median prices declined a bit, but this is more related to where sales occurred geographically than any significant depreciation in values," said Berton Hamamoto, president of the Honolulu Board of Realtors. "Fifty-five percent of single-family home sales this month were in the more affordable Leeward Oahu area, compared to 44 percent last month, which helps explain the variances we experience in median prices."
Year-to-date median prices for the first seven months of the year were $645,000 for single-family homes and $325,000 for condos.
The number of sales in July fell for both categories, the board said. There were 339 single-family homes sold last month, down more than 10 percent from July 2006 when 379 houses sold.
The 457 condos sold in July were more than 8 percent fewer than the 498 units sold during the same month last year.
However, the average number of days on the market for single-family homes dropped to 37 days, the fastest pace for this year and about a week faster than this time last year.
The figure for condos fell to an average of 35 days, three days faster than a year ago.
Shapiro said the cost of financing a home has risen, with a 30-year fixed-rate mortgage today costing about 6.25 percent, about a half-percentage-point higher than at the beginning of the year.
"This rise has a significant effect on our housing market since our mortgage balances are among the highest in the nation," he said.
Sales of single-family homes and condominiums on Oahu hit a brisker pace last month, with the fewest average days on the market recorded this year.
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