Kona Market Update: Inventory Down, Sales Up!

Kona’s real estate market continues to gain momentum, as reduced inventory levels and aggressive buyers continue to take advantage of fantastic market pricing.

Our most recent market update via The Griggs Report, shows us that in North Kona’s residential market priced to 4 million,  inventory levels have been reduced 19%  when compared to the same time in 2011.

In the same market, during the same time frame that inventory has decreased, pending sales have increased by 16%.

Decrease in inventory, increase in sales…..you know quite well what is coming next. Increased pricing.

Many Realtors can attest to the fact that we don’t have the inventory we used to. It simply isn’t available. Well priced properties fly off the shelf, and my Alii Lani #F101 unit, currently in escrow, was a great example of this.

I listed the below Alii Lani #F101 condominium Friday August 3, 2012 at 8:11 a.m. Before the end of hour, I had a request for showing. Then a second showing to that same buyer by mid afternoon. The next morning, we had an offer. All parties came to terms Sunday, and we opened escrow Monday morning.

If you are a Buyer in Kona’s current real estate market, DON’T WAIT. Recovery is happening this very moment, and concrete numbers are supporting that.

Don’t be left behind!

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Snapshot Of West Hawaii’s Recovery: Kona Coffee Villas

When do you know the real estate market has hit bottom? When it has passed you by!

West Hawaii’s continued recovery can be clearly illustrated in some of our local condominium projects.  The Kona Coffee Villas is one of these.

Located in Holualoa, this project of 176 fee simple units can prove to be a great investment for first time buyers or the savvy investor. Coffee Villas offers concrete constructed 2bed/2bath units, some offering additional loft areas, with dynamite ocean views and low maintenance fees!

Click information below to enlarge.

The three highlighted units SOLD for $65,000, $80,000 and $82,000!  Are you kidding me? These are fee simple,  2bed/2bath units, in concrete buildings, with low maintenance fees! 

Currently in the project there are 3 units available, priced between $120,000-$150,000. Will we see units listing at under $100,000 anytime soon? Possibly, but not likely.  In my opinion, that market has bottomed, and is already, as illustrated, on the way back.

It’ll be interesting to see where it goes!

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Buying Now: How Interest Rate Increases Affect YOU

“Interest rates are at historic lows right now!”  I’m sure you’ve heard it, but how do interest rates affect you and your purchase?

Interest rates affect your monthly payment, and the amount you will have paid by the time your loan is paid off.

Minute increases in interest rates directly affect the amount a buyer ends up paying in the short and long-term.

Let’s run some numbers to better illustrate.

We have found your dream property, at your price point of $500,000.

The interest rate on your $500,000 dream home is 3.875%. For a 30 year, conventional mortgage you can expect your monthly principal and interest (P&I) payment to be  $2351  By the time the loan has been paid off, you will have paid $1,595,967.

But, you just aren’t certain. Prices have been going down, and you want to wait a week or two, see if the sellers reduce their price. What does waiting a week or two hurt, right? 

Unfortunately, when you next look at this purchase, interest rates have gone up. Now, the best rate you can get is 4.25%, and increase of .375%.

Your same property, now at 4.25%, is costing you  $2460 per month. Principal and interest payment has increased by $109.

Along with that the total amount paid on the loan which previously was $1,595,967 has now increased to $1,785,325, a difference of $189,357 over the life of the loan. Wow. 

The chart below illustrates how changes in rates will continue to affect you, at different percentages. 

Value     Int Rate         Term             P&I Payment        Total Paid                Difference

500K        3.875%         30 year           $2351.19             $1,595,967            From 3.875%

500K        4.00%           30 year           $2387.08             $1,656,749           $72.62/60,781

500K        4.25%           30 year           $2459.70             $1,785,325           $108.51/189,357

500K        4.50%           30 year           $2533.43             $1,923,849           $182.24/327,882

The question you should be asking yourself is, do you forecast the market dropping far enough to cancel out an increase in interest rates? Or are you ok paying an additional $70-$180, or more a month, to continue waiting on your purchase?

Interest rates are at historic lows right now make sure you take advantage of them!

Buyer Property Tips – Asking The Right Questions

When previewing property in West Hawaii remember you aren’t just looking at the home, condo or land, you are gathering valuable information. The quality of the information you gather will prove itself to be very helpful, when you are ready to make an offer. Simple questions you ask can save you thousands of dollars when it comes to the negotiating process!

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Often times listing agents of the subject property host the viewings. You will arrive with your buyer’s agent, and the listing agent will give you a tour of the property. On this tour you will have the opportunity to:

Ask pointed questions

Why are the current owners selling?

Moving off island? Job loss?  Illness in the family? Just testing the market? You will get valuable information into the sellers motivation, and how quickly the property needs to be sold. This simple question can speak volumes. Let the listing agent talk, as you listen and take notes.

How did you arrive at the current list price?

Each property is unique, with each seller having different motivations. You will at times run into a seller that is holding out hope for that one buyer that is willing to pay much higher than market value, believe me, I’ve run into them myself!

Realtors provide their clients with facts and figures, market statistics that illustrate where the market is and at what price the sellers are most likely to sell their property. Once presented, sellers embrace this information, or take into consideration and position their property differently. The listing agent will have provided this information, and if the property is $50,000-$75,000 overpriced, will have a hard time keeping a straight face.    What he or she will be able to do is provide neighborhood information, and give you the reasoning/facts as to their current price.

At the conclusion of the showing make sure you and your buyer’s agent discuss what the listing agent has relayed. Compare notes and fact check with your agent on what was presented in the showing.

Remember, you aren’t just looking or previewing, you are gathering valuable information on that property, and on that specific seller. Information that you can put in your buyer’s tool kit, that will help YOU when it is time to write-up an offer!

I’m off to show property in beautiful West Hawaii, stay tuned for more buyer property tips!