The sea cliffs, or pali, as seen from a home for sale in Kukuihaele, near the Waipio Valley Lookout, Hawaii Island.

You may remember that before 2008, home mortgages were sold on the secondary market after escrow closed. The wizards of Wall Street shredded, mixed and repackaged them into meaningless, worthless blobs, and then sold these mortgage backed securities to unwary investors. This financial industry fraud played a key role in the global economic meltdown. As a result, the market for today’s mortgage backed securities is very limited. Investors don’t want them.

If investors are not buying mortgage backed securities, there is no money for new home loans. To keep things circulating, the federal government continues to buy and/or insure almost all of these securities. Right now the government is pretty much the only player in the this market. That’s right. The federal government is providing the capital to keep the American real estate market alive. If this system were left to the free market, there would be no money for home loans. Homes could not be sold because no one could buy. The value of American homes would be worthless.

Even thought interest rates are now at the lowest point they have ever been (according to last week’s news reports), home loan money is extremely valuable because it is so hard for the lenders to obtain. In addition to being difficult to obtain, lenders face a new risk. If a home buyer defaults on his mortgage in the first year, the lender can be penalized $30,000. Yet another reason why underwriting guidelines are now crazy tight.

As a result, the home mortgage application and loan process has become brutal. On the list of required financial documentation, borrowers must provide three years of bank statements. For bank deposits or expenditures of more than $1,000, borrowers may be asked to explain those transactions. After that headache is out of the way, then there is the appraisal. There must be available very recent (within six months) of comparable sales data for the subject property, and those sales must be very near (within a few miles) of the subject property. In many communities these comparables can be non-existent. If the appraisal is rejected by the bank, the loan is denied. This kind of loan denial happens about a week prior to the planned closing date. At this time in the process, the seller has already packed up and shipped the furniture. Buyers with a double closing scheduled are now doubly ruined because the party purchasing the buyer’s home also cannot close the transaction.

Those of us with very high credit scores have only cleared one hurdle. Be prepared for a grueling, seemingly unreasonable loan process. If a lender is involved, do not assume the home purchase transaction will close on time, or even close at all. Make sure your offer is written with financing contingencies that will protect you to the very end of the process. Aggressive home loan underwriting guidelines will bedevil borrowers for a while.

Then about two weeks ago it was reported that May 2012 median home sale prices on Maui set a record low.  The Maui economy, like the other neighbor island economies, is falling farther behind Oahu’s recovery.  The good news is the neighbor islands will eventually follow Oahu.  Here, West Hawaii, Big Island housing inventory continues to fall.  Rising prices must follow if this continues.  In neighborhoods along the Kona-Kohala Coast, custom home building has returned.

To receive an automatically updated list of newly available homes or condos from Kona to the Kohala Coast, or North Kohala and the Hamakua, please email your request to Diana@BigIslandOceanfront.com.  If you have been dreaming about buying property on the Big Island, the time to get off the fence as passed.

Diana Woods specializes in the Kohala Coast of the Big Island of Hawaii.  She knows and understands all the communities in and around the area and provides her buyers and sellers with a careful attention to detail, follow-up, an upfront communication style, and a competent interpretation of the Hawaii Island real estate market.  Don’t navigate the real estate market without the information, resources, and negotiation support she provides.  For more information about Diana and the area, including newsletters, video and a blog, visit: http://www.dianawoods.com

That’s a huge relief.  Since the REO (bank owned) property inventory has artificially dried up, and the non-distressed property inventory has also dwindled since last year, the market can do something with those short sale properties.  Like find buyers for them.

What’s going on with the REO properties?  They are queued in the court system’s two year backlog waiting for judicial foreclosure.  In Hawaii the non-judicial foreclosure is no longer an option for most parties.  The non-judicial foreclosure law was written in the 1800s and was bad.  The old law allowed a bank to complete a non-judicial foreclosure in less than a month with no notice to the home owners.  Yikes.  Okay, so the legislature killed that law, but the law taking its place has caused an enormous back up in the courts.

REOs used to trickle onto the market providing buyers with a decent selection of homes and condos to consider.  Here in West Hawaii we didn’t experience a “shadow inventory” of REO properties swamping our market that some pundits predicted.  The REOs came on the market at a manageable and marketable rate.  That was then.  This is now and the REO market is pretty much a memory.  At this writing there are only two REO condos and two REO homes on the market in South Kohala, four REO condos and one REO home on the market in North Kona.

Currently there are 10 short sale condos and 21 short sale homes in South Kohala, and 14 REO condos and 19 REO homes on the market in North Kona.  Now if the banks would just let all the short sales actually close escrow without deciding to foreclose at the last minute.

Diana Woods’ area of expertise are the tennis and golf resort properties along the sunny Kohala Coast, the lush forest properties of the Hamakua Coast, and suburban Kona town.  Her clients benefit from careful attention to detail, an upfront communication style, and competent interpretation of the Hawaii Island real estate market. Take advantage of the information, resources, negotiation and escrow support she provides.  For more information about West Hawaii real estate, visit www.BigIslandOceanfront.com

Condo sale prices on Hawaii’s Big Island have climbed higher in 2012 year to date.  With the exception of January where prices decreased by 8.7%, Big Island condo sale prices increased in February 6.2%, March 55%, April 3.7% and in May 18.3%.  The 2012 monthly unit sales were more uniform than last year, but with bad economic news continuing to come out of Europe, I fully expect U.S. consumer confidence to wane into the summer.  That should trigger a fall in Big Island condo purchases, as the island is largely a second home market.

However, since Hawaii still has a moratorium on non-judicial foreclosures, the REO (foreclosed property) market has dried up, significantly reducing our inventory.  Therefore I don’t expect prices to fall.  For example, the lovely condo neighborhood of Wai’ula’ula at Mauna Kea Resort has only one unit available for sale.  Wow!  There’s also only one unit available in the Villas at Mauna Kea, and only one unit for sale in Kauna’oa at Mauna Kea.  Incredibly, there are still three reasonably priced ocean view units available in Kumulani at Mauna Kea Resort.   The inventory at Mauna Lani Resort is also shrinking.

What predictions do you have about our Big Island condo market?

Here are a few things you may not have known about them!

Seasons/Availability
Apple bananas are available year round.

Current Facts
The banana plant is often erroneously referred to as a tree, rather it is a large herb with edible fruits. The herb successively produces fruit indefinitely without discrimination to seasons.

Description/Taste
Although short in length, apple bananas are fatter and chunkier than other small varieties and its flavor, once ripe, is both tangy and sweet displaying hints of apple and strawberry. Though they can be enjoyed when their skin is yellow apple bananas are at their sweetest when the peel has turned near black.

Nutritional Value
Apple bananas contain a significant amount of potassium and fiber and are higher in vitamins C and A than traditional bananas.

Applications
Once ripe, the apple banana can be enjoyed just like the common banana: fresh, baked, pureed, even fried. Keep at room temperature until ready to use, to ripen place in a plastic or paper bag overnight.

Geography/History
The apple banana is most commonly grown in subtropical and tropical regions, specifically the Hawaiian Islands, Honduras, Malaysia and Mexico. This banana takes a mere fifteen months from planting to harvest. A member of the Musa paradisiaca species and from the Musaceae family, new varieties of small bananas are being cultivated and are now available in American markets.

Source:  www.specialtyproduce.com

Diana Woods specializes in the Kohala Coast of the Big Island of Hawaii.  She knows and understands all the communities in and around the area and provides her buyers and sellers with a careful attention to detail, follow-up, an upfront communication style, and a competent interpretation of the Hawaii Island real estate market.  Don’t navigate the real estate market without the information, resources, and negotiation support she provides.  For more information about Diana and the area, including newsletters, video and a blog, visit: http://www.dianawoods.com

Last weekend Mauna Kea Resort hosted Hawaii Island’s 2012 Jazz and Blues Festival.  Though I could not attend the Saturday night oceanfront bash at the hotel’s luau grounds, I did make the Sunday Jazz Brunch at the Manta Pavilion overlooking Kauna’oa Beach (aka Mauna Kea Beach).  Skip Martin sang one of his new songs accompanied by flugelhorn and keyboard.

The video was hard to capture as the Manta Pavilion restaurant is built almost entirely of wrap around picture windows.  Despite video underexposure, the audio is very good.  Thank you Skip Martin for your kind tolerance of my video camera!

If you are looking for a reason to visit Mauna Kea Resort and Beach or the Big Island late spring next year, be sure to allow time in your schedule to enjoy the Jazz and Blues Festival.  This new festival is gaining in popularity so buy your tickets early!

Honoka'a neighborhood hula

I recently sold a home to a retired couple ready to move to our pretty little Waimea town after just a couple visits. Another family who asked me to help them buy a vacation home in Kona a couple of years ago is also getting ready to make the move to live in Hawaii full time. Both families just asked the same question: what tips can I share to help them settle into the community? I immediately began asking lifestyle questions. What activities do you currently enjoy? What volunteer work do you do? What have you always wanted to do? Right now, how do you spend your day?

Before moving here, my husband and I were actively involved in our tennis club. So the first thing we did was join the Seaside Tennis Club here at Mauna Kea Resort. Instantly we had 30 new friends. The other thing we did right away was adopt two little dogs. I had a goal of walking four miles a few times a week and I thought the dogs would help me meet my goal. They certainly did! Those walks are the highlight of the doggie day. There’s no way I can put off walking when those sweet, expectant little eyes have me pinned to my responsibility. Here’s what my Waimea friends are doing:

• Volunteering with Honoka’a Hospital and it’s long term care home; Visitor Aloha Society of Hawaii (VASH); the Humane Society; the Kahilu Theatre; community or civic groups
• Training for the Lavaman triathlon
• Paddling outrigger canoes with the local canoe club
• Swimming with an open water group
• Growing vegetables, fruit trees and orchids
• Paddle boarding, playing mahjong, ballroom and hula dancing

For inspiration, use the internet to search “calendar of events Hawaii Island”. You’ll find calendars at Hawaii Public Radio, Go Hawaii, and Kona Web. After attending a few events, you’ll have lots of friends and plenty to do!

King David Kalakaua’s reign is remembered by his patronage and promotion of Hawaiian music and dance.  He did this direct defiance of the newly arrived Christian missionaries, scandalized by the sometimes erotic dances and scantily clad dancers.  This earned Kalakaua his nickname The Merrie Monarch.

Unfortunately, upon King Kalakaua’s death, the church succeeded in driving the hula and other disagreeable native cultural practices underground.  Hula next reemerged to lure tourists to the islands in the sanitized grass skirt resort version hula dance, and supple hipped dashboard dolls.

When the sugar industry left the Big Island at the same time a tidal wave wiped out most of downtown Hilo, the local economy was devastated.  Local hula masters George Na’Ope and Gene Wilhelm proposed to the Hawaii County Council that a festival would attract tourists.  In 1964 The Merrie Monarch festival was born.

In 1978 The Merrie Monarch, the state’s largest cultural event celebrating Hawaiian ways, added dance competition to the festival.  In 1976 a men’s division was added.  In 1980 television cameras arrived.  Today The Merrie Monarch is far more than a competitive festival to native Hawaiians. It showcases the hula, a global link to the heart of the Hawaiian people.

Click through to view a selection of Merrie Monarch video clips and more information at the official Merrie Monarch website.