 I'm a real estate agent with Keller Williams and this is The Life of the Land is in its real estate with Ink Tech Hawaii. Today, we are going to talk about where is the real estate market. We're close to six months of a shutdown, COVID-19, lots of unemployment. Oh, where is the real estate market? So I have two guests with me today. I have Kevin Mianna from Keller Williams. He is a market expert and I have John Kiefer who is a mortgage officer, loan officer with comma Aina mortgage group. So you would think I would know. So, Kevin, what are we seeing with the real estate market right now? Burkina, thank you so much for inviting me on the show. I really appreciate and the opportunity to kind of give a perspective of what's happening in Hawaii. And again, I've been in a real estate business for over 20 years and just finally stepped down from running the third largest real estate company Keller Williams Honolulu. Right now, it's very interesting. We really thought there was going to be a crash and initially there was a minimal crash because of the shutdowns. Surprisingly, again, I'll give you an example. Single family homes went from negative 26% to 7.5% to now is 3% minus from the year before. Single family homes. Yeah, can you explain that? Yeah, can you break that? Yeah. So and again, what's happening right now is days on the market. So we went from when we talk about months of inventory and days on the market. So we're talking about going from 32 days on the market. We are now down to 13 days on the market where the house is available. The other crazy part is we're talking about a 3.9% increase in prices. And this is not just locally, but it's also nationwide. So when you talk about the real estate market and we talk about months of inventory, we talk about usually it was six months of inventory. Now we're talking and I changed the perspective because in Hawaii, it hasn't been six months in 30 years. Right. So it's been three months is been the norm. So if all the inventory, all the single family homes, we sold it all at one time and it took three months, it would be a stable market. And right now we're at 2.4 months of inventory. So we are now what they call a seller's market on single family homes. But on condos right now, we are at 4.7 months of inventory. So we're a buyer's market on condos. And on condos, we talked about 3.9% increase in pricing for single family homes. We're looking at actually a minus 15% on cost of a condo. So it's pretty amazing what's going on right now in the market. We're getting multiple offers on single family homes that are ready to sell. Right. Are ready to sell. I give you a huge example. Pacific Palisades in Pro City. We couldn't eat. We had to beg people to come to see that property way up on the hill. We got in one listing in our office, we had 21 offers and we went from $725,000 list price. We ended up at $800,000 sell price in Pacific Palisades. We had to beg people to come. I just had a probate in Ewa Beach and we had multiple offers on a probate property that we're going to sell in September. So people got to wait for this property, but we got actually full price offer. And it still has to go to the court. But again, we're getting multiple offers. We had, right now, we have a $1.2 million listing in Montelua Valley that we already got one full price offer and we're getting multiple offers at $1.2 million. So think about that. Montelua Valley was at $800,000 before. Now it's at $1.2 million. But the condo market again is pretty saturated. There's a lot of inventory. It's still building. If the sellers were too late right now, they probably, it's a buyer's market. And you can see the pricing going just a little bit down as it goes in the market. So why do you think that's happening? We don't have a crystal ball. This is all just conjecture. But why do you think we're seeing a decline in the condo market? Because I've seen that also. Well, here's the first thing right now. Because the single family market is so hot. And then again, John can testify to this again. What kind of interest rates? It's phenomenal interest rates. Phenomenal. And especially on the west side, even Cailloua, Cailloua, his side, you look at the amount of VA buyers there are because VA buyers right now are at 2.75, almost down to 2.25 interest rate. And the lenders are actually giving them money to close. It's crazy. It's crazy. So when you look at money, right now, because they opened up the market to the VA where the military people can actually fly in now, even though they're on the quarantine, they're having the opportunity now to go ahead and purchase because living on base or purchasing right now at a 2.5 or 2.25 interest rate, and they're giving you some of the closing costs. What would you do? I mean, it's a huge savings right now. So I see a lot of it as far as I specialize on more on the west side versus overall. But I'm just seeing multiple offers and multiple locations. And it's not foreign buyers. It is Hawaii buyers and again, people that are transferring in. So is that what you're seeing, John? So what do we see with the interest rates and then how is the market impacting those right now? Yeah, that's great. That's a great question. And Kevin pretty much nailed it when he said that, especially for VA loans, the rates are really, really low. And we're going at 2.25 and sometimes even giving credits for closing costs for some of those lower rates with VA. So we're at phenomenal. I haven't seen it like this ever. And even on conventional loans, we're still about three eighths, I think three eighths lower than we were a year ago, even on conventional loans. And the Fed is helping out because they're purchasing mortgage back securities every day, $4 billion a day. And I mean, to the layperson, what does that mean, right? Basically, what they're doing is they're stabilizing the rate, they're stabilizing the market so that we don't have a huge jump in rates or rates bottoming out. So they're controlling the curve, the yield curve on the 10-day treasury. They're controlling it. It's something that's fairly new. We learned this from the Japanese and now we're doing it. The Fed's doing it. So pretty much it can last as long as the Fed wants it to last, these rates. There's a couple of things that could drive it though, up or down. And I think the rates are going to continue or at least stay this low for at least to the rest of the year and into the spring. There's a couple of game changers. If somehow we find a vaccine and the economy starts pumping up again, that's going to change the stock market, change the rates a little bit. We could see a jump in rates there, but I don't see them getting higher in the next few months. So it's a great time to buy and it's a great time to sell, as you guys both know. Even condos, even though the single-family homes are getting multiple offers, I've had, in the last week, I've had at least three VA buyers for both single-family homes and for purchasing in condos on the west side. And why not? Over asking $25,000, $30,000 is still being a bid. So now's the time to sell and buy and refinance. One of the things you got to look at is the, I think it's the testing. So they're pretty close to getting the testing down where we can get a 15-minute test. That's probably going to be November, December. And then perfection and distribution probably, I'm looking at January February from based upon CNN and some other news things. So if we get the testing down and if we get the tracing correct, I believe that's going to be one of the reasons why we open up the market just a little bit. So as people look at these things and I've been telling the sellers, you got to watch out because once it starts opening up, then watch the feds. What are they going to do? Are they going to subsidize or are they going to go back to regular? So right now, as far as listing properties, John's again, she's spot on. It's listing your property right now, especially single-family homes. Yeah. So John, let's go back to the race. We talked about this before we started this show. Rates can't just jump from their twos and threes up to six to eight overnight. Yeah, that doesn't really happen. I've never seen it happen. I've never seen it do the opposite either. So when they do correct, like when you hear the news, like today I saw the news that said mortgages are back to their all-time lows, right? Even if it's not all-time lows, it's still going to be really darn close to all-time lows. So they're only going to move a little bit. Even when it says the rates jumped up a tick, it really, all that means, it doesn't mean that the rate actually went up. It just means that it's trading for less than it was the day before. So someone could still be, they could still be at 2.25, even though the news says the rates went up a tick, they're still within that window to be at 2.25. So basically, long story short, they're not going to jump not even a half a point in a day. It's just not going to happen. Not even a quarter of a point. It won't happen. Let me weigh in on that, Tina and John. I just had a situation with one of our condos where it was a $7,000. We counted at $7,000. And then the buyer said, wow, $7,000. That's not going to work. Well, you think about it right now on a conduit, 3.35% interest rate. What is $7,000 equate to? It equates to $24 a month. So that buyer thinking it's a higher price did not accept it at $24 a month. Now, and John can testify, what's that average life of a 30-year mortgage? Well, it's seven to 10 years because you refi or you resell. So here's the thing, that whole thing came out to about $1,600 versus $7,000. That $7,000 increase was only worth $1,600 because it's only $24 a month. So these buyers as well as these listed sellers, they really got to get the brink correct on the numbers. And again, that's one of the reasons why you got people like John that I work with John. He's phenomenal as far as loans is concerned, but the agents don't know the numbers. I just did one. I can just imagine $10,000 is only $40 a month more. A $10,000 increase is only $3,500 for the whole life of the loan. So yeah, the buyer is going to $10,000, but it's actually not $10,000 if they're going to either sell or refi in seven years. John, am I kind of close? Yeah, that's really good. In fact, sometimes we have even a bigger loan amount like an $800,000, $700,000 loan amount. It's literally a couple of dollars a month more, like two coffees a month and a bento. That's it. Yeah. So you're right. They just have to really focus on, sometimes our clients will focus on the wrong thing. So we need to educate them and show them where the real value is. And that's where that's where professionals like you guys come in. Yeah. One of the things also, when you think about the median price, single family home median price. So I don't go on median price. I go on average sales price of the month. So the median price is like $790,000, but the average sales price is $1.10 million dollars. All right. And up from $800,000 last year, $935,000 last year. That's a 3.9% increase. So can you imagine the average price in Hawaii is $1.01 million? Wow. You just shake your head. But condos again, it was $570,000, and now it's back down to about $475,000. So again, condos is dropping a little bit. The seller's got to be aware of where they are as far as what they bought it for. And that's the biggest key, right? A lot of the listeners don't know what they're trying to, I want to listen for $580,000. But what are you making? The goal is what you're making, not what you sell it for, what the list price is. And then the other guys that are listing goes, yeah, but he's selling it only at $570,000. Well, he has a different goal from you. So but look at the condos again. You got to listen. The average, the monthly inventory is 4.7 months. It is going up from 3.75 the month before. So yeah, so watch out the condos versus single family home. So let's talk about where do we think the market's going to go? Again, it's all conjecture. We are not fortune tellers. But with all the unemployment today, what do you guys think we're going to see a year from now? That's a really good question. Unemployment, I'm glad you brought that up. Tomorrow is the jobs report. It comes out every Thursday. So tomorrow, yeah, on Thursdays, it comes out for the previous month, right? For the previous week. I mean, and they're predicting a gain of one million jobs from last week. However, there was a report today and they expected about 900,000 job gains over the last week, but it was only 428,000. So it's less than what they're expecting. And another thing is that so there's unemployment and then there's PUA. PUA is unemployment for gig workers and people who aren't W2 employees, business owners and things like that. It's the equivalent of unemployment. Those aren't counted when it comes to the unemployment rates that you see on the news, because I don't think they know how to properly account for them. So tomorrow or later in the week when you see the unemployment numbers, if it's higher, if it's lower than a million, you can expect the stock market and the rates to react slightly. So when you say react, are they going to go up? I mean, down? What is normal with normal pattern? They could. So stocks might, the stock market might get a little bit better. And when the stock market gets a little better, the bonds for mortgages usually get a little bit worse. And like I said, a few minutes ago, a little bit worse could really be nothing. I mean, it's just, you have to talk to your mortgage professional when the time comes because the headlines can be very misleading with unemployment rates, all-time lows. In fact, one more thing about that. Every Wednesday, the major media outlets report the mortgage rates. But what they're not explaining is that those mortgage rates were for the previous few days, not that actual day. So last week, there was a jump in the mortgage rates. However, on Wednesday, the news came out that there were all-time lows again. But actually, they were no longer all-time lows because they had gone up. So now I'm getting all these calls and people who I'm in contract with and refinancing say, hey, everything's lower. Now I have to explain how that all works. And it's all part of what we do is educating our clients, right? Yes. So, Ken, one of my concerns would be that it's a trickle-down effect. So what I'm concerned about right now is, again, unemployment. And again, if you heard this morning, United Airlines is going to furlough another, what is it, 16,000 jobs, positions right now. And then United Airlines is a huge carrier for us. You can see the cutbacks on Hawaiian Airlines. So all of our friends and family right now, it's a trickle-down effect. So where, and again, this goes back now, back to taxes. So in the state government-wise, we're collecting less taxes. So we've got to stabilize. And right now, it's not going to stabilize. I believe it's not going to stabilize for a while, especially now. They just took the other subsidy from $600 a week. Now it's only no, they didn't put it in play yet, right? They said 300, but it's not in play yet. So what I'm very fearful of is what's going to happen is people are going to stop making their payments because they can't afford it to. So where does that happen with the real estate market? Well, it's going to be a trickle-down. So are they going to be foreclosures or short sales? That's what we really got to look out in December and January. Because it's going to take a long time for us to recover. Right now, the reason why the United Airlines is cutting back is because the lack of people flying. And that's to Hawaii, right? So we went from 30,000 visitors a day, we're now down to 600 a week, right? Yeah, 600 a day or less. So it's just a trickle-down thing. And it's going to affect our housing market again, just because of everything goes from those tourist situations all the way now down to the government. And it's going to be police. And that's the concern of everybody, right? The regular workers here. Yeah, so with the foreclosures, that's a really good point because contrary to popular belief, lenders, investors, banks, they don't want to re-foreclose on a home. They don't want to repossess a home. They don't want to. That's not their business. That's a losing proposition for them for their bottom line. They're in the business of servicing mortgages and collecting mortgage payments and dispersing them. They're not in the business of selling homes and putting them, listing them and getting them prepped and ready and maintenance and everything. That's not what they want to do. And the government knows that. And so the government, regardless of who wins in November, I think that they're going to continue with the moratorium on evictions and foreclosures, which they have now to the end of the year, because we will be in a lot of trouble if people are foreclosed on who can't make their mortgage payments. A lot of people cannot make their mortgage payments. So there's forebearance programs in place. They'll have to continue. And like you said, Kevin, someone has to pay for that down the road. And it's going to be our children, our grandchildren, most likely, because there's no way we can make it up in the next 20 years. Yeah. So since you mentioned forebearance, let's touch on that for a minute. So I know for a while that once you've claimed forbearance, you could not get another mortgage for 12 months. Did they change that or is that still in place? They changed it. They changed it. I know, right? They did this smart thing. It was a really smart thing to change that. Of course, certain loans that aren't government backed can do it however they want to do it. But government back loans at minimum have to follow the rules of, and it's kind of varies right now. It's either depending on the lender that is servicing the mortgage, either you have to, if it was a COVID related forbearance, then all you have to do is have three payments made and you can refinance. If it's not COVID related and someone just did it just to do it, which a lot of people did, they have to be caught up and make three payments. Okay. So they've made it a little easier and I can only see them making it even easier down the road. Otherwise, people are going to lose their homes and we really need to capitalize on the refinance opportunities to get people into lower rates and saving money, especially right now in the times that we're in. Yeah, that's a really good point, John. Yeah. So Kevin, you see more short sales, maybe more foreclosures. What about, we are seeing, I know I'm getting a lot of buyers coming from Boston, California because now they can work remotely. So are you seeing that as a driving force? We already said it wasn't foreign buyers. I have a lot of escrows going and not a single foreign buyer but I'm getting some mainland buyers wanting to locate. The funny part is I had just talked to Ward Village and I asked them what was the demographics of the purchasers and they had about 70 closings or new contracts going to market. It was actually local, west coast, Japanese was actually down, I believe it was about 40% as far as purchasing power and maybe about 5% or 6% was Korean, almost no existence on Chinese but most of them were either local buyers or west coast buyers buying the condos in Kaka Akusai. I don't see that in the single family homes. Most of the ones I see right now are very much local people buying. So yeah, that's the demographics right now. Yeah, that's what I'm seeing too, a lot of professionals, not even a lot of VA buyers. We have one or two in escrow but a lot of professionals are buying that are working here on Island and they're ready to, because of the interest rates, ready to move from the condo to a single family home and we're getting a lot of just local families buying bigger houses. One of the things I don't even see, John, do you have that white coat program with doctors? Yeah, we do. This is kind of stuff that most agents don't even know and they don't even tell their friends who are doctors. There's a white coat program with over a million dollars they can purchase at 5% down, John, was it 5? 5 or lower. It used to be 3% but it might be 5 now because they've kind of raised it. Yeah, I mean the doctors right now, I mean that should be a program where they should be buying houses right now, it's not condos but again, some of our agents are not informed out of those advantages. Yeah, they have, there's some restrictions, of course, you have to be a newer doctor so they're looking for, they're looking to help doctors who are, who are new doctors, they have a lot of students loan debt which they overlook because you can't buy a home when you have a ton of debt and doctors fresh out of medical school have a ton of debt, right? But we all know their earnings are going to be what they're going to be in the future. Yeah, well especially right now with the COVID and everything going on, right now we have a shortage of nurses, right? So all this stuff coming in but you're going to have more doctors coming too so I just see that opportunity too. And what I'm seeing on the lending side are what you were alluding to earlier, Kina, about people relocating from the mainland where the tech industry, San Francisco, Seattle, the Bay Area, Northern California, a lot of them are now, a lot of their employers are saying you can work from anywhere you want now. So they're like, well then I want to work from the North Shore. Yes, they want to work from the North Shore. So they buy homes here and they quarantine in their new home after they buy it. Right, on the West Side, actually you're talking about Colorado being the boom town right now because it's so, that's the place to be and it's cheaper, you know, versus Silicon Valley, right? One point, I think it was 1.7 million was the average sales price in Silicon Valley and that's a shack and then so you can get something for 400,000 in Colorado. So yeah. Yeah, I know a story about a guy who, he was living, he was working for a tech company in the Bay Area and he was renting the top bunk of somebody's bunk, like he was three of the guys in the room. $1,800 a month he was paying. Now that they can work from anywhere he bought a home in like Boise, Idaho and his mortgage is less than what he was paying for a bunk in San Francisco. It's not Hawaii. That's not Hawaii, yeah. So Lee, I have a couple more minutes. So one last prediction Kevin, where do you think, what do you think we're going to go? I hope you think where we are, but where do you think we're going to go from here? Well, I think I still think that Hawaii, again, because of the limited inventory, it's going to be pretty consistent. We're not going to vary too much. Again, we've only got a couple of big projects that's going to be coming up in Milani, right? So a couple more in D.R. Horton. So because of this limitation of building, I think we're going to be, I think we're still going to be pretty stable. All right. What about you, John? One prediction. It's a prediction, so you can't- Prediction. My prediction is rates will fluctuate a little bit, a little bit, a little bit, and overall, go down a little bit. So the incentive to purchase or refinance isn't going to go away. Like I wouldn't wait for them to get better, because if they get better, it'll only be a little bit, and it's going to fluctuate anyway, and no one's going to be able to time it exactly right. So do it now. I just remembered, interest rate goes down, but the housing price is going up, so it's just compensation. Do it now. That's right. Do it now. Yeah. All right. Well, thank you so much. This has been a great conversation. I think our viewers are going to love it. And this again has been the life of the land is in its real estate with Think Tech Hawaii. I will see you guys all in two weeks, and I have a property manager who's going to come on and talk about what we're seeing in the rental market right now with COVID and the unemployment and the rental more time. He's going to come kind of give us a direction and see, you know, is right now a good time to invest in rental properties. So I will see you all in two weeks. Thank you so much, guys. It's been great. Thank you. Thanks, John. Thank you. Thanks, guys. Thanks. Thank you.