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Homebuyers have upper hand


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POSTED: Sunday, June 21, 2009

Dan and Macie Akana sold their townhouse in Mililani in 2002 and had hoped to buy a single-family home, but Oahu's expensive housing market always seemed to push that dream beyond their reach.

The couple, who earn a respectable living as members of the Hawaii Air National Guard, opted to rent for seven years rather than to buy a home that they couldn't afford or that was too cramped, or rundown or far from their jobs.

“;We sold in 2002 and we had been waiting out the market since then,”; Dan Akana said.

While the run-up in Hawaii home values that occurred from 2000 to 2008 was great for Hawaii's homeowners, it was discouraging for the Akanas and other would-be homebuyers.

“;I had just about given up hope,”; Macie Akana said.

Homebuyers were active during the frenetic run up, but few were playing let's make a deal with sellers since they held all the cards. By the height of the market in 2005, even buyers who had more than $600,000 to spend were complaining about property size, condition and location. Sellers, on the other hand, no matter how undesirable their properties, smugly expected full price or better offers and seldom helped with closing costs.

“;Sellers were looking for the next biggest fool,”; said John Riggins, owner of John Riggins Real Estate. “;Some of them listed their properties at exorbitant rates simply to see if they could find a buyer who would be willing to pay a premium.”;

Nowadays, sellers are having a tougher time moving their properties, said Harvey Shapiro, an economist for the Honolulu Board of Realtors.

First-quarter sales on Oahu were off nearly 35 percent for single-family homes and about 45 percent for condominiums, according to HBR data. The median price paid for a single-family home on Oahu during the first quarter fell 8.1 percent to $570,000, while the median price paid for a condominium declined by 9.1 percent to 300,000, HBR data indicated.

“;There are more negotiations prior to the sale and only people who really need to sell are in the market,”; Shapiro said.

The Akanas, who had given up ever being homeowners during the height of the market, began looking again last August when they started to see signs of softening, but couldn't find a property for a price that they wanted to pay. The couple had 13 offers declined before getting an accepted offer this month on a three-bedroom, three-bath, nearly 1,500-square-foot, single-family home in Mililani Mauka, said their agent Monalisa Sabo, a Realtor at Prudential Locations.

“;They paid $685,000 for the home,”; Sabo said. “;In 2006, the same property would have cost them closer to $750,000.”;

In addition to taking advantage of the free-falling prices in Oahu's housing market, the Akanas were able to secure a low-interest rate and an $8,000 federal tax credit available to first-time homeowners. The seller even sweetened the deal with a $20,000 credit to cover closing costs and agreed to leave her Jacuzzi, Sabo said.

Even with all those incentives, it was still hard for the Akanas to pull the trigger, she said.

“;They wanted to make sure that they had the best deal possible,”; Sabo said.

Oahu's real estate market is still uncertain; however, more buyers are getting off the fence this year, said Paul “;Kalama”; Kim, a senior vice president and broker-in-charge at Coldwell Banker Pacific Properties.

“;With all the great incentives and low-interest rates, many buyers have seen their buying power go up an average of $40,000 to $60,000,”; he said.

In this market, most single-family homes are closing about 7 percent below the list price and condominiums are closing 9 percent below the list price, Kim said. Buyers can expect to get foreclosures or short sales for about 10 percent below the list price, he said.

In places like Ewa Beach, which Cyberhomes has calculated as the only affordable ZIP code in Hawaii, the market has steadily improved for buyers, said Marty Frame, general manager of Cyberhomes (http://www.cyberhomes.com), a consumer real estate information portal and a division of Lender Processing Services Inc. “;The average June home value was $354,000 compared to this time a year ago when it was $495,000 and the year prior when it was $533,000,”; Frame said. “;There's been a steady decline in prices.”;

While it's scary to buy in an uncertain economy, for the average Oahu family there has never been a better time , said Chason Ishii, president of Coldwell Banker Pacific Properties.

“;For the first time since 2006, interest rates and home values are moving back to affordability,”; Ishii said. “;More and more individuals can afford to buy based on their income, interest rates and median sales rates. Even if unemployment rates remain high, those that have a stable position will be able to move forward.”;

As long as interest rates remain low, the median home sale price on Oahu should remain affordable for several more years, Ishii said.

“;I don't expect the market to turn around until unemployment levels peak,”; Ishii said. “;And, then there will be about a two-year lag.”;

Since the University of Hawaii Economic Research Organization's latest forecast puts unemployment at 8.1 percent in 2011, it could be 2012 or 2013 before the market recovers, Kim said.

“;I would say that we still have a ways to go to move through this market,”; he said. “;There are still foreclosures and short sales out there that we need to work through.”;