Honolulu Real Estate: The Coconut Wireless

For many people, their home is their largest asset and their best performing investment.   The equity in a home is the difference in what it is worth and what is owed.   Two dynamics, appreciation and unpaid balance, work in concert to make homeowner's equity grow. It can be said that you appreciate the fact that your home is your best financial investment.   It is also ironic that the appreciation, the increase in value, is what causes it to be your best financial investment. In a one-year period, the increase in value divided by the beginning value will determine the rate of appreciation for the year.   News stories and articles, frequently, report statistics on appreciation for the month, the year or longer. In many cases, a national appreciation is mentioned but the local appreciation is more reflective of an individual property. The National Association of REALTORS® reports " The median existing-home price 2  for all housing types in June was $363...

It has been said that more money has been lost due to indecisions than ever was due to making the wrong decisions.   Many times, the larger the decision, the more likely procrastination comes into play and doing nothing will cost something.   Buying a home is certainly one of the biggest decisions people make.   Careful consideration and planning are necessary steps leading to a prudent decision.   Considering today's market that includes a global pandemic, financial volatility, and rapidly rising home prices, it is understandable that many people thinking about a home purchase are in a wait and see posture. However, there is a cost connected to waiting and it may be a lot more than you think.   The recent Home Price Expectation Survey 2021 Quarter two estimated appreciation rates will average just under 5% annual for the next five years.   It expects prices to increase by 8% in the next one year.   Being a renter or even putting off moving to a ...

Stepped-up basis is an incredible benefit to people who inherit property.   Not only do they receive the property itself, the basis or cost value of the property becomes the fair market value at the time of the decedent's death.   This avoids recognizing the gain between the decedent's cost and what it is worth when it is inherited. If a person had purchased a home for $100,000 and 20-years later when they died, it was worth $500,000, there would be a potential gain in the property of $400,000.   However, because of a tax provision called step-up tax basis, the person inheriting the property will have a basis of the fair market value at the time of death. The recipient could sell the property for $500,000 and have no taxable gain on the sale. A formal appraisal is the most reliable and defensible estimate of fair market value at the time of the decedent's death.   There will be a fee of several hundred dollars for the appraisal.   Another alternative is to...

The question is "financially speaking, are you better off owning than renting in the long term?" Renting a home has advantages.   It is usually a short-term commitment from year to year and the landlord is responsible for the repairs. Owning a home with today's low mortgage rates, the total house payment could easily be less than what the rent would be on a comparable home.   Once you assume ownership, you will have the responsibility of the repairs and possibly, a homeowner's association fee. Many times, an initial benefit of owing a home includes the ability to deduct property taxes and qualified interest on the mortgage.   With the increase of the standard deduction and a limit of $10,000 on state and local taxes, it is estimated that 90% of homeowners do not itemize their deductions to consider property tax and mortgage interest.   This comparison will not consider them. There are two very significant benefits that contribute to a home being an excellent ...

A home warranty is a service contract that protects your home's appliances and some systems from repairs or possible replacements.   A convenient benefit of a home warranty is that when you report an item, they will assign a service provider to evaluate whether it should be repaired or replaced without the owner having to act like a middleman. Homeowner's insurance is required by most mortgage lenders when there is an outstanding loan.   This coverage protects the structure and the dwelling and the homeowner's personal property from named occurrences like theft, natural disaster, or accident.   Homeowner's insurance does not cover the systems and appliances for repairs or replacements due to normal wear. The fees for home warranties can vary based on deductibles and how much of the risk the homeowner is willing to accept. Additional items can be included to the standard coverage to include pool, spa, additional refrigerators, septic tanks, and other items.   Th...

Credit plays a huge role in getting a mortgage because it is a variable that helps the lender determine the likelihood that the loan will be repaid on a timely basis.   Credit bureaus evaluate people's credit worthiness using a FICO score.   The higher the score the better the borrower's credit. The mortgage rate charged to a borrower depends on their credit score.    There is an inverse relationship between credit score and interest rate changed.   The higher the score the lower the rate and the lower the score, the higher the rate.   Two separate buyers with the same income, purchasing the same price home may both be approved by the lender, but they may be charged different interest rates based on their credit scores. You could save thousands of dollars over the life of a loan by improving your credit score by just a few points.   A $350,000 mortgage at 3.5% has a principal and interest payment of $1,571.66.   By improving your credit scor...

There is a story of a real estate agent's prayer: "Dear Lord, if I can't be someone's first love, or second wife, at least, please let me be their third REALTOR®."  In a normal market with a balanced supply of sellers and buyers, this describes the preference that it might be better to be the third listing agent to help the seller after they became more realistic about their list price. In today's market, it might have more to do with buyers because of the increased competition, their chance of having an accepted offer is greatly reduced and it is only after they have lost several that they become more aggressive in the negotiations. Competition for homes being sold has greatly increased over the previous two years, according to a recent REALTORS® Confidence Index Survey from NAR.   In April of 2021, there were nearly five offers for every home sold which increased from two offers in 2019 and 2020. Utah reported the highest number of offers per home sold...