April 30, 2017

Can I buy a home with 3% down?

"I don’t have 20% to put down. Does that mean I’m out of the game?"

If you’ve even thought about purchasing a home, you’re already aware of the industry standard in home-buying: 20% down for a mortgage loan. The absence of that amount of cash is enough to defer the dream of home ownership for many. But this doesn’t have to be the case for everyone…

Why is 20% such a magic number in the first place? From the lender’s perspective, offering you more than 80% of the value of the home is a huge risk. Why? Well, statistically speaking, a buyer who hasn’t had the income or financial habits to save that amount of money is more likely to default on their mortgage loan. Nothing personal, these are just the facts.

But what if you have great financial habits? What if you’ve got a good credit score and you’re good at saving? Let’s say you’re thrifty, out there hustling every day, but not making the 6-figures it seems you have to make in order to buy a home. What then?

Freddie Mac’s HOME POSSIBLE program may just be the right fit, which allows a minimum of 3% down up to a loan amount of $636,150 in Honolulu County.  So with 3% down, you’re looking at a max purchase price of $655,824.  Whoa.

Yes, Freddie Mac developed what you can say is a hybrid loan between FHA and USDA loans to serve low to moderate income buyers.  Unlike a USDA loan (in which you’re limited to buying in rural and underserved geographical areas) the HOME POSSIBLE program allows you to purchase island wide! You would just need to make sure you're within the income limitations. These limitations depend on which area you’re looking to live in, but note: there are even some geographical areas that don’t have any income limit. More info here: http://www.freddiemac.com/homepossible/eligibility.html

Some basic details:

  •       3% down payment
  •       Down payment can come from a gift (e.g. from mom, dad, grandma)
  •       Buyer must be owner-occupant, purchasing as their primary residence
  •       Minimum FICO of 620
  •       Income limits may apply depending on location
  •       Home ownership education certification required for first-time home-buyers
  •       Max loan amount for Honolulu County can’t exceed $636,150

Do what you can with what you have, where you are. That’s what Theodore Roosevelt said. So you can’t buy a median-priced $750K home in Hawaii? Start somewhere. Start small, start now. Begin to build the dream. It’s your dream. And we’re here to be on your your team.

Thanks to our info source for this article: Steven Bui, loan originator at Compass Home Loans, LLC. He’s a responsive, informative and creative problem solver. Great guy to have on your team.

Posted in General
Feb. 24, 2017

Moving to Hawaii and thinking of buying a home? Forget what you know about real estate on the mainland!!!

     One of the most common phrases a Realtor in Hawaii will hear is ”back on the mainland” or “back in Seattle” or back in (fill in your city), followed with, ”my home was so much bigger” or “brand new” or “I had this much land!” These statements always end with the inevitable disbelief of how much a single family home will cost in Hawaii specifically on the island of Oahu. Not only how much they cost, but what you get for your money.

     The island of Oahu has a land mass of approximately 600 square miles. With over 950,000 people occupying the space, and so many people looking to stake a claim in an area this size, it is no wonder that many homes in highly sought after neighborhoods have soared to over to well over $600.00 per square foot.

     According to an article in Pacific Business News published in January of 2017, home values on Oahu rose 5% in 2016 and the median home price rose to $740,000.00.

     In this article I will focus on one very hot area of Oahu for home sales, Hawaii Kai. This area began to be heavily developed in the seventies so many homes for sale in this area will typically be forty to fifty years old. For most people moving here from the mainland they are quite shocked to find a 40 year old 1200 square foot home selling for upwards of $800,000.00 and in many cases the home may still need a renovation or makeover to bring it up to date. Furthermore, it is not uncommon for these homes to only last on the market for a few days, with offers well above asking price. However, with all of that said, Oahu is still one of the best places in the country to invest in real estate!

     Before the market crash in 2008-2009 Nevada was one of –if not THE- fastest growing states in the nation. For comparison, I will show how an investment in real estate in Nevada compares to an investment in real estate on the island of Oahu.

     Post-crash, at the end of 2009, this 5800 square foot house (in Reno, NV) was only two years old, sat on an acre of land and had 4 bedrooms and six bathrooms. Sale price was $1,000,000 or $172.00 a square foot.


     Almost 2 years later, at the end of 2011,with the economy still struggling, this 1242 sq. foot home ( in Hawaii Kai) with 3 bedrooms and 2 bathrooms sitting on a little over 1/3 acre sold for $799,000.00. Or $644.00 a square foot.


     It is obvious, as the pictures show, you get a lot more bang for your buck on the mainland. However what the pictures don’t reveal is the investment potential. The home in Nevada sold at the end of 2015, six years later, for $1,175,000.00. Or $217.00 per foot that equates to roughly 2.91 % a year in appreciation.

     On the other hand, the home on Oahu is currently listed at $1,145,000.00. ($921.00 per foot) This sale price will bring the annual appreciation rate up to 8.6% over the last five years. To further illustrate the value of the Oahu home over the Nevada home you also have to consider the difference in real estate tax rates. The real estate taxes on the Nevada home were roughly $11,000 per year, while the Oahu home is only $2,900.00.

     So what does that mean for a buyer moving to the islands from the mainland?

     Real estate on Oahu continues to be a great investment!

     The best advice I can offer is to work with a Realtor who knows the market well. Have your Realtor begin your home search well before your move so you have a better idea what to expect before you arrive. This will not only save a considerable amount of time and frustration trying to adjust to the real estate market on Oahu. It will also prepare you to take the next step once you have found that dream home.

     Stay tuned for part two of this article “you’ve found the house you want-how do you get it?”

p.s. it is not as easy as you may think!

James Pferschy RS# 79141 (808) 342-9000

For questions or comments on this article email me at jamespferschy@gmail.com

Posted in General
Jan. 18, 2017

Before and After my North Shore Remodel

People often ask me about remodeling in Hawaii. Is it hard to find a good contractor? Yes.  Are materials and labor more expensive?  Yes. But you can do it and you should. I've done several remodels now, and this one is my favorite.  

A couple years ago I bought a foreclosed home on the North Shore from a bank.  The process of buying it was a crazy ordeal that took over a year to complete, dealing with title problems and termites.  But once I finally closed on the purchase, the real work began.  This is what the front of the house originally looked like. The trees and grass were overgrown, and the carport had a very plane look to it. 

We removed the center post in the carport, added a nice door and some wood to give it a board and batten look, and cleaned up the landscape for a nice clean look. Landscape is often a part of house flipping that gets overlooked in the budget. 

The original kitchen had a wall that closed it off to the living room, apparently because people in the 70's liked that kind of thing.  I wonder if that will come back in style, but for now, everyone prefers the kitchen to be wide open. So we took this original kitchen, which had a hole in the floor and mold growing everywhere from the leaking refrigerator... 

And turned it into this new open concept with quartzite and monkeypod wood counter, with simple shaker style cabinets, and new tile floors that look like wood.  The wood counter is everyone's favorite part. Hard to believe it's the same room isn't it?  We got the wood for the monkeypod counter from my friend Ty, who tragically passed away last year, so it's a constant reminder of my friend whenever we use it. 

We had to gut almost every part of the house.  New electrical and plumbing, new roof, and we refinished the original oak floors, which looked like this. See the dark stain on the left side?

After the wood refinish, new paint, and the wall removed, the room looks like this. Yes that's the same wood, but sanded and with a new satin finish on there. Satin finish doesn't hold the dust as much, so it's easier to keep clean. Also we replaced the old windows with vinyl jalousy and added a pantry where the stairs used to be. This is a how a kitchen should feel - open and inviting. 

This house original had a weird addition on the side, which many people told me to tear out.  I try not to tear out things that can be used.  The room  was formerly a second living space for the many drug abusing squatters who were renting the house from the foreclosed owner.  (Yes I had to evict them.)  This odd room was long and narrow, with a makeshift bedroom that someone had apparently built out of scrap wood and leftover tiles that were unevenly cut as you can see in the bottom of this next picture. Look closely to see the next room that was built with an interior sliding door in between this wall and the rock wall in back. 

We cut this odd room in half and made a master bedroom and a family room.  Here it is with new flooring, windows, doors, paint, baseboards, etc. This picture below is just the back half of the room above. 

The other half of the long narrow room was turned into a master bedroom with a huge new walk in closet, new carpet, and a new bathroom. Here is the new master bedroom. 

Then we added a new bathroom in what used to be part of the carport. I got these vanities off the shelf at Home Depot.  They actually have really good stuff sometimes, and these actually match the kitchen counters. 

Every house in Hawaii should have a nice outdoor dining space.  When we bought this one, it was like a jungle with an odd rock formation that looked like some kind of altar.  Pretty much a total mess. 

We removed the rock firepit/altar, added a new fan, a new set of french doors, and cleaned up the landscape. 

Best of all is the beach at the end of the road.  We didn't have to do anything to that part, and it's just a 1 minute walk from our front door


Jan. 6, 2017

Real Estate Market Stats for Oahu 2016

As I'm looking at the statistics that just came out from the Honolulu Board of Realtors, I'm laughing! Mainly because at the beginning of the year I actually thought that maybe the market may start to slow down in 2016 (see my article from March 2016 below in the blogs)... Boy, was I wrong!

Not only did our market continue to soar in 2016, but December was the 2nd highest month for # of sales. December is usually a bit slower as expected with the Holiday's.

The median home price for Oahu went up from $700K to $735K. And the median condo price went up from $360K to $390K respectively. The Honolulu Board of Realtors calls this "stable". The average days on market for both SFH and condo's went down (that's a good thing) to 18 days on market for both. WOW, that's fast! The key is choosing the right agent who KNOWS the market and has a lot of experience selling homes in your neighborhood, in order to get the best and highest price. There are a few homes on the market that are sitting idle because their agents' have not helped them get their homes in sell-able condition. This doesn't help the agent either, so the whole thing boggles my mind...

The number of homes for sale (inventory) has remained flat, which continues to drive our market. This lack of inventory has helped many get into homes, while simultaneously lowing our standards by consumers buying out of desperation of loosing yet another home.

January and February tend to be slower months (but not by much), but come March things will get crazy again with military folks coming in and people starting to buy new homes that will close at the end of the school year. What does this mean for you? Use this time in Jan and Feb to find your home while the masses stay at bay until March! ;) Buy a home now, and hold onto it!

The public is encouraged to visit www.hicentral.com to see what's happening in the housing market. And, as always please feel free to call one of us at alohatony.com for real estate advice and services. We remain in the Top 100 Realtors of Hawaii and enjoy serving our clients with Aloha.

by:Chelsea Pferschy RS, MRP (808) 754-6000 chelseapferschy@gmail.com

Posted in General
Dec. 28, 2016

Interest Rates Are Up. Should I Buy?

Buyers this past summer got a great deal on their loans, with interest rates at around 3.5%. Since then, rates have shot up from 3.5% to 4.5%. How are interest rates priced anyway? And what do rising interest rates mean for the housing market and the economy overall? Should anyone still consider buying a home right now? 

Pricing interest rates 

Let's start with the first question: how are interest rates priced? Economics writer Paul Solman offers some insight:

Think of a market interest rate as the sum of three separate factors: waiting, repayment risk, and inflation.

1. First, waiting — also known as the time value of money. Imagine an inflation-free environment, such as today’s. Which would you take: a thousand dollars today or a thousand dollars, guaranteed, a year from now? Unless you’re a very unusual person, it’s the thousand right now, so you can do something with the money. If you forgo the money, you generally need to be paid something for doing so, for waiting — in recent history, around 2 percent a year.
2. Second is the risk of not being paid back. This is why folks with low FICO scores have to pay such high rates of interest. This obviously varies enormously. But the U.S. government has generally been thought to pay the “risk-free” rate: 0 percent for risk. 
3. The rest of the interest rate is inflation. If money is losing value and you lend it, you’re going to expect to be reimbursed for the loss.

So what do rising interest rates mean?  

When interest rates are lower, more buyers are able to borrow money. When more money is being borrowed, more money is being spent (After all, people don't take out loans to add to their savings). This increase in purchasing pumps money into the national economy. Then when consumers have been steadily fueling the economy for a while, the Fed will typically respond by raising rates. When rates are higher, purchasing slows. And when purchasing slows, so does inflation.
Therefore, interest rates rise as a result of inflation. Steady inflation is natural. It is indicative of a healthy economy. On the other hand, no inflation or deflation (the lowering of prices) is related to economic recession and depression. And so rising interest rates are a sign that our economy has been doing well. 

What does this mean for home owners? 

Inflation means your home is increasing in value, which is good. Now, with a higher home value, property taxes will be higher, but only because the home owner's net worth has gone up. The beautiful thing about a mortgage payment is that it stays the same for 30 years. Rents may go up, interest rates may go up, but your mortgage payment stays the same.

What does this mean for renters? 

Obviously, rent goes up. Healthy inflation results in higher wages, but it also results in higher everything, rent included.

What do higher rates mean for would-be borrowers? 

The most obvious answer is higher monthly payments (If, of course, you don't already have a mortgage. If you already have a mortgage, higher rates have no impact on your monthly payment). The difference between 3.5% and 4.5% on a $500,000 mortgage is $288 more per month, which comes out to $3,456 more per year. Today's borrower will pay that much more on interest than her friend who borrowed the same amount of money in June. 
Since higher rates result in higher payments, the buyer pool shrinks. Here are some effects:
1. A few would-be buyers will no longer qualify for loans and therefore will not be able to buy. 
2. Some buyers will get approved for less than what they would've got when interest rates were lower and will choose not to buy.
3. Many buyers who get approved for less will borrow what they can and buy at that price point.
4. Stronger buyers (all cash or high earners with high credit scores) will continue to buy what they want.

Why even buy right now? 

Why would anyone choose to buy when rates are the highest they've been in 2 years? Here are some reasons, below:

1. It could be worse ... in fact it has been in the past. If you've just started looking for a home this year, you may have grown accustomed to seeing interest rates between 3.5%-4.0%. Believe it or not, rates right now (at 4.5%) are still low. The average interest rate over the last 30 years is 7%, as shown in the graph above. In the late 80's, interest rates were at 10%. In 1981 (not shown on graph) the average rate was 17%! If interest rates go up next year, you may wish you'd borrowed at 4.5%.
2. It could get better. If rates go back down after you purchase, you may choose to refinance to a lower rate.
3. You still need somewhere to live. Higher interest rates don't take away the reason you were looking for a home in the first place.

You are not alone

If you buy in 2017, will you be among the many or among the few? Interestingly enough, the Mortgage Bankers Association predicts an 11% increase in new home mortgages next year, in spite of projected increases in mortgage interest rates.
TransUnion, a credit analytics company, attributes the increase to lower unemployment rates and higher household incomes. These factors should allow more first-time buyers into the game. "We believe with improved economic conditions we could see nearly 3 million first-time homebuyers in 2017," said Joe Mellman, TransUnion VP.

You would have a home 

Why buy? You would have a home. I bought my first condo in Honolulu in September and was able to have my parents over for Christmas this year. My dad complimented the job I did putting in new flooring. Mom kicked back on my leather couch and watched White Christmas while my sister and I made omelettes and cocoa mochi in the kitchen. Grandma had one long nap, interrupted only by brunch and the obligatory photo op. I told a friend about it later and he said, "That's the dream isn't it? to have your parents over at your place for Christmas."
"Yeah man," I told him, "It was a dream come true." And you can't put a price on that.
Posted in General
Dec. 23, 2016

Color(s) of the Year 2017 and selling Real Estate, What You Should Consider.

     As most of you know, Pantone, Benjamin Moore and Sherwin Williams each year, pick a "Color of the year" that influences trends for interior design and fashion. Following these color trends can be very risky if you plan on selling your home within the year... This year Pantone has picked a color called "Greenery." Its a very vibrant, yet not neon green. I might even call it Spring Green. It's pretty in small doses (pillows, throw blankets, or other decor), a wall of this color may be a bit overpowering though, and only appeal to a small number of buyers


     Benjamin Moore has picked "Shadow 2117-30" as their color of the year for 2017. It's a VERY dark navy blue with some shades of purple in it. It's a beautiful color for a dress, a men's suit, a pair of pants, or even a purse. But as Realtor, I think we could all agree that it would be wise to steer clear of this color on walls if you want to sell your house quickly. 


    At this point, you're probably thinking "Geez! She doesn't like ANY of these colors!!!" WRONG! This next color is actually quite beautiful, on trend for interiors and can be fairly neutral in a well lit room. It's Sherwin Williams color of the year "Poised Taupe sw 6039." Like it's name you can guess that it's a taupe shade, medium in intensity, but also in the 'greige' family. (That's a mix of beige and grey....greige.;) If you like this color, but want to put it in a room that doesn't have a lot of light, you can go up a shade and try "Truly Taupe sw 6038." It's also a Sherwin Williams color that will give that greig-y/taupe feel in a room. 

Poised Taupe (above) and Truly Taupe (below)

      You may want to consult a Realtor if you plan on painting your home and putting it on the market soon. A saavy Realtor will be able to suggest colors and idea's that will help your home be neutral and at the same time give it a (small and subdued) personality so that buyers will be able to see themselves and their things in your home, which will help it SELL. Give me, or one of my teammates a call if you would like some suggestions on paint colors.

by: Chelsea Pferschy (808) 754-6000 MRP, RS #76072

Posted in General
Dec. 21, 2016

Brand New High Rise proposed in Kakaako/Ala Moana area... BE THE 1ST TO KNOW!!!

Artist Rendering for new development on Kapiolani

A Los Angeles based development company (Salem Partners) recently filed a sewer connection application for the "Heald College Plaza Development" block of 1470, 1488, and 1500 Kapiolani Blvd. to build a 500 unit, high rise condo-hotel building which would be just adjacent to Walgreen's and across from Ala Moana Center.

The building, once completed will consist of 301 studio, 122 one bedroom, 71 two bedroom, and 6 three bedroom units.

They will be using locally based engineering and planning firms and also have other building in the works near the convention center.

As soon as I have more information about purchase price and pre-sales, I'll add it to this blog. This area is popular for tourism, singles and convenient for busy families as well which would make a great investment to either live in, or rent out.

Call one of us at Team Aloha Tony for all of your real estate needs.

-Chelsea Pferschy MRP RS-76072  (808) 754-6000 cell

Posted in General
July 6, 2016

Newly Listed in Mililani Mauka: $875K

Our sellers did a killer job on renovations to this already valuable piece of property in Mililani Mauka. Thanks in large part to their hard work, we were able to go into escrow today after just 4 days on the market! 
Some of their upgrades include all new flooring throughout, a wide open kitchen with brand new cabinetry, granite countertops, and all new appliances; fresh paint on the interior and exterior; and a brand new washer and dryer. 
This two-story home on a corner lot has 4 bedrooms, 3 full baths, and a flat and grassy back yard. 
Mililani Mauka was developed about 20 years after Mililani Town, on the other side of Interstate H-2. "Mililani" literally means "heavenly caress" in Hawaiian, but is used poetically as "thanksgiving" or "praise". "Mauka" indicates "toward the mountain". Schools in Mililani are among the highest ranked in the state, which makes Mililani one of the most sought-after neighborhoods on Oahu. 
Posted in General
April 6, 2016

March 2016 Housing statistics-Oahu

There are several things that led me to post an entry such as this, and I've
been thinking about it for several days. This is the kind of post that can cost
me a lot of credibility, but here goes.

First, on Sunday I had 50 people
at an open house. It is my Aina Haina listing for $1.1million, a nice house but
nothing out of the ordinary for the area. A nice pool home with 5 bedrooms and
2300sqft. I haven't had 50 people at an open house in about 4 years. Another
agent in my office said he had 25 people, and the $1.2million house he is
listing was in escrow last week, until the buyer found a few problems in the

Also, the March stats for sales came out, and like I predicted, the
number of sales jumped up significantly, while median Oahu home prices rose
again to $600k. The number of listings is down again, to about 1900 homes and
2200 condos, and the number of sales was up about 20% compared to Jan and

Finally, there was this very poignant article
in Forbes
, which said that "The end result is that the stock market and the
economy are being lifted on a sea of liquidity, giving us a V-shaped recovery.
Very soon, the recession will officially end. This is not a dead-cat bounce, and
it's not government spending. It's easy money, plain and simple."

Posted in General
March 1, 2016

Could El Nino be pushing Hawaii home prices higher?

Hawaii’s hottest summer and coldest winter coincide with all-time highs in Oahu median home prices. Maybe it’s time we talk about the weather.

Research suggests that Hawaii's unusual temperatures last year may have been a factor in driving up Oahu home prices.

Last September, two Hawaii cities reported the highest summer temperatures in over 100 years. "It really is significantly warmer than what we typically have," said meteorologist Chris Brenchley. He added that, once humidity was factored in, "We started to see those heat index values in the high 90's, even in the triple digits."

That month, the median home price in Honolulu reached a historical new high of $730K.

Then in January of 2016, the National Weather Service reported the lowest temperature recorded that day in Honolulu in the last 122 years. That month, the median home price – after a slight dip at the end of 2015 – reached a new all-time high of $733K.

Though radical temperature shifts may be common on the U.S. mainland from season to season, most long-time Hawaii residents were caught off-guard.

“Fluctuations in weather patterns have been linked to increases in consumer spending.” –Vadim Krasko, economist

Economically speaking, increased spending in unusual weather is a necessity. Krasko’s research simply connects the dots between unusual weather and higher energy bills, since consumers “need to balance the temperature differences from weather changes.”

Emotionally speaking, increased spending in unusual weather is a way to cope with unexpected discomfort. In an article published in the Journal of Retailing and Consumer Services, researchers linked the influence of weather on mood and, in turn, the influence of mood on spending. Negative affect (feeling bad) was shown to increase a person’s willingness to spend more money.

So research suggests that the unusually uncomfortable temperatures in Hawaii may have motivated home buyers to spend more on homes.

On the other hand, these historic highs may simply be characteristic of the seasonal ebb and flow of median home prices on the island of Oahu. 

In my previous posts, I’ve tracked median price peaks on Oahu over the last five years. From 2011-2014, I observed a pretty consistent pattern:

  1. High in May/June
  2. Dip in July/August 
  3. High in November/December

The pattern seemed to be broken in 2015 when the median went up in autumn instead of down, as was characteristic in previous years. I interpreted this as an elongation of the ebb/flow wavelength, predicting that the highs and lows would still occur in sequence, just on delay.

And so it went. The Oahu median home rise/fall pattern was delayed:

  1. High in September
  2. Dip in December
  3. High in January

 The chart below shows the pattern from 2011-2014 and how it shifted in 2015.


Summer Peak

Post-Summer Dip

Winter Peak

2015 – 2016

$730K (Sept)*

$700K (Dec)

$733K (Jan ’16)*


$700K (Jun)

$650K (Aug)

$719K (Nov)*


$677K (Jun)

$647K (Jul)

$685K (Dec)*


$664K (May)*

$609K (Aug)

$640K (Dec)


$595K (May)

$558K (Aug)

$605K (Dec)*

* Year’s Highest Median 

Were Hawaii’s hottest summer and coldest winter the primary cause for Oahu median home values reaching record highs? Probably not. Due to the strong demand for housing in Hawaii, prices were bound to go up anyway. Also, interest rates did not suddenly rise despite widespread anticipation. This must have been a huge encouragement to borrowers. 

Still, it’s hard to ignore the coinciding of two seemingly unrelated statistics: peak home prices and the weather. Taking into consideration the general impact weather has on consumers both economically and emotionally, it’s not a stretch to say that our record-setting weather influenced record-setting home prices.

Posted in General