Betty Sakamoto: Aloha and welcome to Betty’s Real Estate Corner brought to you by Roy and Betty Sakamoto, Coldwell Banker Kapalua. Today, we have a guest in the studio that we haven’t had here before. I hope that everybody is really excited about this. Dave Browne, who is Makai Mortgage. I’m going to have introduced him, have him introduce himself, and tell you a little bit about Makai Mortgage. Then, we want to talk about some things about mortgages and interest rates. I’m going to tell you an interesting story after we get into this about the way early days for us when interest rates were really through the ceiling. Right now, people are complaining about 5.5%. Anyway, David. Oops.
David Browne: Thanks, Betty. David Browne with Makai Mortgage here on Maui. I’ve been doing home loans here on Maui for coming up on thirteen years. I’ve been with Makai Mortgage now for just a little bit over a year. Makai Mortgage is a mortgage broker shop. We have a very wide array of loan programs. I always joke and say I can finance anything that’s here on Maui. Anything you have listed, Betty.
DB: I got you.
BS: Okay, we’re good on that. We’re good on it. We’re going to do it. Fortunately, we’ve been in the moment of the last couple of years where the majority of our people have been paying cash, which is fabulous, but that doesn’t always happen. Right now, especially for the market that I think could be really active coming up. I think that there are going to be more owner occupants somehow stepping into the market. I think that’s difficult and everybody’s really afraid. Everybody right now is afraid of the interest rate. After we sat down here, I was sharing with Dave that I had a client many, many years ago because we are getting older here. She wanted to buy a place that was a million dollars. She was a businesswoman here and the interest rate that she ended up getting was 18%. Interest rates were through the ceiling, but she wanted the place. It was something that wasn’t usually available. It was brand new. It was just across from the ocean. She totally loved it. She bought it and for whatever it never hurt her. She was always fine with it. She ended up refinancing a number of times and probably ended up eventually really happy with maybe an 8.5% mortgage. Now obviously everybody’s complaining about 5.5% or something.
BS: Is it about there?
DB: Five and a half six percent thirty-year fixed right now, yeah.
BS: So, what do you thinking right now from the standpoint of, let’s say it, it’s going to be hard forever, but I think we may still see some things come on that will be owner-occupant and theoretically the workforce. People who are working here that have saved some money, maybe gift money for a downpayment. What are you thinking right now Interest rate, qualifying, etcetera?
DB: A lot of my clients right now are opting for ARM loans. The seven one or the seven six and the ten six ARM. It’s offering you rates that were the thirty year yesterday. Like you said with your client back in the 80s or early 70s that had the 18% she refinanced eventually into a lower rate.
DB: That’s kind of the thought process when you approach doing like a seven six or a ten six ARM.
BS: What interest rate are you seeing right now on that?
DB: On a ten-six ARM you can get almost a full percentage point lower.
BS: Which would be?
DB: Four and a half for an owner-occupied single-family home.
BS: I think that’s a great interest rate. That’s fabulous.
DB: It’s fantastic and a decades-long time.
BS: A decades-long time.
DB: Just think about how many times the economy can come full circle in a decade and how many opportunities you might have to refinance into something more long-term in that ten-year period. For a lot of people, that’s making a lot of sense right now. The other thing I’m seeing more of that I didn’t see when rates were, you know, at the three-and-a-half mark is people are paying points and buying down the rate. I mean, just because you hear five and a half or six percent that’s a zero-point rate. If you pay a point or a point and a half.
BS: You can still get the rate lower.
DB: You can still get the rate lower. For a lot of people, that’s what they’re doing too.
BS: I’m glad we’re having this meeting because I didn’t realize that you could even get a loan at that interest rate right now.
DB: Oh, yeah.
BS: A jumbo loan, what would it be? Approximately.
DB: Yeah, sure. If you’re up over the nine seventy-five mark which is the Maui County conforming limit thereabouts. On a thirty-year fixed you’re going to be looking at in the low fives.
BS: Nobody should be afraid of that.
BS: They should be perfect.
DB: Yeah, and I have a fifteen-thirty balloon, so it’s fixed for fifteen years and then it balloons after the fifteen years. That for an owner-occupied you can get four points one two five. It’s at three points. You’re paying the point charge so you’re closing costs are a little bit more but just think about four point one two five and today’s rate market.
DB: There are opportunities out there still to get really low rates and not that six percent. Isn’t historically low I think that the average thirty-year fixed in the US over the last forty years is up close to eight percent. That’s the average over the last forty years. Six percent is still good.
BS: What are you thinking we’re all talking everybody’s kind of maybe let’s say hoping and praying for some more owner-occupied inventory coming up as workforce housing, low-income housing, whatever we want to call it. Are you thinking right now if something were on the table? There’d be some really great rates coming up or if there was a product that came up quickly? What are you thinking?
DB: Are you asking me if I think rates are going to go down soon?
DB: Okay, yeah. I mean, I think everyone’s kind of paying attention to the Fed immensely right now. I think their position is that I think they’ll continue to raise rates. A lot of people here raised the rate, the Fed raised the short-term rate that doesn’t directly affect mortgage rates. It’s the quantitative easing or quantitative tightening that they’re doing when they’re selling their mortgage-backed securities.
DB: That actually affects the mortgage rates. As they raise their rates, they’re reducing their balance sheet which is making the mortgage rates go up. I think they’re going to have to continue to do that at least for the next year, maybe a year and a half. A lot of economists which I’m not seemed to think that when the economy really shows signs of taking a bad turn that the Fed is going to have to do a one-eighty and bring rates back down. A lot of people that I’ve been reading are kind of targeting a year or year and a half from now. That’s why when you have people doing the ten-six arm or the seven-six arm loan the chances of them having an opportunity to restructure that loan into a thirty-year fixed in that window is pretty high. That’s a long time.
BS: Yeah. I would think you’re right. I would think I mean sad or not even sadly a lot of people that have lived here don’t keep homes that long. I do think that there could be I think there will be new products around. Now, one of the things that’s hard is often the new product isn’t available to someone that already owns a property.
BS: When they come up, especially with a lower income. That could keep someone right now from buying. I think politically it’s going to be interesting because everybody running for office right now seems to be talking about homes.
DB: Seems to be their number one issue.
BS: It’s the number one issue. You know, lower-income housing, workforce housing. I think there are more and more employers’ large employers that could and should be coming up with a product of their own, and there are possibilities of that. We know of a few that we’ve been talking to trying to take over buildings or trying to do a variety of different options to make it happen. But again, that’ll be an interesting thing for owner-occupants because without it as we all know there are too many businesses right now that don’t have enough employees. There’s not enough housing to bring anybody in even the big hotels. It’s almost impossible.
BS: For them to have enough people. I think at least eighty percent of that has to do with housing and finding places for our young people but older people also.
BS: It could be anybody but let’s say the young people, families that have moved here, the people that have grown up here. This is where their life is, where they want to be. It’s going to be interesting. I think we should all work on for another show. Ideas for how it can possibly work to come up with housing that stays owner-occupied.
BS: That doesn’t become second homes.
DB: It would be fantastic if they were able to get that box to where it really truly helped the people that are here.
DB: Because it seems like right now that’s not the case.
BS: It’s hard. It’s really hard.
DB: I don’t know enough about the regulation that it takes to build a community here or develop a home to really talk in-depth about it. The consensus that I’ve gotten from a lot of developers here is that the regulation is just too thick and by the time they get through the weeds on that it’s just so expensive to make that mid-level point price construction. It’s not on their priority list.
BS: You and I talked when I first got here. We were talking a little bit about voting, people voting today. I think we’re going to have a good opportunity in Maui County to vote coming up. If you pay attention to that and think about it whether it’s for yourself, for the seniors and your life, for the young people coming up that want to raise a family. It’s something that we should all work as hard as we can to figure out who the candidates are that are paying attention to that. And are really going to work like you say to get rid of some of the regulations because that is one of the problems for people trying to build low-income housing. I mean, you already have interest rates that are really great and hopefully, that’s going to take a couple of years, but they need to do it. Again, don’t think you shouldn’t vote because maybe you didn’t go to Harvard Business School or something or you didn’t go to college, or you didn’t graduate from high school. It doesn’t matter. You live here, you work here, and you have the right to vote whether you make the decision, talking to family members or reading or where you work. It’s your vote counts. I just think everybody’s going to do that. They’ve got to do it.
DB: I think that if you don’t vote, you can’t complain.
BS: There you go.
BS: I think that’s one of the greatest of all statements, really.
BS: And yet the people who don’t vote are probably the first to complain. Let’s encourage everybody in our lives to vote. I mean, if you know let’s say older people that might need a push to vote I mean not trying to tell them who to vote for but helping them to maybe get to vote or to get out or getting them newspapers or whatever might help them or leading them toward places they can find it online. Whatever we do to help other people vote it would be great. Then let’s be happy with it for four years even if your candidate doesn’t win. I’ve said a few times now I’m getting older, said that twice. When I grew up my parents, I don’t know who they voted for, but they voted. They always voted both of them. When it was done if their candidate didn’t win, they may be complained for a day but then they supported whoever won because that’s the American way. That’s the democratic party working. I mean the democratic not party, the democratic process working. We’ve got to remember our democracy has got to be the most important thing to us today.
DB: Yeah, absolutely.
BS: And keep our life happening.
BS: Anyway, going back to we were at an office meeting this morning and I think everybody was trying to get your attention. You may not have noticed it because everybody’s working really hard, having a hard time finding new people to buy. I think it’s starting to pick up a little again. People are coming in and out of open houses. We’re getting more telephone calls. People are looking for things and we’ve got to pay attention to that. You’re going to get a lot of calls which you’re already doing. That will take huge amounts of time, but I think it’ll be great for our office.
DB: The current market here on Maui with the interest rates going up has really kind of slowed down the single-family stuff especially the midpoint stuff, the median value stuff because those are the people that are the most affected by higher rates.
DB: What I’m finding right now is the investors the ones buying the vacation rental condos seemingly are unfazed by interest rates.
BS: I agree with you they are unfazed. It doesn’t really matter.
DB: Yeah, exactly. A savvy real estate investor understands the perspective of if the cash flow of the property is absorbing the overhead. You’re not actually the one paying the interest anyway it’s your tenants.
DB: Your interest rates kind of your friend too come tax time. What I’ve noticed, Betty, just to give you some insight is that the interest rates are seemingly unaffecting the investor marketplace. The biggest pressure I’m seeing is the single-family stuff in that million-dollar range. You get somebody that buys a million-dollar home today and they put 20% down. They’re financing $800,000 at six percent. After you add in taxes and insurance if there’s an HOA, you’re getting really close to $4,500 a month.
DB: For a family where you know you have a construction worker, teacher.
BS: It’s hard.
DB: It’s household. That’s coming up real close to 50% of their gross income, not their net, their gross. That’s why we’re seeing a little bit of a slowdown in the single-family market within that price point.
BS: I mean inventory.
BS: There really is nowhere near even enough inventory in that price range.
BS: To satisfy the people that possibly could or would buy right now.
DB: That would help prices as well.
BS: Yeah, absolutely. I think it would.
DB: I think everyone’s as prices catapulted or shot up. If you will right after the pandemic and during the pandemic everybody not everybody but a lot of people were like oh, here we go again.
BS: Yeah. Yes, I think you’re right. Here we go again.
DB: Here we go again. I was paying really close attention to the inventory and there’s it’s anemic. The old adage supply and demand I think at the end of the day is going to hold real estate through even one of a really bad economic downturn this time just because there is no inventory on Maui there’s no end in sight for that.
BS: There’s no end in sight.
DB: Because I don’t see people moving dirt around a whole lot. I mean, there are a few things here and there.
BS: No. There are a few things that have been approved that haven’t started.
DB: And you know how that works.
BS: That’s right. Whether they’re going to start or not. I think that there’s a project at Kapalua right now that they are talking about starting. I can’t believe that they can or will because it’s too many cars.
DB: It’s a formal project?
BS: No, it’s a long story. I won’t even say which because it would be too complicated to get into it. But it really is going to be interesting because it would add too many cars. There are problems going on also in West Maui that in order to just keep traffic moving you can only add so many cars, so many properties, so many, whatever it is.
DB: Tell me about it.
DB: I drive my kids to Kihei Charter every day.
DB: From town. Have you gone by where they’re building the roundabout over there by where the new high school is going to be?
BS: No, actually I have.
DB: Too many cars is an understatement.
BS: There are already too many cars. We went to the party was it yesterday or two days ago for Tommy Muldoon.
BS: Tommy Muldoon who’s leaving Coldwell Banker after 30 years and going back to New York. He is a New Yorker through and through. He was a New York policeman. He’s probably one of the greatest people.
DB: Never lost the accent.
BS: Never lost his accent. He probably can make it a little more intense when he chooses to but love Tommy. We went over there for that and you’re right. I mean, traffic is already insane there. The school is going to be unbelievable. Where does the money come from anyway? They build this huge school and Lahainaluna we can barely get them to pay for water for a classroom. I mean, another whole story. But again, I think we need to find a way that our schools are better-taken care of. There’s a lot of stuff going on and without the housing, it’s so we’re going to have difficulties.
BS: I think your interest rates sound really great. Tell them more about you. Let’s get your phone number for people email address.
BS: I had it.
DB: The easiest way to find me really is mauihomeloans.net
BS: Okay, Maui home loans plural dot net. That’s pretty easy mauihomeloans.net. Everybody stops, pulls off the side of the road, which you can still get ticketed for just pulling off the side of the road. If somehow write it down when you’re done.
BS: Best phone number?
DB: Phone number is (808) 344-3414.
DB: You got it.
BS: That should be fairly easy. Again, (808) 344-3414. One of the things that I think would be really important for anybody even if you’re not buying right now would be to call David. Check-in with him and tell him what your goals are. He can start like a computer something for you. Write something down whatever he does now and give you some ideas because you can tell him what you have, what you need, and what you want, and what your goals are. If one of these properties does come available and you’re able to do it that could be fabulous. He’ll be ready with you. He’ll know you know your family.
DB: There’s nothing I enjoy more than helping someone, especially that self-employed business owner here on Maui.
DB: That for them it’s daunting to think about getting pre-approved.
DB: Because they’re like they maybe don’t do their taxes. They have someone else do their taxes. They’re not the numbers people they just run the business. They’re like well, I’m making good money.
BS: I’m good.
DB: I think I can afford the house and then I look at their tax returns and maybe we have to coach them a little bit on how to plan to go forward for the next couple of years. Doing that with people is one of the things that I really love to do is getting someone that maybe doesn’t immediately qualify today.
BS: Being sure they can later.
DB: Coaching them and a year or two down the road then they’re good. Also, I have loan programs for self-employed people where they analyze your bank statements instead of tax returns.
DB: And so, for a lot of self-employed people that comes in handy because maybe they’ve only been in business for a year.
BS: You think you can do them a good chance?
DB: Twelve months business bank statement loan. It’s a fantastic tool for a lot of self-employed people.
BS: That’s amazing really.
DB: But yeah, planning ahead. Don’t be afraid to get pre-approved it’s not like a doctor’s visit.
BS: The other thing is it doesn’t mean you’re going to be forced into buying something.
BS: This is your loan representative, David here. It really will make a big difference to you because it’ll give you confidence. I think sometimes, especially when you are a younger business owner which we were at one time I remember the first thing we bought. We actually bought a place at Kapalua. A condominium that was almost 100% financed by the owner. It was a really hard time in the market. He really wanted it sold and we had talked to him for a while. We ended up buying it with a lot of financing. Again, we were running our own company. We were probably didn’t even realize how good we were doing. I think that if we had at the time well, I think that was the best thing we ever did.
DB: I think it worked out pretty good for you.
BS: It worked out pretty good yes. We’re very fortunate. I feel always Roy and I both we’re so blessed at what we’ve done. We’re so happy with it and our life is really amazing. My husband was born and raised here, and I’ve been here now pushing for fifty years. Life has been really good. The other thing is now we’ve got only a couple of minutes left. One of the things my daughter says and helps and it just a kind of little message on and she’s here for the Lahainaluna reunion forty years. Julie Ehu Sherlock originally Julie Ehu Flynn. She says that whatever your agent tells you, your loan agent gets everything to him, and then if he asks you again in three weeks, get it to him again. And that four weeks if he needs it again get it to him again. Whatever you need to get to him keep getting it to him because he is your best friend in all of this.
BS: It’s been really great being able to spend time with you today.
DB: Likewise, thanks.
BS: I met you before I mean today, we just happened to be at the meeting and fell into this.
DB: It’s on the fly.
BS: On the fly and you came.
BS: I think it’s been perfect. We’re going to be coming up really quickly to Danny Couch again. He starts us and he finishes us up. Again, call David, or I guess David is really what somebody calls when they’re angry. Call David at (808) 344-3414 or your website makai.
BS: I’m sorry
BS: mauihomeloans.net and I think that Danny Couch ought to be coming on here. Here it is, Danny Couch. He is one of the best entertainers in Hawaii and he’s flown over here and did a fabulous luau for Hale Makua the nursing home here.
DB: Very cool.
BS: He is the best of the best. Thank you, Danny, for letting us use this. Aloha.