Housing prices down again, but...

Here we go again with more confusing statistics - but this time it may actually be telling a story. The S&P/Case-Shiller index of 20 major cities fell for 31st straight month, but for the first time since October 2007, the annual rate is not a record low. The index fell 18.6% from February 2008, compared with a 19% year-over-year decline in January, and was also down 2.2% from January. The index has not recorded a price rise since July 2006 and has fallen 30.7% since that peak. However, the rate of decline slowed, with the S&P/Case-Shiller 20-city home price index not hitting a record low for year-over-year drop for the first time since October 2007. This hardly sounds like news to break out champagne on, and it's not. But it is another indication that we're scraping along near the bottom. As IHS Global Insight economist Patrick Newport says, "We believe that the bottom is at hand and that sales will begin turning in the second half of this year." As previous recession s show, demand for new homes does not evaporate altogether, even in the hardest of times." Guess we'll see how it affects Maui and Lahaina real estate.

Consumer confidence up
Maui Real Estate housing prices being down-but-not-too-far-down is not the only indication of a bottom to the economy either. The Conference Board's consumer confidence index climbed to 39.2 this month from an upwardly revised 26.9 in March - the highest since November 2008. Consumers' assessment of present-day conditions improved moderately, with those claiming business conditions are "bad" easing to 45.7 percent from 51.0 percent, while those claiming business conditions are "good" rose to 7.6 percent from 6.9 percent. Consumers expecting business conditions to worsen over the next six months declined to 25.3 percent from 37.8 percent, while those expecting conditions to improve rose to 15.6 percent from 9.6 percent in March. "The sharp increase in the expectations index suggests that consumers believe the economy is nearing a bottom, however this index remains well below levels associated with strong economic growth," said Lynn Franco, director of the industry group's Consumer Research
Center. Notice the caveat there? Confidence is still in the pit without a handhold, but at least it's leaping for the edge.

'Nother mortgage bailout
According to the Wall Street Journal, the government will start paying Lahaina Maui Real Estate mortgage servicers $500 upfront and $250 a year for three years for successfully modifying a second mortgage. The announcements, which will come from both the Department of Housing and Urban Development, and Treasury, are expected updates on the administration's plan to right the housing market. Some of the largest U.S. banks, including Bank of America, Wells Fargo, and J.P. Morgan Chase, have already agreed to sign on to the program, a senior administration official said. The rest of the industry will be encouraged to participate.

Under the program, servicers must agree to modify all second mortgages where the first mortgage has already been modified. "We are tackling one of the challenges we recognized," the official said. The issue of second Maui Real Estate mortgages has been dogging policymakers ever since the onset of the foreclosure crisis. A large share of troubled borrowers also have a second mortgage on their home, which is typically owned by a different investor than the first mortgage. Those borrowers may not be able to afford their monthly payments if only the first mortgage is modified. The administration will also announce a set of incentives for servicers and lenders participating in the Hope for Homeowners program, which aims to restore homeowners' lost equity by encouraging lenders to write down loan principal.

Swine flu is still a market story
The World Health Organization moved a step closer to declaring a pandemic by raising its alert level from three to four on its six-level scale. So far, the swine flu outbreak in Mexico was suspected in 152 deaths and more than 1,600 illnesses, its health minister said. At least 90 cases have been confirmed worldwide, including 50 in the United States, six in Canada, three in New Zealand, two each in Spain and the United Kingdom, and one in Israel. Economists say the outbreak could derail a global economic recovery if it isn't contained. "The flu is going to continue to be a market story," said Art Hogan, chief market strategist at Jefferies & Co. "In 2003, SARS cost us tremendous amounts in terms of market capitalization because of the travel restrictions. We haven't heard about any of those yet, but investors worry that we might." Besides, some countries are using swine flu as an excuse to institute trade restrictions, like Russia's ban on imports of meat products from M exico, California and Texas. "It's a very bad time for [the outbreak] to be happening when you want to remove trade restrictions to help economies recover," said James Auger, senior analyst, North America, with IHS Global Insight, a global economic research and forecasting firm.

$1 Billion a day for 10 weeks
Handing out nearly $800 billion in a responsible manner is not easy. "You can only spend so much money really fast," said Michael Ettlinger, vice president for economic policy at the left-leaning Center for American Progress. But the government is trying hard anyway, having already dumped $14.5 billion into Medicaid costs. If you're wondering what that has to do with stimulus, you're not alone - so am I. The Obama administration says it's satisfied with the pace of spending and should meet its goal of making 70% of the funds available by September 2010, but so far, only about 15% has been committed. "We're ahead of schedule and making steady progress," said Liz Oxhorn, a press secretary for Vice President Joe Biden, who is heading the recovery effort. "We're pleased." I'm sure we're all thrilled too, but will our kids be as happy when they have to pay for it all?

Now on to our real estate investing education section...

What's Better - Maui Real Estate Short Sales or Foreign Currency?

Ohhh...Forex. It sounds sexy and oh so very cosmopolitan but is it really a good investment? Which is the better choice when it comes to preserving your hard earned income or better yet, realizing a real return in order to build wealth? Sort out the facts from fiction about foreign currency investing with these fundamental considerations then decide if short sales are the right choice for your portfolio.

Liquid. Few things are more liquid than currency so it should seem like a safe bet that you can always get your money out but the truth of the matter is a bit more complex. Roughly 80 percent of all trading volume is concentrated in only seven currencies including the USD, euro, British Pound, Swiss franc, Japanese yen, Canadian and Australian dollars. Unfortunately, nearly all of these currencies are seeking safety in the USD since their own currencies are in as bad...or worse...condition than the dollar. On the other hand, real estate which is not particularly liquid, is not always an "all or nothing" proposition even during the worst of times. Maui Real Estate rental income and tax incentives may offset a significant portion of the costs associated with holding real estate prior to a sale while loans may provide access to funds without selling.

Returns. While it is true that emerging nations such as India or China often provide double digit returns for those brave souls willing to put their money into these highly volatile investments it is equally important to remember that for one currency to go up, others must go down. Unlike Maui real estate where all property can move upward at one time, currency markets are relative. So, while there is always a bull market in some currency somewhere...there is always a bear market in another currency. Because currencies do not go straight up or down, the natural variation and volatility make it an extremely complex and potentially dangerous investment for novice individuals. On the other hand, few people cannot learn how to understand the natural rhythm associated with local Lahaina real estate. Even in the worst markets there are properties that remain in high demand; good schools, safe neighborhoods and a sense of community never go out of style.

ETF and Big Banks Accounts. Fortunately few Lahaina real estate short sale investors need to worry about global politics when deciding to invest in any given home but foreign currencies fluctuate on a near constant basis depending upon politics, banking, economics and a plethora of other factors. In fact, it's frequently far beyond the reach of a single individual to keep up with the changes...of course, failure to do so in a timely manner could wipe out your portfolio practically overnight. It's for this reason many individuals interested in foreign currencies actually end up investing in ETF or Exchange Traded Funds instead. While this does provide an added layer or protection, it also reduces the full profit potential.

Plus, ETF's are still far from a non-volatile instrument. Compared to the slow, steady and somewhat predictable nature of short sale Maui real estate, it's important to ask yourself how much time you can commit to managing your investment portfolio prior to making a final decision. Short sales require minimal training, very small start-up costs and can nearly run themselves while investing in foreign currencies or even ETF's is time consuming, complex and costly.