1. Maui Consistently rated the "Best Island in the World" by travel experts, this Hawaiian beauty underwent a growth spurt during the past decade that some critics bemoaned as excessive. But the southern coast, anchored by the hamlet of Wailea, has weathered it all well. One of the first master-planned resort communities in the nation, it's a balanced blend of understated gated communities, luxury resort hotels, three excellent golf courses, a tennis center and, of course, several crescent sandy beaches. Wailea has 500 single-family homes, and their views are stunning: lush, verdant hills, brilliantly blue ocean and, after the steamy sun showers, rainbows over the horizon.

Hear! Hear!

Increasing tourism on Maui can only be good news for the Maui real estate market.

For first time home buyers that tax credit is $8000 and for repeat home buyers that credit is $6500.

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The industry is in shambles for two reasons, the first of which must be lived with if the U.S. economy is to recover. This reason concerns U.S. housing starts (including apartment units). In 2009, starts were 554,000, by far the lowest number in the 50 years for which we have data. Paradoxically, this is

good news. People thought it was good news a few years back when housing starts ? the supply side of the picture ? were running about two million annually. But household formations ? the demand side ? only amounted to about 1.2 million. After a few years of such imbalances, the country unsurprisingly ended up with far too many houses. There were three ways to cure this overhang: (1) blow up a lot of houses, a tactic similar to the destruction of autos that occurred with the ?cash-for-clunkers? program; (2) speed up household formations by, say, encouraging teenagers to cohabitate, a program not likely to suffer from a lack of volunteers or; (3) reduce new housing starts to a number far below the rate of household formations. Our country has wisely selected the third option, which means that within a year or so residential housing problems should largely be behind us, the exceptions being only high-value houses and those in certain localities where overbuilding was particularly egregious. Prices will remain far below ?bubble? levels, of course, but for every seller (or lender) hurt by this there will be a buyer who benefits. Indeed, many families that couldn?t afford to buy an appropriate home a few years ago now find it well within their means because the bubble burst.

For those interest in Maui Real Estate the bold is obviously the most interesting part of the text.

Things are picking up!

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The housing market has regained some footing, although the next three to six months will be a period of uncertainty as major programs designed to support the housing and mortgage market expire.

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Given the experience with the tax credit in the November to December 2009 period, we can expect some buy-ahead volume, and incremental price pressure, in the March to April time frame as the credit expires atthe end of April, with a payback in the May to June period.

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The Fed program of purchasing mortgage-backed securities from the GSEs is scheduled to end in March. Already the Fed has cut the pace at which it is purchasing MBS (see page 8 below), and the well anticipatedend to the program is now expected by dealers to have only a minor impact on rate spreads.

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The exact rate impact still remains to be seen, and buyer and seller responses are also uncertain. Nonetheless, at this point, it seems like the Fed?s frequent repetition of its intent has created expectations that will ease the transition.

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The HAMP program of mortgage modifications will remain in place, and may accelerate. So far, according to a recent Treasury report, only a fraction (25%) of eligible borrowers is in the HAMP process.

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Interest rates are still historically low as of the most recent reporting week (February 11), with the 30-year fixed rate mortgage at 4.97% according to the PMMS, creating historically high affordability.

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In our December report, we indicated re-finance activity was below the expectations, given the interest rate incentive. This has now changed, with re-finance activity

Though there is always uncertainty, the mood certainly seems better than it has been.