Getting the right mortgage is very important for your real estate purchase. While there are many factors to consider when shopping for a mortgage, like points and other fees charged by the lenders, I’d like to show just how important the mortgage rate is.

This week, lenders in the weekly mortgage rate survey that is sponsored by the Honolulu Board of REALTORS® and circulated to local newspapers, were reporting fixed 30-year mortgage rates at around 5.25%.

If a household could afford a monthly payment of $3,000 and the mortgage rate they can get is 5.5%, the purchase price, working backward, would be $660,500, based on normal lending assumptions like a 20% down payment, etc.

I then looked at the effect that various changes in rates would have on the price. If the mortgage rate increased to 6.0% and the family’s payment budget remained at $3,000 per month, the computed purchase price would decrease to $625,500. In other words, a 0.5% increase in the mortgage rate would diminish purchasing power by $35,000. When I went in the opposite direction and lowered the borrowing rate by 0.5%, to 5.0%, buying power rose by $38,000, to just under $700,000.

If, as expected, the Federal Reserve reduces bank lending rates at their January 30-31 meeting, you’ll see mortgage rates go even lower. I’m guessing the Fed will cut rates by half a percent - what do you think?

Sales of single family homes in the Kailua neighborhood have been very stable. For research purposes, the Honolulu Board of REALTORS® defines this geographic area as Tax Map Key , Zone 4, Sections 1 through 3 and part of Section 4, and includes Waimanalo.

In 2007, there were sales of 314 dwellings in this area, only 3 units less than in the prior year. Prices were also quite solid, with a median price of $804,500 last year, compared to $799,500 in 2006, a slight increase of just 0.6%. The highest price paid for a Kailua property in 2007 was $11,000,000.

Sales occurred with a median market time of 42 days last year, the exact same time required to sell a single family home in 2006. Compared to all of O’ahu, the speed of sales in Kailua was 5 days faster.

The inventory of properties for sale is also a strong indicator of stability for Kailua. In December, there were 142 homes on the market with a median asking price of $999,500. At the same time in 2006, there were 143 homes available with a median list price of $999,000. How’s that for consistency?

For further information about Kailua residences or how your specific neighborhood performed, check out the Honolulu Board of REALTORS® website www.HiCentral.com or contact a REALTOR® in your area.

This morning, we held a cleanup at beautiful Hanauma Bay , the loveliest spot on O`ahu, IMHO. The sponsoring group was the Friends of Hanauma Bay and 40 volunteer cleaners came to the Bay to help make this Marine Life Conservation District a no-miss destination for tourists.

The manager of the park, Alan Hong , was his usual helpful self and cleanup regular Fran Gabrielli assisted by giving out gloves and bags to volunteers. Another regular, Peter Rappa , from the University of Hawaii Sea Grant program helped with the setup and brought the cold drinks that we give to the workers.

This is a quarterly event, alternating between Saturdays and Sundays, to accommodate as many volunteers as possible. We’ve had as many as 200 volunteers in past cleanups.

The next cleanup will be held on April 19 - mark you calendars now! Will you be volunteering to keep Hanauma Bay pristine?

The was a $10,000 price increases in the Makiki-Moili`ili neighborhood from 2006 to 2007. This neighborhood, which is home to many Oahu residents, is defined by the Honolulu Board of REALTORS® for research purposes as Tax Map Key Zone 2, Sections 4 through 9, excluding Section 6 (Waikiki).

This neighborhood experienced a 10.2% decline in annual sales, to 688 units, but saw a 3.2% increase in prices last year, to a median price of $320,000, just below the O`ahu median of $325,000. Comparing only the fourth quarter results to the same time period a year ago, sales were actually up 12 units, from 142 to 154, and the median paid price was up $3,500, to $310,000. The highest price paid for a condominium sold last year was $1,250,000.

Sales speed, measured as the time from the listing date to the date of a sale agreement, not including escrow time, was 38 days. This figure was 4 days better than the islandwide median of 42 days and dropped from the prior year by one day.

For further information about how your specific neighborhood performed, check out the Honolulu Board of REALTORS® website www.HiCentral.com or contact a REALTOR® in your area.

I’m routinely invited to speak at REALTOR® functions to provide information about last year’s housing market performance and to present my expectations for the coming year. This week I’m speaking at two REALTORS® events.

Tomorrow, Wednesday, I’ll be speaking to the Central O`ahu Regional Group at their gathering at Ryan’s in Ward Center. The meeting will start at 8:15 and my presentation will be about 30 minutes. I was invited to speak by Carol Marx from Inter Island Home Loans . For more information about this meeting, contact Mark Stewart at 949-2302.

On Thursday, I’ll be at beautiful Waimea Falls Park to speak at the North Shore Regional Group’s January luncheon. The luncheon starts at 11:30. My appearance was requested by long-time friend Richard Sterman of Sterman Realty . Further information is available by calling his office at 637-8600.

All members of the Honolulu Board of REALTORS® are cordially invited to attend.