‘Value Is Evaporating Into The Salty Air’: Oahu
The Honolulu Advertiser reports from Hawaii. “There’s been a dramatic turn in O’ahu’s residential real estate market in the last year. It’s as though value is evaporating into the salty air, $50,000 here, $150,000 there, $720,000 in Michael Choi’s case.”
“Choi thought he had a $1.8 million Hawai’i Kai house ready for a quick and easy sale last November, but following nearly a year with no offers, he has cut his price to under $1.1 million.”
“Not only are more sellers dropping their asking prices, but more properties are selling for below list price. The trend is clearly benefitting buyers and frustrating sellers.”
“‘The sellers are still a little bit out of touch with reality of where the market is,’ said agent Bryn Kaufman. ‘They’re pricing initially higher and they don’t get any offers, and then they lower their price. The buyers are in a mindset where they feel the market has peaked. There’s a lot of inventory, and they’re looking for deals. It’s a battle of two mindsets.’”
“According to Kaufman, about 70 percent of single-family homes this year sold for below their list price, compared with about 50 percent a year earlier.”
“According to O’ahu home sale data, there were 1,798 cases of sellers dropping their asking price last month, compared with only 633 a year earlier. The number of price drops for homes on the market, which includes more than one drop for the same property, has been steadily rising from 1,081 in January to 1,604 last week. The average drop for single-family homes was 7.6 percent.”
“Lowering an asking price can give sellers the depressing feeling that a good part of their home’s value has evaporated rather substantially.”
“About 18 months ago, a disability forced Dolores Martinez to retire and refinance her Punalu’u home, but higher mortgage payments became unaffordable. Martinez said she had to sell, and in April with a broker’s assistance listed the three-bedroom house ’steps from the ocean’ for $775,000.”
“There was little buyer interest. ‘One person looked, and that was in the door and out the door,’ Martinez said. In July, Martinez dropped her price to $675,000, and then to $550,000 last week, a collective 29 percent reduction.”
“If her home sells for $550,000, Martinez, who plans to move to the Mainland, said she can live with it. ‘It wouldn’t be good, but I’d be all right. I hope it sells soon.’”
“The median list price on O’ahu hit a peak in May 2005 at $850,000 and now stands at $770,000. Median list prices for single-family homes have been below their year-ago levels in each month this year except January.”
“Many sellers have been slow to accept that the top of the market has passed. ‘It’s taken them a while to agree that the heat has gone out of the market,’ (broker) Jim Wright said. ‘People are starting to realize it’s slowing down,’ added broker Rob Burns. ‘Prices are going down to where they ought to be.’”
“Choi, the Hawai’i Kai home seller, was one who got caught expecting buyers would keep bidding up values. Choi at the time had been a real estate agent for about two years and felt buyers would snap up the 1,668-square-foot house with three bedrooms, two-and-a-half bathrooms and a pool. List price on Nov. 8, 2005: $1.8 million.”
“‘It was pretty bad timing,’ he said. ‘The real-estate cycle was so good up to that time. Now I can say that that was the top of the market, but I couldn’t see that at that time.’”
“Choi in January reduced the price to $1.58 million. By May it was $1.38 million, and then $1.23 million in July. Still, no offers. Now Choi said he plans to bring the price down to $1.08 million and install new carpet and paint.”
‘Mainland experts say it’s the day home sellers have been dreading and home buyers have been waiting for. The slump has begun with steady drops in housing prices for the first time in over 10 years.’
‘The National Association of Realtors says prices are finally falling, and we’re not just talking mainland homes. It’s happening in Hawaii. The report says that’s partly because of a recent flood of new homes on the market.’
‘Realtors here say the slowdown is inevitable. ‘You’re never going to see a market like we’ve seen in the past three, four, five years, where the market’s gone up 30 percent, 20 to 30 percent every year, year upon year. It’s finally a market correction now,’ said agent Christine Kim.
The value is the same as it ever was.
It’s the prices that are changing.
Price Value
jb
That should read:
Price (is not equal to) Value
I now hear that immigrants are going to save us from a correction. Next thing you know it will be martians.
I’m ready for the new paradigm where “Prices never go up” and “Take that refi or HELOC and be PRICED IN FOREVER”.
All those TV shows, Flip this house, Designed to Sell & my favorite, Suzanne Won’s House Hunters are going to give all the deeply underwater FB’s major heartburn.
We’re going to see new crop of shows where vultures descend on grieving homeowners and agree to take properties for peanuts or go to lender auctions with no one present and pick up homes for next to nothing to get the albatrosses off the lenders’ books. That’ll be MUST SEE TV!
You do realize they are going to cut interest rates again.
cool, I’d love to see the Canadian dollar worth more than the US dollar
But they aren’t making anymore land in Hawaii, oh wait, they sure are:
http://hvo.wr.usgs.gov/kilauea/
Now Choi said he plans to bring the price down to $1.08 million and install new carpet and paint.
He was trying to sell for $1.8 million with old carpet and paint?
lmao.
My sister sold her hillside hovel between Diamond Head and Koko Head last Aug for a mill more than she bought a little over 5 years previous. Thus using the never fail Coté Luck Indicator we can call the top of the Ohau market from that date. All she did was caulk some cracks in the cement and hide the kids’ toys although shedidn’t insist on a letter promising to feed the Nee-Nees. [N.B. My family is living proof that being lucky is better than being smart. Sometimes I feel like Teela Brown.]
Larry Niven ‘Ringworld’ reference?
Mais oui. Bravo.
WOW would never have expected to see a reference to those books. Right on!
Trying to sell a bungalo with rank carpet and peeling paint for $1.8 million. Dude, ease up on the Maui Wowi!
Gonna need some more Maui Wowi in the days to come…
He’s trying to sell for $1.08 million with carpet?
The new carpet matches the granite counter tops.
Includes the plants! -
LOL. That tells how insane the buyers were. They would buy homes they have never seen.
This has to be the new poster boy for “flippers gone bad”!
“…but I couldn’t see that at that time.’”
__________________________________
You were BLINDED by GREED!
Agreed! The signs were all there for anyone to see. I bet the joker even had a couple of friends who were in our camp that tried to give sound warnings that fell on deaf ears. It wasn’t that this greedy fool couldn’t see it, but rather wouldn’t see it. You’re a victim of your own choices, pal.
Don’t forget he was a real estate agent so these things were probably a little tough for him to work out.
My bad - he inherited the property. HE was still BLINDED by GREED!
Even worse. He had virtually zero cost basis since it was inherited. He could have sold for just about any price and come out way ahead, but he held out for last year’s price + 20% just because he heard other homes sold for that much. Greed at its worst. I can’t even feel sorry for the guy since its not like he was desperate or anything.
“Even worse. He had virtually zero cost basis since it was inherited.”
In most states, and for Federal purposes as well, the cost basis of property inherited is the property’s fair market value on the date of death.
don’t they say… sell the merchandise but don’t get hooked on your stuff.
The 775 to 550 woman is every FB’s worst nightmare. She can cut like that and still be okay. Hello lower comps!
- “‘The sellers are still a little bit out of touch with reality of where the market is,’ said agent Bryn Kaufman.
- According to Kaufman, about 70 percent of single-family homes this year sold for below their list price, compared with about 50 percent a year earlier.”
- Reality is sometimes SLOW to surface.
C’mon fiscally conservative boomers (there have to be some of you out there who haven’t sucked every last nickel out of your homes), retire, sell for whatever price you can get, and lower those comps!
We’re out here, but most of the fellow boomers that I know have paid off the mortgage, or are close to it, and plan to hunker down and stay in something we actually OWN.
Ah yes! The older price conundrum. Screwing the newer comps six ways to Sunday. Gotta love it.
How come they can drop prices there in paradise like that but you still see the boneheads here in Orange County CA sticking to their fantasy asking prices.
All I can say is it can’t happen here soon enough.
Who do you think the people were that you bought those properties. I just got back from Hawaii and I can honestly say that none of that real estate is intended to be sold to the people that live there.
Southern CA is going to crash hard soon. We just have soooooo many people working in the Real Estate industry that they’ve got a mini monopoly on prices. Eventually they’ll run out of money and either be forced to sell at a discount or foreclose.
No matter what they say you can’t hold on to a mortgage when income isn’t coming in to cover it.
I’ll agree that this a large contributing factor in stubborn price holds. It takes a while for people to run through whatever liquid assets they have, then live off the credit cards to their limits, then borrower from whatever family member or close friend to get an extra month or two before you finally reach the end of the rope. These folks are running out of time, and we’re going into the slow season.
It takes a while …
I’ve been trying to guessimate how long it will be until those sources evaporate. From the data points that I have, it looks like about 4 years. (I know several people with decent amount of savings/income that went down the path of 2 mortgages or ARMs or combinations.)
This is anecdotal, but I’d love to hear other’s thoughts.
JP,
I think it will be much quicker. Florida held on due to exotic loans and the national mania funneling out of state dollars into the state. Since California was quite a sorce of that money (as well as NYC and any other wealthy urban area), it will end quicker for So-Cal.
My estimate is that the ball really doesn’t get going until 2Q2007. Why? At that point 1/3rd of the option ARMs will reset and that will push on the market. I am making the assumption that the rumors I’m hearing from banking friends regarding the bond market play out by then. (Buyers lose their appetite for exotic loan backs bonds.)
2007 will be “free fall” in Southern California.
Neil
several people with decent amount of savings/income that went down the path of 2 mortgages or ARMs or combinations
A vast multitude with no savings and mediocre income also went down that path. Prices will be crashing withing 2 yrs of peak.
I maybe should be more specific regarding my comment on nnvmtgbrkr’s post.
Obviously there’s a big ARM reset that will drive some prices next year. The observation I’m making is: some of that CA money is coming from people that are in reasonably good shape with savings/income. The money I know about has gone mainly to LV and back into CA.
I’m guessing that the meltdown is not a smooth or one-time event. First I think the hairdressers/ iamfacingforeclosure.com people are forced out; second, the people who are insulated from some downturn (but not forever); and third, people that won’t go bankrupt, but throw in the towel and take a loss just to get the money earning some returns again.
It was the second category that piqued my interest. How much savings/credit is out there for the next income group to burn off?
There is not as much wealth out there as one might think. I know we’ve all heard about savings at an all time low in this nation. Being in a position to see the financial situation of a variety of individuals, I can tell you that the liquid resources of most are slim. In addition, the folks that are savers are not the type to be in the RE game right now anyway. Most savers are prudent thinkers and blind risk is not part of their makeup. So of all these sellers in the market today, I’m sure there is a very small percent that have resources to play this out much longer oir would even want to. Pretty soon we will see these folks accept that they have only two options: Drastically reduce or walk.
nnvmortbkr,
I couldn’t agree more. Perhaps coming out of the 90’s there was a segment that could legitimately assert they had 2 to 4 years of assets set aside for a “rainy day”. Well rain it did! Much of the boomer gen. wealth was in the form of their WW2 parents John Deere stock “certificates” (which they promptly cashed out) for margin accounts to trade dotcoms!
Then salvation appeared in the form of the housing bubble which many (not just boomers) tapped out in the form of the in house ATM machine. Well, when you have a never ending ATM who the hell needs savings? I would argue that the generations that SHOULD be the best prepared to have the cushion in a downturn have already blown their inheritance (and then some).
nnvmtgbrkr, I agree. I think we’ll see that those who took the biggest chances on real estate were those who could least afford the consequences.
Maybe they considered it their last, best chance?
How does the song go…”T-i-i-i-me is on my side, yes it is. T-i-i-i-me is on MY side….”
I prefer “Free Fallin’” by Tom Petty.
How about “Crumblin’ Down” by Mellencamp, “Digging a Ditch” by Dave Mathews, or “High and Dry” by Radiohead. The list goes on and on…
Those who can least afford leverage are those most attracted to it; sometimes they win, more often they lose.
You have to count those people who did well in the first round, and threw it back into the pot. My buddy bought (against my advice) and leveraged a 10K down payment plus 18 mos mortgage into almost a quarter million dollars free & clear when he sold. Well, I told him that his real challenge was just starting - keeping his gains.
He invested in Hawaii, big island, no beach, no industry, just simple BFE Hawaii. He’s bleeding, and can go on bleeding for a while. He’ll lose everything, but will not bankrupt. Just back to the day job.
The time to get back into real estate will be when even this blog closes due to lack of interest.
Paul
“Who do you think the people were that you bought those properties. I just got back from Hawaii and I can honestly say that none of that real estate is intended to be sold to the people that live there.”
Yes, we cannot afford the houses here. I hope that mainlanders and Japanese investors do not buy the house or at least let the price come down to reality and then buy it.
Except for a few areas, it has been a long time since locals could afford houses there. Lots of demand from people who don’t require income in Hawaii.
It’s not the Japanese buying any more…it’s the Chinese.
They own about all of Waikiki.
Chinese FBs for everyone!
Looks like Hawaii is going to be home to a lot of Poor Dads soon, boo-hoo, Robert Kiyosaki should hide his head in shame during the bust but he won’t.
Anybodty who read his first book will remember how he ultimately ridiculed his biological father who’s greatest sin was being fiscally conservative and had the temerity TO WORK A JOB HIS WHOLE LIFE AND NOT TRY TO GET RICH QUICK.
LOL. Sadly I bought that book. What a load of crap. His poor dad was a school administrator who bought some weak a$$ franchise and was broke. The moral of the story - don’t go to school and try to contribute to society - LEVER up and buy every piece of property in sight!
The young blonde agent who worked with the buyer of our house last year told me going to college and working was a waste of time. She learned everything from “Rich Dad, Poor Dad”. She said real estate was the only way to go and how she was hot and heavy into investing. Her “investments” were in Culpeper County, VA, a for-sale sign disaster at the moment.
I told her we were going to rent for a while and just said “uh huh” to all her lecturing about how foolish we were being.
In all fairness, Kiyosaki’s book includes cost calculations for every rental property example. He emphasises buying properties that are likely to be cash-flow positive and warns extensively on what can happen if the cash flow is negative. Of course a lot of eager buyers ignore this part in their rush to make their real estate “fortune”.
For another take on Kiyosaki, see:
http://www.johntreed.com/Kiyosaki.html
If she learned everything from that book, let her real education begin here:
http://www.johntreed.com/Kiyosaki.html
The funny part (for me) was that about a week after that conversation (last Spring) Kiyosaki said to ditch real estate and buy gold.
That does not make any sense. If she had learned everything from Kiyosaki’s books then she would know about cash flow and many other essential concepts. A close read of what Kiyosaki is saying is pretty stark and does not amount to much more than how and why to be on top of spending and income and work on consistently improving the ration of income to spending. When people use that advice to rationalize quitting good jobs to buy underwater properties it is clear they did not understand the basic message which emphasizes always doing the math and trying to do better based on real numbers.
It amazes me how many get-rich-quick books, like “Rich Dad,” there are and how many copies they sell. And the books that speak about how to think, live, be–they are few and far between. One of my favorites, a classic really, is Pirsig’s “Zen & the Art of Motorcycle Maintenance.” Oh, and then there’s Voltaire’s timeless pitch for tending to your own garden: “Candide.” Voltaire’s Pangloss, with his ceaseless rambling about the best of all possible worlds, must have been the prototype for today’s real estate agent. BTW, which rich, “successful” Americans are going to jail today: Enron’s Fastow, HP’s counsel, Tom Delay,… David Lereah?
How rich do you have to be to be happy ? It gets to the point where more money just reaches the law of diminishing return and your just buying more junk . There is a whole market that caters to people who are trying to think of ways to burn excess money .
Nothing worst than a family being stressed out financially and not being able to pay the monthly bills . This housing boom created that situation for alot of families and it’s not good .
One needs only enough money to do what one really wants to do. Anything more than that is superfluous.
It sounds like you need to read Zen and the Art of Motorcycle Maintenance again. Many successful people are doing just fine. This cartoonish view of the world is exactly what caused the housing bubble. Anytime things get reduced to black and white, this is good and the other is bad, math is hard, the result can only be the usual sleep of reason awfulness.
I’ve read the book a number of times: its main theme, like that of Zen, is one of process–for instance, the process of saving for and caring for a home, rather than the end result of a profit made from flipping.
Almost all who have achieved the American version of success have paid for it–usually in the form of neurosis. I’ve personally met a number of wildly successful people and found each one to be deeply troubled. True, it’s only inductive reasoning, but the correlation is pretty strong.
I have no idea why you’ve chosen to call my statements cartoonish, but advise you to look at the logic of your own last sentence, which is an either/or dilemma that condemns either/or dilemma.
I’ve read the book a number of times: its main theme, like that of Zen, is one of process–for instance, the process of saving for and caring for a home, rather than the end result of a profit made from flipping.
Almost all who have achieved the American version of success have paid for it–usually in the form of neurosis. I’ve personally met a number of wildly successful people and found each one to be deeply troubled. True, it’s only inductive reasoning, but it suggests at least a strong correlation.
I have no idea why you’ve chosen to call my statements cartoonish, but advise you to look at the logic of your own last sentence, which is an either/or dilemma that condemns either/or dilemmas.
You guys are all totally off base about ‘Rich Dad, Poor Dad.’ It does not emphasize get rich quick schemes and it doesn’t promote the idea of mindlessly buying up real estate to become a tycoon. On the contrary, the book encourages saving money and investing in sound, positive cash flow producing investments, be they real estate, stocks, bonds, or whatever.
He even goes so far as to emphasize his view that buying a house as a primary residence is not an asset/investment because it takes money out of your pocket each month (he defines an asset as something that puts money into your pocket each month).
Ultimately, his book is about buying enough positive cash flow producing assets over time so that instead of having to work for your money, your money can work for you.
Believe me, I’m as big a bubblehead as anyone on this blog, but you’ve either misinterpreted Kiyosaki’s work or haven’t read it.
I agree. it seems like often times here too many people are quick to judge people’s motives.
I disagree. There’s ample evidence that Kiyosaki has misrepresented his background, made things up, and given bad advice.
I have seen him on KQED - PBS affiliate in San Francisco. He was hawking real estate as a no brainer last year during the pledge drives. I could only stand listening to him for extremely short stretches so I didn’t suffer through his whole program / message. Also he is one of the headliners for the Real Estate Expo that also feature the Donald. Enough said / what a bunch of nonsense!
775k haircut. SSWWWEEEETTTTT!!!!
Can we collectively say, BONEHEAD. DUH.
Of course, it was probably overpriced by $1,500k to begin with.
Hawaii is no longer in the top 10 Priciest Homes in the USA according to an article in the Hawaii Star Bulletin this morning:
http://www.starbulletin.com/2006/09/28/business/story01.html
i thought they were running out of islands? buy now or be priced out forever? I feel like I was lied to…
Hawaii, one of the few places where they *are* making new land.
I’m in the mood for a Don Ho song. Any suggestions?
Easy. Tiny Bubbles.
There’s a new, future, island growing right now; probably pop its head out of the water in 2,000 years or so. I kidded to my wife that we should probably reserve a lot now.
People People People!
Doesnt everyone want to live in a paradise like Hawaii.
The same is with California.
Dont they want to overpay!
LOL! I guess not. I pity the fools who moved to California and Hawaii thinking overpaying was the right thing to do.
This just in from Tucson:
http://www.azstarnet.com/business/148591
“Bubble? What bubble?”
“….Things are definitely slowing down on the new construction. I do think it’s a hiccup …..”
Apparently a hiccup is when all the food you have eaten for the last week is running down the front of your shirt.
“….Tucson is a little different than the rest of the United States in that as the population ages, there’s going to be a lot of demand for second homes. It’s somewhat insulated from downturns in the market…..”
The date on this article must be a typo. This is 09/28/2005 talk.
Anyone who saw what happened during the last two downturns knows that when the economy is down Tuscon and any other such place becomes a graveyard of equity. Probably the person who said this only started looking at this after 1995?
I’ve been reading this blog for a month or so now, and wondered what the collective (skeptical) wisdom is on renting in these overheated, sure-to-fall-fast-and-far markets?
My husband and I are preparing to move to SoCal where we will be renting, while still owning our emminently affordable home in a stable city neighborhood in the Midwest. As housing inventory rises, along with foreclosures, most likely, won’t this put additional pricing pressure on the rental market? This isn’t my usual area so any input is appreciated.
AHinOH,
From what I’ve heard rents are firming in SoCal. The best estimates from local intel is that this is temporary and will likely be followed by a downturn as repartments (apartments converted to condos, the swan song of a RE bubble) are in turn rented out by “owners” that can no longer flip them for a profit. So right now the bubble menatality is still skewing rental data. There are several CA only blogs that provide much better data than I ever could! Check ‘em out.
Thanks for the tip - I’m hoping some of those people who bought investment property will turn them into rentals when they can’t move them on the resale market, but you can’t figure hope into a budget.
Oh, wait. Looking at some of these “innovative” lending products, maybe you can.
This could be interesting
David Merkel
Getting Closer to My Modest Mortgage Proposal
9/28/2006 12:30 PM EDT
Well, at least on the other side of the pond, rationality is being further abandoned by a few mortgage lenders, according to The Economist. Some banks are making their lending rates partially dependent on home prices. I was joking around, or so I hoped, when I wrote this comment in the CC by taking current lending trends to an absurd.
But now I’m not so sure. I’ve got a piece that I’m working on about happenings in the derivatives market on instruments that allow “investors” to go long or short residential real estate in a big way. A lot of hedge funds are pursuing this trade. If an investment bank gathered together a bunch of these loans, it would create an even more direct way to go long residential real estate equity, and then a derivative market would grow up around it (and notionally be at least four times the size of the cash market).
Life may be imitating art here. As La Rochefoucauld supposedly said, “The best banker is a stupid banker.” In this case, definitely true for the one who bears the risk of default, because the borrowers will not likely be high quality. That said, it is potentially very profitable for the investment banks if a market could develop for loans like these.
Position: none mentioned
a must see!!!!!!!! copy from the bits buckets.
make sure you see this video!
Tango in Uniform
2006-09-28 05:46:41
Hi, folks, your Billings, MT field agent here. I’ve changed my nickname (thanks to RC for the idea).
Without further ado:
Video report for Billings, Montana
Now for the ado. Lou Minatti’s cool videos inspired me. Unlike his nice short ones, though, mine got out of hand and turned into a 20-minute monster! It’s kinda long and boring, partly because I want to use this video to make a case for the bubble to friends, realtors, etc. around town. It’ll face close scrutiny there, so if you see any flaws let me know. If you want to skip to the condo action, fast-forward to the 5:50 mark.
Also, kind of a funny story. I was going to have a friend of mine do the narration, since he has a better speaking voice than I do. He got half way through the script and started getting really uncomfortable. He was afraid that his employer’s clients (developers, realtors, others in the REIC) would recognize his voice and get angry at him! So I let him go and did it myself.
Here are a few highlights of the video:
- Downtown condos with 40+ units in the last year. Of five developments, three have not sold a single unit. One has sold 2 out of 5 units since summer 2005. Incredibly, one conversion, with 14 units in a historic building, reports 11 have pre-sold (with prices up to $440,000).
- High-end Ironwood subdivision. Started in 2003, now 1 in 6 homes is up for sale. Median price around $500,000. (Just yesterday, I got a tip that a lot of them might be realtors looking for a quick flip. I’ll have to check county records against the list of realtors, hmmm..)
- Copper Ridge subdivision. Roughly 20 houses under construction, and 15 of them are on the MLS (median around $300,000)
- Even with danger signs, construction at a breakneck pace in every direction. Inventory up 50% since December, now holding steady.
So that’s it. I hope you enjoy it. Lou’s got a new blog featuring housing bubble videos, so let’s get going out there!
http://video.google.com/videoplay?docid=2923166850569585085
No offense, as I am fond of rural America, but the phrase, “housing boom in Billings, Montana,” should be all the proof we need of the coming massive correction!
are you saying prices can’t rise in billings? a boom happens everywhere. it’s just a rise in prices. prices can rise ANYWHERE.
This is ridiculously good!
Great video - I’m sure that took a ton of work.
“This turn hasn’t been reflected in regularly reported median sale prices, which continue to be up in year-to-year comparisons. The median price for a single-family home on O’ahu in August was $635,000, up 1.6 percent from a year ago.
But that headline number masks the fact that list prices are falling. Not only are more sellers dropping their asking prices, but more properties are selling for below list price.”
How does this work — falling prices which are steadily masked by rising headline numbers? And why is my mind suddenly drifting over to the new record level the DJIA is flirting with setting? The gaps seem very large between headline figures and underlying fundamentals in both the housing and the stock market these days.
Thanks for posting this. I tried this morning but couldn’t. I live on Oahu and sold my house 6 months ago, am sitting on cash and renting. I’ve seen some property I like but the owners won’t budge and act all insulted when I tell them I would pay 10
Thanks for posting this. I tried this morning but couldn’t. I live on Oahu and sold my house 6 months ago, am sitting on cash and renting. I’ve seen some property I like but the owners won’t budge and act all insulted when I tell them I would pay 10% less.
Those same properties are still on the market. I know a few flippers who are losing their arses.
I live on Oahu as well and am amazed at how many people still believe prices are only going to go up. They’re getting very upset that they have to cut into their $100K+ profits to bring their price down $5k. Amazing.
I’m living with parents right now fresh from a move from SoCal waiting for the market to drop more.
Next Spring I’ll start making lowball offers.
“The sellers are still a little bit out of touch with reality of where the market is,” said Coldwell Banker Pacific Properties agent Bryn Kaufman. “They’re pricing initially higher and they don’t get any offers, and then they lower their price. The buyers are in a mindset where they feel the market has peaked. There’s a lot of inventory, and they’re looking for deals. It’s a battle of two mindsets.”
Inventory crash, sellers who are out of touch with reality, and buyers who are waiting until later to see if they can get a lower price, rather than purchasing near the all-time high price which is currently dropping like a rock. I wonder who will come out on top in this clash of mindets?
Dolly Lenz, NY’s biggest realtor®, says housing is poised to take off again. She said that right on CNBC so it must be so.
“According to Kaufman, about 70 percent of single-family homes this year sold for below their list price, compared with about 50 percent a year earlier.”
“According to O’ahu home sale data, there were 1,798 cases of sellers dropping their asking price last month, compared with only 633 a year earlier.
Is it just me, or did anyone else do a double-take on these stats? How does 633 –> 1,798 = a mere 20% increase? And how is it that 50% of HI sellers were accepting offers below list price last September (height of the bubble)? Sorry, not buying it. I know newspaper reporters are not mathematicians by training, but someone ought to be fact checking this stuff before they publish it.
The language is awkward but the math works out. The asking price is the last published asking price even if it has been lowered. The sales price is recorded 70% of the time lower than that. I imagine sometimes a drastically lowered asking price could ignite a bidding war to account for the 30% of recorded sales at or above asking price.
I am not quite sure how to parse this. Have all 1,798 sold? If they sold, is it talking about “sellers which sold in the last month and dropped their last price?” Or is it “sellers who sold, and a month before they sold, dropped the price?”.
The article says that the price drops are all counted including multiple drops on the same house. there could be 4 price drops on many of those houses, bumping up the total reductions significantly, while only increasing the number of houses with price reductions by 20%
This from a story in the WSJ today.
“Another approach is a personal plea. Traci Smith, president of Century 21 Smith & Associates in San Antonio, encourages clients to court prospective buyers with a letter explaining the intangibles that make their home and neighborhood so appealing, such as the fact that the kids on the block trick-or-treat at Halloween together. During the height of the housing boom, some brokers were encouraging the same type of personal notes — but from buyers eager to get their bid accepted.”
Cracks me up that sellers now have to do the letter writing to the buyers. Wasn’t long ago that the buyers were putting out their life story so the seller might look upon the kindly.
If walls could talk I’d wanna hear about mold and termites not little Jimmy playing cowboys in the yard.
so which bank or lender is in the position to help out these 9-5 workers with 700k homes….