October 5, 2006

‘A Pause The Market Needs To Take’: Hawaii

The Star Bulletin reports from Hawaii. “The number of previously owned homes sold on the neighbor islands continued to plummet in September, most dramatically on Kauai, according to figures released yesterday. Median home prices on Kauai fell 12.2 percent. On Oahu, home sales fell about 20 percent in September while the median home price remained fairly steady.”

“Hawaii’s softening residential real estate market reflects a national trend, said Calvin Mobbs, president of the Realtors Association of Maui. ‘I think the market is going to continue to slow down in the single-family housing market,’ Mobbs said. ‘This is a pause that the market needs to take.’”

“In September, Maui sold half the number of homes that sold a year earlier. The story was the same for condominium sales on Maui, which dropped dramatically at a median price of $499,000, compared a median price of $405,000 last year.”

“On the Big Island and Kauai, sales also declined dramatically. Only 132 houses sold on the Big Island in September, down 43 percent from 233 sold the same month a year ago. Some 37 homes sold on Kauai in September, down 49 percent from 72 sold the same month a year ago.”

“Condominiums on the Big Island and Kauai fared no better. Only 46 condos on the Big Island were sold in September, despite a drop in the median price to $341,000. Some 126 condos sold the same month a year ago at a median price of $424,900.”

“Broker Debra Blachowiak on Kauai, said she wasn’t surprised by the dip in sales. Buyers are no longer in a hurry to snatch up properties in the face of increasing prices. ‘Buyers are holding back a little bit to see what happens,’ she said. ‘Last year, this time, and maybe a year and a half ago, it was the complete opposite. People thought, ‘If we don’t buy, prices are going to go up.’”

“There are fewer speculators, she said, and more owners looking for a home to live in. ‘I don’t expect a crash, but there are not as many speculators,’ Blachowiak said.”

The Honolulu Advertiser. “The sharpest decline in September transactions was for condominiums on the Big Island, where there were 45 sales, a 64 percent drop compared with 126 sales a year earlier. Maui transactions were hit hard, too, with a 59 percent drop in condo sales to 66 from 160, and a 50 percent drop for single-family home sales to 61 from 122 in the same period.”

“‘The number of properties sold continues to taper off impressively,’ said Terry Tolman, chief executive of the Realtors Association of Maui, which released the Maui data.”




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70 Comments »

Comment by Ben Jones
2006-10-05 06:49:13

Running a little behind this AM, lost my ISP connection.

Comment by turnoutthelights
2006-10-05 07:19:35

Did you look in the last place first? That’s always where my keys are.

 
 
Comment by stanleyjohnson
2006-10-05 06:52:04

Nothing to do with Maui however you get a house and 5 “free” non adjacent acres!!

2661 Via Olivera, Palos Verdes Estates, 90274 $1,377,202*
Status: ACT Orig Price: $1,450,000
Style: Mediterranean APN#: 7543-014-014 Pool: N DOM: 72
Bed: 5 Zone: Horse: N Apx SF: 2,686
Baths: F: 3 3Q: 0 H: 1 Cmplx: FP: Y $/SF: $512.73
Elm Sch: Stories: TwoLvl Map: 822F1 Lot SF: 6,080

LP Exclds: for limited time we will give the buyer 5 ac lot in san bernerdino county absolutly free(call for info).

Comment by Robert Coté
2006-10-05 08:40:40

How much extra to NOT get the 5ac in San Bernardino?

 
 
Comment by az_lender
2006-10-05 06:55:36

The 60% sales-volume drops YOY seem larger than those we are used to seeing in previous posts and/or other areas. My guess is, pretty soon we’ll be seeing 70% YOY drops here and there, maybe 80%, as Ben’s Word Gets Out.

 
Comment by zee_in_phx
2006-10-05 07:01:26

Hey,
slightly OT:
got a MLS listing for a TH thats listed at under $100/sqft. This has not happened in a long time for the area i’m looking at , its still pretty high, should be somewhere at $60/sq.ft, this particular place has been on the market for a few months or more and was listed at a much higher price…. Let the snowball effect start….drum rolls….

Comment by david cee
2006-10-05 07:29:17

Divorce looming in upscale Calabasa, CA, so house in must sell situation. Asked 1,150,000 just 30 days ago…dropped the price to 950,000 today…That’s a $200,000 price cut. Tell that to The next economist or Moody’s market research with their 3.8% drop for Los Angeles. The internet and Ben’s Blog makes stale any research report with days of its release. Surrender, you over educated fools, to the new world of “real time” reports

Comment by DinOR
2006-10-05 07:48:04

David Cee,

Good morning all btw!

David, I just don’t get this? I feel for people that have been through a divorce, especially those that have given their all to make it work. I just fail to see a connection between getting a divorce and needing to sell that day! Before anything has been finalized? If it were appreciating at Gary Watts type #’s would there be this urgency to sell it ASAP?

Ahem, look I don’t know if this divorce situation is for real or not and frankly…… I don’t care. If you’re at all like me I hate this type of sales tactic. “Illness forces sale” “Getting D I V O R C E! Let our misfortune be YOUR fortune! This is the lowest form of advertising. Mind if we ask WHY? It’s as if to say “Oh, there’s nothing wrong w/the house/car/electric guitar, it’s just that I’m going through this “situation” with uh…. you know. NO, I don’t know, (and I don’t want to know either).

Comment by Robert Coté
2006-10-05 08:50:35

The price, the value, your bargaining leverage and your unrevealed love of the property are all that matter. Everything else is a distraction.

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Comment by Robert Coté
2006-10-05 08:46:52

Not so fast. Some of this may be the inertia that after 5 years of 20-25% annual increases they just assumed they could list at 20% higher than the house that sold last year. Then reality and the time factor intrude and the reduction is actually the first realistic wishing price.

 
 
 
Comment by Hopeful
2006-10-05 07:02:31

“On Oahu, home sales fell about 20 percent in September while the median home price remained fairly steady.”

Something tells me this news has not reached the folks who are frantically building away new high rise condo towers in downtown Honolulu. But it is no big deal, anyway. Just look at Hong Kong for a similar example of a market which goes through fluctuations in supply and demand conditions. Like Hawaii, everyone wants to live in Hong Kong…

Comment by txchick57
2006-10-05 07:24:29

Hong Kong has to be THE most expensive place in the world to buy property. Even the rental prices are breathaking. $5K USD for like 700 square feet in some highrise. I do love that city though.

Comment by goleta
2006-10-05 08:44:48

Many home owners in HK committed suicide after the home prices there fell by as much as 50% in late 90’s and 2000. The BK laws in most Asian countries are not as generous to debtors and they might have to pay back their loans.

 
 
Comment by dwr
2006-10-05 09:23:17

Ah yes, the three great economic centers of the world, Hong Kong, Manhattan, Honolulu.

Comment by Hopeful
2006-10-05 09:53:05

Nobody in their right mind would rather live in Manhattan than Honolulu — it would take a mind driven by a lust for greed, fame, or power.

Comment by Jim D
2006-10-05 10:55:44

Have you *been* to Honolulu? Like Vegas, but without the fun.

I’d take a lot of places over Manhattan, but not Honolulu.

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Comment by dwr
2006-10-05 14:08:51

You were trying to equate Honolulu’s market with that of Hong Kong, which is ludicrous.

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Comment by dwr
2006-10-05 07:05:37

“‘The number of properties sold continues to taper off impressively,’ said Terry Tolman, chief executive of the Realtors Association of Maui, which released the Maui data.”

Impressive? Interesting choice of words. As in, making an impression on his bank account.

Comment by Curt
2006-10-05 08:44:25

“taper off impressively”…… I was thinking a word along the line of plummet might be more appropiate.

 
 
Comment by Hopeful
2006-10-05 07:20:14

“September home sales stall on Neighbor Isles”

At least Oahu’s home sales have not stalled, right? And besides, a stall is nothing to worry about — markets stall all the time, and then start going up again. Look at the US stock market since 2000 for an example.

Comment by Pete
2006-10-05 07:42:19

It doesn’t cost you anything to hold a stock for 7 years. Not so for a house.

Comment by Hopeful
2006-10-05 09:55:42

That’s right — it cost holders of houses a “negative” amount compared to stocks for the past six years, as stock prices went from peak-to-peak while houses appreciated 100% over the holding costs.

 
 
 
Comment by Hopeful
2006-10-05 07:22:55

“‘Buyers are holding back a little bit to see what happens,’ she said. ‘Last year, this time, and maybe a year and a half ago, it was the complete opposite. People thought, ‘If we don’t buy, prices are going to go up.’”

They should keep thinking that. The gold and bond markets are sniffing inflation in Bernanke’s recent remarks about the Fed’s concern about the housing slowdown, which suggests that lower interest rates and more housing price inflation are a pretty good bet. Buy now, or get priced forever seems to still be good advice!

Comment by turnoutthelights
2006-10-05 07:29:51

Excuse me. How do lower interest rates and ‘more housing price inflation’ align with ’sniffing inflation’? The ECB is talking higher rates, China is seriously talking yuan adjustments, and we (as a debt-riddled country) need lotsa bucks from offshore lenders. Lowering interest rates seems rather counter-productive.

Comment by Lefantome
2006-10-05 09:03:39

When you’re caught at the end of the Ponzi game; no work, dwindling GFs, what else is there to do but visit ‘housing bust’ sites and try to steer thinking back to positive territory.

Hopeful - ly ….. this trolling doesn’t add much debate, because it certainly doesn’t add any information…..

Good comedy thought!

Comment by nnvmtgbrkr
2006-10-05 09:10:37

Ponzi is right. The pyramid has run out of steam. It has no where to go but back to fundamentals.

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Comment by nnvmtgbrkr
2006-10-05 07:51:07

So I guess you’re banking on mass wage inflation in the near future as well. Rates mean nothing at this point in the game because we’ve hit a dead-end unless a solution is found for wage disparity. In addition, the economic impact of just the last 8 months of slow down in housing is about to rear it’s ugly head. 2007 will see no recovery, but rather the beginning of a lot of suffering.

 
Comment by Betamax
2006-10-05 07:53:28

Buyers set the price, not sellers. Wake up: it’s over, and blind optimism in a down market will just hurt you more later.

 
Comment by auger-inn
2006-10-05 08:41:55

Let me guess. Your job is somehow related to the RE industry? I concur with nnvmtgbrkr’s remarks.

 
Comment by jag
2006-10-05 08:47:06

Yes, yields on long term treasuries have declined from about 5.2% to 4.7% since June……….sounds like the bond market is “sniffing” inflation…….oh, and why would so much money go into treasuries instead of corporates? Why the need for “safety”?

Comment by Hopeful
2006-10-05 09:58:07

Last time I checked, the yield spread between high-risk and low-risk debt was near its recent razor-thin levels, which suggests that many bond market participants disagree with your opinion about any major need for safety.

 
 
 
Comment by Ben Jones
2006-10-05 07:24:35

‘Median prices in the Oahu housing market continue to stabilize, even with the slowdown in sales,’ said Harvey Shapiro, research economist for the Honolulu Board of Realtors. ‘Many Mainland cities prices have declined.’

‘For condos, there was the same diminishing sales volume. Realtors closed 481 condo sales in September, down from 764 a year earlier. ‘Properties for sale are more plentiful now,’ said Mary Flood, president of the realty board, ‘with 2,005 single-family homes and 2,750 condominiums on the market, providing buying opportunities not seen in the past few years.’

Comment by Hopeful
2006-10-05 07:32:32

With mainland prices on the decline and Oahu prices to stablize, I guess we can expect more mainlander real estate investment money to wash up on the shores here, and get our prices to start rapidly increasing again soon. Don’t miss the chance to get in while prices are still affordable…

Comment by winjr
2006-10-05 07:44:42

My advice to you is to get out while you still have the chance to avoid a big loss.

 
Comment by bottomfisherman
2006-10-05 07:58:19

Hopeful,

Dream on. Vacation & 2nd home areas such as HI are the usually the hardest hit in a RE bear market. This bear market is going to be long and ugly. Better to keep the money safe and sound in CDs or MM than HI (or any RE for that matter).

 
Comment by Beer and Cigar Guy
2006-10-05 08:56:03

Hopeful, its obvious from your comments that they DO still grow excellent dope on Maui, but you REALLY ought to ease off for a while. You are making noises like someone who is completely out of touch with what is going on around them. Please step away from the bong and go buy some more of that phenomenally-priced, island real estate before you are priced out forever. Go on- corner the market. You have my permission.

 
Comment by mrktMaven FL
2006-10-05 08:57:20

Fly! Fly fly Lemming, fly…
No sense yelling after all
I have taken short positions
to enjoy your fall…

Fly! Fly fly Lemming, fly…
then fly some more
I hope you soar
I’ll increase my short positions even more…

Fly! Fly fly Lemming, fly…

 
 
 
Comment by LM
2006-10-05 07:30:47

Was in Maui 2 weeks ago. They are still building like mad. The house next door was having an open house. Purchased for $500K 2 years ago- now asking $1M. When the realtor told my friend and I that the owners were flexible my friend said “Well I would assume so based on a 500K purchase price”

There were 3 other houses for sale- two doors up the street, one behind and one down the street.

Comment by Hopeful
2006-10-05 07:36:50

Lots of very wealthy people favor Maui as the most beautiful place on the planet to settle. My guess would be that the wealthy are sitting back and waiting for prices to drop a little bit, as price weekness has been publicized. But don’t expect the price of Maui real estate to keep dropping for long — there are too many people with too much money who would happily buy at 10% off…

Comment by Pete
2006-10-05 07:44:09

Hopeful, you are a troll.

Comment by nnvmtgbrkr
2006-10-05 07:57:52

Keep it coming….. I like trolls. It gives those of us who actually know what’s going on a chance to flex our muscles. It gets boring with everyone agreeing all the time. So crack your knuckles, take a big slug of coffee, and hammer the poor troll with some hardcore facts and fundamentals. At this point, we have nothing to fear from the troll whistling through the graveyard. In the words of that intellectual giant Mr. T, “I pity the fool!”

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Comment by Judicious1
2006-10-05 08:58:15

nnvmtgbrkr - you may know what’s going on here in the mainland but Hawaii is a different animal. There are beautiful waterfalls there, unlike anything you’ll find in NV. The air is clean and the women are gorgeous. People will eventually regain their senses and buy in Maui at any price.

 
Comment by nnvmtgbrkr
2006-10-05 09:08:44

“nnvmtgbrkr - you may know what’s going on here in the mainland but Hawaii is a different animal. There are beautiful waterfalls there, unlike anything you’ll find in NV. The air is clean and the women are gorgeous. People will eventually regain their senses and buy in Maui at any price”

Sooooooo, what happened in the 90’s? I have a good buddy over there that ran a biz that managed properties in foreclosure for the lending institutions. The stories he tells me from time period are outrageous.

 
Comment by Judicious1
2006-10-05 09:21:12

The 90s? That’s ancient history my friend, no longer relevant as far as Maui is concerned. Besides, that was just fallout from speculative buying by Japanese investors. Maui is riding high on solid fundamentals today: sun, sand and surf (and let’s not forget the gorgeous women). I’ll admit that many markets are out of whack, but not this little gem. You’ll see.

(NNV - I’m kidding, of course)

 
Comment by nnvmtgbrkr
2006-10-05 09:30:28

(NNV - I’m kidding, of course)

Sorry I didn’t get it the first time. I was about to say “Damn that Island weed is good!”

 
Comment by winjr
2006-10-05 18:43:48

“and let’s not forget the gorgeous women”

Actually, Maui has a serious shortage of beautiful women.

 
 
 
Comment by winjr
2006-10-05 07:48:20

Don’t bet on it. Maui home prices cratered in the early 90’s, and they’ll crater again. Nobody is in a hurry to buy those $600,000 sh!tboxes that were constructed 50 years ago with toothpicks and Elmer’s glue.

Comment by turnoutthelights
2006-10-05 07:50:38

Duct tape and spit…?

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Comment by winjr
2006-10-05 08:01:46

Yeah, that too!

 
 
 
Comment by DinOR
2006-10-05 07:54:38

Do you mean there are more wealthy people this time than there were the last time real estate in the islands crashed? How old are you anyway?

 
Comment by nnvmtgbrkr
2006-10-05 08:03:57

It’s alright Hopeful, you can come clean. How many is it? 1 or 2?…..3?….4?….5?…..Oh my god, 6? How many flips do you have sitting on the market right now?

Comment by DinOR
2006-10-05 08:23:34

nnvmrtbkr,

LOL! Now that you mention it……..

Oh and kudos on Tahoe/Reno for their “ranking in the spanking” column! You told us! (But would they listen……)

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Comment by auger-inn
2006-10-05 08:44:36

“ranking in the spanking”. Add it to the list! LOL.

 
 
 
 
 
Comment by Judicious1
2006-10-05 08:13:04

‘I think the market is going to continue to slow down in the single-family housing market,’ Mobbs said. ‘This is a pause that the market needs to take.’

Gee, you really think it will continue to slow down? Great insight Calvin.

The associations are all now saying this “pause” is much needed and actually a positive thing for the market. By next year they will begin to change this spiel as the agents and FBs begin to resent this “healthy correction” rant.

 
Comment by Bkiddo
2006-10-05 09:32:09

I live in Hawaii and yes it’s beautiful but good luck making enough money to relax enough to enjoy it.
Inventory is way way up, sales are way way down, but prices are sticking. Wierd. Who knows how long this will take. It’s a standoff between sellers and buyers, for now.
I know ALOT of folks who have refinanced their homes to buy HUGE SUVs, vacations, and other toys. They might lose their homes.
I think prices will fall by 10-20% and then stagnate for 10 years. That’s what happened from 1990-2000.

Comment by Hopeful
2006-10-05 10:05:41

The government encouraged this sort of behavior in order to save the country from the aftermath of the tech stock crash and the terror attack of the early 2000s. So why do you think the government will not do everything they can to help the folks who followed the program keep on enjoying the vaunted benefits of participating in the ownership society? I would be more nervous right now if I were a priced-out renter…

Comment by Lefantome
2006-10-05 10:10:50

Apparently you missed the BK law changes in 2004, and the tighter lending standards of 2006-2007. You’re on your own ….

Comment by Hopeful
2006-10-05 10:47:21

I doubt the BK law will be enforced as written — it would be much too harsh for sympathetic Americans to think their friends and neighbors are suffering at the hands of the banking industry.

And tighter lending standards? I keep hearing about “guidance” but not much evidence of action to tighten standards. Do you have any evidence lending standards are tightening?

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Comment by lefantome
2006-10-05 16:13:45

Great, the savior will be “no laws enforced”…..

Your friends and neighbors (and probably you) are suffering at the hands of their own behavior. The banking industry was simply the enabler.

And tighter lending standards? Your first day here?

http://www.federalreserve.gov/boarddocs/press/bcreg/2006/20060929/attachment1.pdf

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Comment by cactus
2006-10-05 10:54:17

The Government will risk crashing the dollar at some point. Of course maybe thats what they want because China owns so many dollars ? Crash the dollar and halve your debt? Of course you will have to double my pay……….

Comment by GetStucco
2006-10-05 18:53:14

It’s OK so long as the crash was unintentional…

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Comment by spike66
2006-10-05 11:12:02

“vaunted benefits if participating in the ownership society”?
Oh yeah, indentured servitude to a depreciating asset as we head into a recession…good thinking hopeful. I needed some laughs so thanks for showing up with your talking points…by the way, I hope you have every nickle of your money and your mother’s leveraged in real estate….just sit tight, ignore any insulting lowball offers and wait for your fortune to be made.

 
Comment by cactus
 
 
 
Comment by Catherine
2006-10-05 09:52:30

The math in Hawaii is the same as here on the mainland.
Sedona’s beautiful. Northern Virginia is beautiful. Idaho is beautiful. Hell, Phoenix is beautiful in the middle of January on a golf course. Everywhere there was mad dog speculation…”beautiful!”
A receding tide lowers ALL boats.

Comment by Hopeful
2006-10-05 10:03:09

All those places you mentioned are too cold in January except for Phoenix, which is hotter than hades in the summer. Math suggests there will always be more demand for Hawaii housing than places where the weather makes you want to stay in bed.

Comment by Catherine
2006-10-05 10:05:16

That’s why Vail, Aspen, Telluride are so cheap, I guess.

 
Comment by Paul in Jax
2006-10-05 11:05:50

I want a place I can drive to from the United States of America. I’ll consider Hawaii when they build a bridge.

I like that - nervous priced-out renter. A really dangerous situation to be in, coughing up $30 or $40 every day, instead of having the thrilling opportunity of losing 10 X that on a comparable property.

Comment by spike66
2006-10-05 11:21:20

I like this even better…”it would be much too harsh for sympathetic Americans to think their friends and neighbors are suffering at the hands of the banking industry.” Hopeful, do you see the neighbors in Colorado rushing to stop any foreclosures? No? Gee, welcome to reality. The owners of liar loans and the innumerate greedy fools stuck with toxic real estate loans can move into cardboard boxes for all I care.

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Comment by kaneui
2006-10-05 15:38:38

The local media is still lagging, as usual, when it comes to what’s happening in the current market–as quickly as things as turning now, reporting last month’s slowdown is already yesterday’s news. Here on windward O’ahu, new “for sale” signs are sprouting every day, and now I’m seeing long-standing signs with “reduced” tacked over them.

The luxury condo market in Honolulu will be an interesting watch - there at least eight high-rise luxury condo towers under construction, anywhere from 35-45 stories each, totaling just under 2,500 units, with most prices starting in the $400’s for studios or 1BR (and a few projects asking over $800/sf!) On top of that, the market is being flooded even further with investor units for resale in the recently completed towers.

But wait–this is Hawai’i, and “everybody” wants to live here, or have a second-home here! I figure many of those FB’s on the mainland running into trouble with their primary residences will also be looking to unload that 2nd home/condo here in the islands. Hang on for a rollercoaster ride, folks!

 
Comment by ray
2006-10-05 21:34:06

I believe the numbers are much worse than what they are now because the Honolulu Board of Realtor’s website (www.hicentral.com) changed ALL their monthly statistics including previous years to not show the breakdown of home sales by region, and other useful charts. What do you think they are hiding? We can only guess but I think our guesses are correct: Honolulu housing meltdown.

 
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