Adjustment “Just Starting” In Hawaii
The Honolulu Advertiser reports from Hawaii. “Hawai’i developers aren’t confronting ballooning inventories of unsold homes or falling prices like on the Mainland, but a few are offering special deals to keep the sales coming as buyer demand retreats.”
“Corinda Wong, (an) agent who’s been in the business 17 years, said she’s aware of a few new-home projects offering incentives. ‘I haven’t seen a lot,’ she said. ‘It’s just starting.’”
“At a 47-unit project in Makakilo, the developer last month ran a limited special giving buyers upgraded kitchen and laundry appliances, plus a two-point closing cost discount on loans through Towne Island Mortgage. Peter Aiello, president of Aiello Development, said the incentives were a response to 10 or 11 cancellations mostly from Mainland buyers.”
“‘That hit us hard, he said. A lot of Mainland (investors) have dropped out.’”
“To see incentives emerging at a few projects underscores the shift under way in the local real estate market that in the last few years had developers turning away buyers. Weaker demand is evident in O’ahu’s resale market, where sales of previously owned homes fell 17 percent in the first 10 months of the year compared with the same period last year.”
“Local developer Stanford Carr said some home builders were caught chasing the market too aggressively. Developers built homes at higher price points. But now with prices flattening, it’s harder to sell higher-end homes that aren’t affordable to the bulk of buyers. ‘It’s just an adjustment,’ Carr said of incentives.”
“The last time Hawai’i developers offered widespread incentives for home purchases was during the mid- to late-1990s market decline. During the market’s downturn, median prices for existing homes fell 21 percent for single-family homes and 42 percent for condominiums.”
“Market analyst Ricky Cassiday said developers regard price reductions as the incentive of last resort. ‘It’s blood in the water,’ he said. ‘If I wanted to boost my sales I’d be doing mortgage rate buy-downs and maybe things like flat-screen TVs.’”
‘A new report on O’ahu’s rental housing market has some good news for renters: the average rise in rates this year is the smallest in six years. ‘There’s not quite the shakedown that there was a year or so ago,’ said Jeff Forrest, a transplant from Oregon who recently moved into his fourth rental in two years on O’ahu. Forrest found a $2,200-a-month Hawai’i Kai house that’s roughly twice as big as a St. Louis Heights home he previously rented for $2,000.’
‘Fewer home sales have meant fewer rentals taken off the market. In some cases, difficulty selling homes is leading some property owners to rent units instead.’
anyone worried about the dollar and how it will effect interest rates and the housing bust?
That topic is frequently discussed here; possible outcomes range from ‘makes Carter-era rates look cheap’ to ‘house for sale; gold only, no dollar offers’. We are a pretty pessimistic bunch.
I wouldn’t say pessimistic, but realistic. Money is no different than any other commodity in the sense that its value is determined by supply and demand. It is different in that it is just a medium of exchange, yet other commodities in the states are “valued” based on mostly the US dollar. Most people will not realize it is losing its value until it smacks them upside the head. The smack upside the head doesn’t even have to come from people selling the dollar, just not buying as many anymore.
There have been issues that have made the dollar been sought after for a few decades. It has given us an opportunity to consume more than we produce while foreigners foot the bill. Whether that changes quickly, slowly, now, or five years from now is speculation. Our current trend is unsustainable, but perhaps others don’t feel the same way.
With a very low fixed-rate mortgage, I’m hoping rates skyrocket in the next few years. End the war on savers!
I have always wondered why you cant take your mortgage with you when you buy a new house, would seem like a good selling point for a lender. Want to upgrade? Sell your old home and take the mortgage debt with you. So, if rates do go up, i would still be able to carry at least a portion of y new mortgage @ my old interest rate.
mdmortgageguy - there is a mortgage out there that allows you to bring your mortgage with you - it’s called a portable mortgage. google it for tons of info.
when i researched it a while back, the rate was typically higher than a 30 year fixed. plus, you could only move once, which is too much of a limitation for me.
for the right person, i think it’s a great product.
The mortgage companies like collecting points and fees every time people move.
You mean like disrupting the carry-trade, deflating the MBS market, and sending mortgage rates sky-rocketing? Shhhhhhhh — bite your tongue.
“If I wanted to boost my sales I’d be doing mortgage rate buy-downs and maybe things like flat-screen TVs.”
Flat screen TVs quickly are becoming synonymous with toasters.
If he could boost his sales by giving away TVs he would be in the street throwing TVs at passing cars.
LOL
BHAHAHAHAHAHA!
Everyone wants to live in Hawaii. They aren’t making any more land in Hawaii. (Well, Mother Nature is, but homeowners will have to wait a few million years before a new island pops up just east of the Big Island.)
If there is one place where these cliches are valid, it would be Hawaii. And look at what we see.
The market here has many faces–the high-end seems to keep on rolling, as Oprah and Cameron Diaz just bought homes here on Kailua Bay for $24M and $16M, respectively, and the proposed Waikiki Trump Tower set a one-day world record this month with sales over $700M (we’ll see how many actually close escrow once they see how much the market has fallen in the next 2 yrs. before it’s complete.)
On the other end, for-sale signs are sprouting everywhere, and many broker open houses on weekends where there were none before. Yes, we’re a bit behind the mainland, but once the investors/second-home buyers start unloading their properties here, prices will begin to fall again.