“How Low Can It Go”: Hawaii
The Star Bulletin reports from Hawaii. “This time last year, real estate watchers were scratching their heads wondering just how high the market could go. Now the most popular question is, ‘How low can it go?’”
“The median price paid for a single-family home on Oahu slid 4.8 percent in November, which marked the first year-over-year decrease in home prices since the market took off in the late 1990s, according to the Honolulu Board of Realtors.”
“The situation was the same on Kauai and the Big Island last month, as the once-frenetic real estate market finally saw prices headed groundward.”
“The good news: It looks like a soft landing. Bank of Hawaii Economist Paul Brewbaker still says, ‘This ain’t no stinkin’ bubble.’”
“Scott Higashi, VP of sales for Prudential Locations LLC on Oahu, agreed: ‘We’re still nowhere near a monumental fall in value. During this cycle, we don’t expect to see any double-digit rises or falls.’”
“‘The change in sales volume is more dramatic, Brewbaker said. ‘We have 25 percent less trades on Oahu than there were two years ago, which means either one out of every four Realtors needs to get out of the industry, or that everyone has to make do with less business,’ he said. ‘Either way, that’s not good.’”
“The November 2005 median was $640,500. Last month, Oahu buyers paid a median $610,000 to purchase a single-family home. They also bought 19.9 percent fewer of them.”
“Kauai’s single-family home sales decreased 20.5 percent from the previous November and condominium sales declined 60.94 percent during the same period, according to data released yesterday. The median price paid for a single-family home on Kauai fell 14.43 percent to $590,000, a decline of $99,500 from November 2005. The median price paid for a condominium fell by 9.53 percent to $415,240, a drop of $43,760 from the prior year.”
“On the Big Island, more than half of single-family home buyers paid at least $370,000 for a single-family home; that’s a 3.65 percent drop over the previous year’s $383,999 median. The median price paid for a condominium fell 10.07 percent to $335,000 from $372,500 in November 2005.”
“The Big Island’s single-family home sales fell about 32 percent, and condominium sales fell about 66 percent in November.”
“‘The soft landing is good. It means we all get to be humans again,’ said Mary Begier, who owns Mary Begier Realty on Oahu and the Big Island.”
The Honolulu Advertiser. “Has O’ahu’s housing market turned? A five-year, three-month string of rising prices was a long and ultimately unsustainable run, but industry analysts said it’s too early to say whether a substantial decline in residential real estate values is coming.”
“The median price for previously owned single-family homes last month was $610,000. That was down from $640,500 in November 2005. Last month’s median also was the low for this year in which monthly medians had previously ranged between $613,500 in February and $668,300 in May, a record.”
“The last time the single-family home median sale price declined in one month compared with the same month a year earlier was August 2001, when the price eased 0.6 percent to $307,000 from $309,000 a year earlier.”
“That was shortly before O’ahu’s real estate market went on a tear, with single-family home median prices rising 12 percent in 2002, 13 percent the next year, 21 percent in 2004 and then 28 percent last year.”
“Doris Sullivan, a Kailua resident who put her Coconut Grove home on the market in February, has seen the softening market unfold.”
“Sullivan said real-estate agents initially suggested she list her house for $769,000 to $789,000 based on what comparable homes were selling for. After hosting a lot of lookers but no takers, Sullivan started lowering her price.”
“The house sold in September for $650,000. ‘I think the market had a big effect on the sale,’ Sullivan said. ‘It’s just frustrating. Great for buyers because with the glut of homes on the market, they can pick and choose.’”
“The good news: It looks like a soft landing. Bank of Hawaii Economist Paul Brewbaker still says, ‘This ain’t no stinkin’ bubble.’”
It ain’t stinkin’ — it’s imploding.
Paul might be seeing the new “Hawaii 5 0″ as in condo prices down 50% in the next 5 years. Ain’t no soft landing for RE, Paul. You have been drinking too many Mai Tai’s and sitting in the sun too long.
But it is diffrerent there!!!
After those hotel workers and surf-shop salesmen plunk down their $122K down payment (20% of the $610K median in Oahu) it’s an easy $2900/mo payment on their salaries. Because everything in Hawaii is more expensive, they all make $10K/month and can easily afford the payment.
See, there ain’t no stinkin’ bubble.
I gotta say it only since this thread pertains to Hawaii….
“But everyone wants to live here”
See, everywhere is different, and everyone wants to live everywhere. Therefore there is either (1) no bubble, or (2) a bubble everywhere. Or both.
Yeah, I’ve often wanted to live everywhere myself. But you can’t lose money on real estate in Hawaii - just ask the Japanese.
“Therefore there is either (1) no bubble, or (2) a bubble everywhere. Or both. ”
This was a question on the December, 2001 LSAT wasn’t it?
“I’ve often wanted to live everywhere” — I’ve recently been living everywhere, and it’s a little hard on my auto. This year’s car maintenance about 1/3 the price of a new one. Living everywhere, though, gives me a good sense that the bubble is everywhere indeed. This evening I dined with an 80-year-old in Chester County PA. He has unfortunately just bought a 2/2 SFH to replace his 3/3 SFH, without first selling the 3/3. Oh dear. He is asking $547K for the 3/3. He says it’s very desirable and he’s not worried. He is a friend of mine, so I will know what happens in this case. He paid $350K in 2002. He says he’ll settle for $530K, my guess is he’ll end up settling for under $500K. I didn’t say so.
Hawaii is dropping a bit later than the other (previously) hot markets, but it could be the one that picks up most speed. All the mainland babyboomers might rush for the exit, now that their second home isn’t such a great investment. How low it will go depends on the Dollar. Hawaii is probably the #1 choice for non-US buyers.
Hey all the Japanese can take their way-above-average savings and buy real estate in Hawaii. Just tell them “it’s different there!”. That way they can double dip. Dip for 10 years in Japan, and then dip for 10 more in Amerika. Maybe we’ll get some of that Honda/Toyota money back.
They took all their savings and bought HI real estate in the late 1980s, but it did not work out very well as I recall…
In currency-adjusted terms, Japanese people buying Hawaii real estate probably didn’t do too all that badly, as long as they sold around 1994-95.
Guam was really a bust for the Japanese but the Chinese seemed to have picked up the beach hotels for half the price afterwards.
“The good news: It looks like a soft landing. Bank of Hawaii Economist Paul Brewbaker still says, ‘This ain’t no stinkin’ bubble.’”
Went for lunch with a mortgage broker friend today… wow! The whole industry is going down kicking and screaming that there is NO BUBBLE!
I asked him “As a broker, would you rather have a boom period followed by a bust period, or would you rather see steady slow growth?”
His answer was unbelievable. “I’m greedy, I want it to always boom!”
He didn’t have one bearish thing to say, still believed the market was going to go up and I even made him a bet that condo prices would drop 10-15% within 2 years.
I figure I’ll be getting my new authentic football jersey by spring!
Better yet, the loser should wear the other guys jersey to work …. all day.
That’s way more painful. Especially if the loser is a Raiders fan. They hate that …. often.
““‘The soft landing is good. It means we all get to be humans again,’ said Mary Begier, who owns Mary Begier Realty on Oahu and the Big Island.”
Realtors are so full of it! I sure hate to see those mid-aged ladies with the big bow ties get all sweaty and bothered from the bubble-talk which about to explode on them.
Those are hot flashes. Brits [wisely, I learned] shipped their pubescent teens off to boarding school, a practice I once thought heartless. For lack of time in this day to fight off the flames were I to project this idea to the hot-flash brigades, I’ll fold my tent with just my initial observation.
I just moved to Kauai, and have been tracking RE on the island
casually for years, but in more detail starting this year. Inventory
is up, rents and prices are coming down, sound familiar? Had
thanksgiving with an RE agent who advised a friend of his that there is no reason to buy now, wait 3 or so years. I’ve looked at
the stats in the local magazines hawking RE here and they torture
the numbers here. Sold listings show days on market of almost
a year and only a couple percent off the list? Yeah right! I’m on
the job here now, I helped get out the word about San Diego
in 04-05, and I’m here to do the same for Hawaii. All the locals
drive super jacked up trucks, I’m guessing some MEW money paid
for those.
one more observation: land here is particularly mispriced. Do I want half an acre for half a mil or the same with a house for an
extra 50K? That tells you who were the last buyers - retirees
building or buying their dream from a builder who was trying to
get rich off the boom. Game over.
can someone help me?
Is there a difference between being underwater or drowning?
Yea — first you go underwater, and then if you stay there long enough, you drown.
lol
We need to stop asking ourselves when will it hit bottom and start a list of what will happen to balance the supply/demand equation. When supply and demand are normal and balanced, we will have hit bottom. So what will happen to cause that and when will that be ?
A possible sign of a bottom is when the time houses stay on the market shrinks from six to nine months down to, what? Two or three months? What is a “reasonable” period for a house to be marketed?
When the average transaction is executed in a reasonable time frame that should indicate buyers expectations and the prices being set (and accepted) by sellers are reasonably in balance.
Were I selling and not getting offers I’d hope I’d do what Doris Sullivan did (but faster). I have a feeling she’s going to be pretty happy she accepted reality and took the price down 15% in a couple of months. Better 15% less now than 100% of no transaction at all for a few years, no?
Isn’t that what’s going to happen to many of the deluge of sellers in the spring who “refuse to give the house away”?
It’s so funny to read the commentators say things like, “that just means houses are taking 6 months instead of 3 months to sell.” I’m talking about the boobs quoted in the MSM. I would say a house on the market for 2 - 3 months is terrible. Having it on the market for 5, 6, 7 or more months is unimaginable.
Living in a house that is for sale is a wretched experience. You can’t really live in it. You hide anything that might be fun. You get rid of your pets. You find that you are vacuuming constantly. Everything has to be spotless so it looks staged. You have to leave the house at any time so that some showing can happen that might not even take place. You don’t sleep well at night. You worry about selling it constantly.
I believe in pricing a place right. We sold a townhouse 4 years ago in 8 days. My wife gave me the, “we gave it away” line for 2 years because we got $2,000 or so less than we probably could have. In her defense, she is sensible on money 95% of the time. The dollar value of that stress we didn’t experience had to be ten times as much. I shudder at the thought of a house on the market for anything approaching a year. Anything over 1 month is too long. Price it to sell, not to completely disrupt your life.
From what I hear the houses are indeed on the market for many months, but there’s no need to clean or vacuum or fret about staging — NO ONE is coming. For sale signs are just lawn ornaments. If people were actually looking and they didn’t make an offer — they would know to lower the price. Right now they’re in limbo thinking the market is “dead”.
Your so right NYCBOY ….It’s not fun selling a house when your living in it and I hated every minute of it .
Agree with NYCityBoy. My houses were sold (a) in 1981 in 3 weeks after about 6 showings, (b) in 1996 in 30 days while I was away on a trip, after 30 showings, (c) in 2006 in 3 days after 1 showing. Case (a) was the most uncomfortable. Case (b) I got the many showings by bribing selling agents with a bonus. Case (c) was the most comfortable and I Gave The House Away happily (broke even).
I think that a lot of people would agree a “normal” /equilibrium market would produce a contract within 90-120 days. Push it to 60-120, maybe.
Someone here (or maybe another blog) said that when everybody you know is cursing real estate as the worst investment ever then, we’ve hit bottom.
Is there a bubble anywhere? Anywhere? I mean, prices up triple digits in 3-4 years? WTF?
Seriously… and yet the MSM interviewers rarely if ever call these halfwits on their nonsense. If a doubling of prices over a few years with no corresponding adjustment in either incomes to pay those prices or rents to cover the mortgages is not a bubble, then what exactly would qualify?
It totally agree with everything you said, especially the MSN interviewers not calling the halfwits. Good line !
It’s hard for a halfwit to call another halfwit a halfwit when both parties are halfwits.
halfwit X halfwit = quarterwit
Great philosophical question: Can two people who know nothing know less than one person who knows nothing?
And they are unhappy about it !?
“The house sold in September for $650,000. ‘I think the market had a big effect on the sale,’ Sullivan said. ‘It’s just frustrating. Great for buyers because with the glut of homes on the market, they can pick and choose.’”
If the median is now at 610k and Sullivan sold for 650k, I wouldn’t imagine here house was worth any more than …. Oh, say about 330k in 2001 (307k median). Gosh Doris, that is frustrating.
But Doris deserves to make as much as she can.
Right, just five years ago the median price in HI was a full one-half of what it is today! And yet still they run around proclaiming it is not a bubble! Jeez, how much Kool Aid did you drink today?
I know for a fact that salaries on Oahu did not double during this period, and there is no way in hell the average family there can afford $600K. I just want one Hawaii realtor to tell me of another time prices doubled in just 5 years. Maybe the Japanese bubble in the late 80s/early 90s? Just look how well that turned out, as many here already know! End the insanity now!!!
Spot on! Also, there are not that many great jobs there. Most workers I see make less than $15 per hour. No way they could afford 250k, let alone 600k…..
Slightly OT. Our neighbors son works in construction. He went to Oahu about 5 moths ago to work on condos. I couldn’t believe what they paid him, it was something like $60-70/hour. He had his truck and tools shipped there. Now this is not an argument that the average Hawaiian salary is high, rather an indication of how much of a bubble there is.
I wouldn’t want to insult any Hawaiians, but honestly, you’ve got to be retired and not have much interest in anything other than staring at the ocean. It’s my favorite place on the planet to visit, and I’ll admit I would love to own an oceanfront condo there, but I couldn’t imagine (translation, couldn’t afford) paying any more than the 2000 price tag. Going there next June, and can’t wait, but there is just too much activity on the mainland for me to ever make it the “permanent home”.
Yeah, and anywhere that’s not Hawaii is a real long plane ride, and not one I’d want to do repeatedly in coach.
“And yet still they run around proclaiming it is not a bubble! Jeez, how much Kool Aid did you drink today?”
Unfortunately, they spiked the water supply here with Kool Aid. I live on Oahu and the amount of brainwashing that goes on here is unbelievable. There are tons of new realtors and they all convince their family and friends that it’s a great time to buy a $600K+ house because otherwise 1. They will be priced out forever after the (substitute Japanese for Chinese) buy up everything and drive the prices up, 2. They are not making more land and 3. Everyone in the world wants to live here and are willing to pay 600K+.
Reality will set in fast and the locals will be surprised. I’ve been watching properties on Oahu almost daily since January and have seen $100K+ price reductions. Much more to go but we’ll get there eventually.
A lot of locals there have two or three jobs to make ends meet as I have been told when visiting Hawaii.
You are 100% correct, Ray. My folks have a house on Maui (bought well before this bubble and it was a BIG renovation) and I was stationed on Oahu for two years. The vast majority of people there are service industry, catering to tourism. These jobs do not pay well. Working for Safeway with $15/hr pay and benefits is a pretty decent job in HI.
C’mon! Dog the Bounty Hunter must be raking it in busting meth dealers.
No clue about salaries or prices today, but in 1974 I dickered with a Honolulu employer about a job there. It paid $85K, an extraordinary amount (in my world) at the time. But when I researched the price of housing and living, I dropped out. A huge percentage of the housing for sale was on leased land (the Bishop ? estate). Hawaii is different, though maybe less different now than then.
But prices always go up. I mean “they’re not makeing any more land”.
(Except for on the island of Hawaii)
Uh, they are making more land in Hawaii. Unfortunately, it’s flowing downhill into the sea and is too hot to build on
But every 100 years a big chunk slides into the ocean. I would never buy real estate on big island.
Another exception - you’ve got that global warming thingey going, which means that the new land created by Hawaiian volcanos must keep apace of the rising Pacific.
“Observers pointed out that the November 2005 price was the high for all of last year and was going to be tough to beat this year.”
When did they point that out? A year ago? Or yesterday?
Another insightful statement from the Honolulu Advertiser:
“Sullivan said real-estate agents initially suggested she list her house for $769,000 to $789,000 based on what comparable homes were selling for. After hosting a lot of lookers but no takers, Sullivan started lowering her price.
The house sold in September for $650,000. “I think the market had a big effect on the sale,” Sullivan said.
Let’s take that one again: “I think the market had a big effect on the sale”. Sullivan, I think you’re right.
Honolulu Advertiser… I just noticed that. Is that really the name of a newspaper that, like reports on stuff and runs editorials? Reminds me of the Springfield Shopper.
That is the most accurately self-descriptive newspaper name that I have ever seen.
Ha! Did not catch that on my quick read-through. That is a truly brilliant observation as you have pointed out, Tom! Boy, some of these realtors are scraping the bottom of the barrel when it comes to brains.
‘We’re still nowhere near a monumental fall in value. During this cycle, we don’t expect to see any double-digit rises or falls.’”
‘The median price paid for a single-family home on Kauai fell 14.43 percent to $590,000′
Oops.
“The good news: It looks like a soft landing. Bank of Hawaii Economist Paul Brewbaker still says, ‘This ain’t no stinkin’ bubble.’” and Brewbaker said. ‘We have 25 percent less trades on Oahu than there were two years ago, which means either one out of every four Realtors needs to get out of the industry, or that everyone has to make do with less business,’ he said. ‘Either way, that’s not good.’”
Now Mr. Brewbaker, which is it—good or is it bad. I guess when it’s your ass that get kicked it will be a bad thing!
“The good news: It looks like a soft landing. Bank of Hawaii Economist Paul Brewbaker still says, ‘This ain’t no stinkin’ bubble.’”
Now what else could we expect from an economist?
And the Bank of Hawaii actually pay the person……..
I wonder how he would like the egg on his face…….boiled, fried…. or maybe scrambled to match his grey matter.
Ben, ya gotta save this classic.
How do I get that job? Bank of Hawaii Economist. What could the job responsibilities possibly be? You sit around for five or six hours, spouting the same insipid platitudes everyone on the mainland does. You can prolly freely plagarize off folks at real banks becuase of the time zone difference and because nobody really cares what anyone in Hawaii does. Maybe once in awhile you go down to vault to count all the pineapples in reserve. Then at 3pm you hit the surf. All on a salary that can afford a median-priced Hawaii house.
Hey, I know a few things about economics. I’ve taken economics courses, I even read The Economist. Hey, it’s still business hours in Hawaii, where do I send my resume?
I know! Are there any hedge funds in Hawaii? I’ll trade for free!
Answering your question seriously… as it turns out, there are. People (not just here) like to bash HFs a lot nowadays, but 99% start out as one or two guys who made their money elsewhere and just got sick of whatever I-bank or trading floor they were at. Once they get up to a certain size they can be anywhere they want, and in addition to places such as Jackson, Tahoe, Monterrey, Bermuda and Grand Cayman, it turns out people do want to live in Hawaii.
I know. I’m a defacto one but not official.
Actually, Hawaii is kind of tough because you generally want to be in a time zone close to that of the market you’re trading in. If you’re split between US and Asia/Australia it makes a good base.
No problem. I”m an early bird. Get up at 3:30 - 4 a.m. anyway. What’s another hour?
Yeah, that’s my attitude with working West Coast market hours too (get in 6am or so). Also, no traffic at 5am!
I’m not just thinking HFs; I’m lumping boutique private wealth mgrs and consultants and such in there as well. I did send a couple resumes out there, never heard back.
I loved trading in Hawaii. Up at 5, watch the market with a couple cups of coffee, and then surf in the afternoon.
“How do I get that job? Bank of Hawaii Economist.”
Main job requirement: Learn to lie like Lereah.
Having used Bank of Hawaii while I was stationed there, I have to say that they are not an impressive group. Maybe the guys sitting way up high in the corner offices are an exception, but I wouldn’t hold my breath. That is too funny, a BOH economist.
Reminds me of beach doctors. Think they’re here to practice cutting edge medicine? No way, Mohamed, they’re here to surf first, work second. Go inland for your surgery.
““The good news: It looks like a soft landing. Bank of Hawaii Economist Paul Brewbaker still says, ‘This ain’t no stinkin’ bubble.’”
Riiiiiiight. The homes I watch on Maui have almost tripled since 2000.
Respectfully, my wife has an economics degree magna-cum-lauda or whatever. I make 3 times what she makes without a degree… She is a brilliant woman when she focuses and academically…
We can’t have intelligent discussions about economics so I come here and to Mish’s blog for my “brain food”.
Sounds like your place is as cold as mine, one degree. If it gets so bad we can’t stand it, we’ll go over to txchick’s place to warm up.
test
test again
you passed
C-
Still better than “C-plus August’s” grade.
It’s not a duplicat comment computer,…
Respectfully, my wife has an economics degree magna-cum-lauda or whatever. I make 3 times what she makes without a degree… She is a brilliant woman when she focuses and academically…
We can’t have intelligent discussions about economics so I come here and to Mish’s blog for my “brain food”.
It won’t let me post anything else, is the government censoring my comments??
Respectfully, my wife has an economics degree magna-cum-lauda or whatever. I make 3 times what she makes without a degree… She is a brilliant woman when she focuses and academically…
We can’t have intelligent discussions about economics so I come here and to Mish’s blog for my “brain food”.
I think I might be getting censored…
no cusswords or anything, I think I am being censored, what gives??
caught be the spam filter I assume. Ben will probably push it through when he goes through the comments.
(to change repeat thing) Respectfully, my wife has an economics degree magna-cum-lauda or whatever. I make 3 times what she makes without a degree… She is a brilliant woman when she focuses and academically (to change repeat thing)…
We can’t have intelligent discussions about economics so I come here and to Mish’s blog for my “brain food”. (to change repeat thing)
Ok ,I will bite …..Why can’t you have intelligent discussions about economics with your wife.
If she’s at the postgraduate level, it’s probably the same as it is in every other discipline: there are only about five or 10 people in the world practicing her speciality, and they are capable of conversing with and understanding only each other.
I think it may be because he repeats himself ad nauseum.
LOL
I got to LOL at that one to
I read here the other day that women are weak at math and logic…maybe that’s got something to do with it?
Just kidding - my wife’s a programmer and a math wiz.
Wiz - LOL.
Poor Bryan, I’ve had this same experience, post the same thing many times, it doesn’t show up, suddenly they all show up and you wish you had waited a while.
I’m almost ashamed to live in Hawaii. With Mr. Brewbaker’s, I don’t think I will keep my money in Bank of Hawaii (BoH) any longer. Those statements are an outright lie, or he’s really naive, or perhaps a total optimist.
The market on Oahu skyrocketed, and if you do tax seaches on property sold in Hawaii (residential), the prices are TRIPLE from what they were in 2003.
I realize that banks need to keep all the boats floating, but geez!
He did make a statement in 2003 that he anticipated the median price to hit $600K, and HE WAS RIGHT. However, I think he’ll be entirely wrong going down the other way..
“I’m almost ashamed to live in Hawaii. …”
I used to feel that way but I just got used to since I’ve been following the real estate market. These “industry experts” are all for the money. They do not care about the little guys that will lose money in this downturn. I’ve been to two real estate bust in Hawaii and it’s very ugly. Those people who save money to buy a house end up losing their savings. It’s not ohana anymore. It’s about greed.
There will be a day again that you can buy a home in Hawaii for a huge discount maybe 20-40% off. Duringthe last bust, my neighbor at that time bought at the peak for 250K and price went down as far as 150K and today its only worth around 310K. That’s how long it takes to get your money back.
“Soft landing….market stabilizing…..” - a few more buzz words to avoid the truth of the tanking prices here in paradise.
On a more humorous note, a well-known Japanese billionaire has been buying up multi-million$ homes in Kahala (Honolulu’s priciest area) and will be renting them out to low-income Hawaiians at far below market rents. When asked how he thought the neighbors would react, he replied, “Most of these people have enough money to live anywhere in the world, so they can move elsewhere if they don’t like it.” (I can already hear those neighbors speed-dialing their attorneys–hope this guy’s ready for a few dozen lawsuits from these folks who aren’t gonna take this lying down.)
Anyway, it would be cheaper for this guy if he just just bought up the whole Waianae coast and rebuild all the housing there, and everyone would be much happier. Ah, the land of aloha!
Idoubt that Tantalus, Roundtop Drive, Kahala …will crash and burn. The Chinese will descend on the islands soon. So what you will, but, more than a few areas are still magical.
Do you really think the Chinese are that dumb? But just drive around the neighborhood that you mention if there is any pattern of foreigners. When the Japanese almost bought the whole island, –a little exaggeration — then had to sell most of the property for a loss. Japanese used to own many of the Waikiki hotels but not anymore.