‘Supply Is Expanding But Demand Is Not’ On Oahu
Some reports on falling prices in Hawaii. “Some 332 single-family homes and 584 Oahu condominiums changed hands last month, compared to 418 single-family hones and 754 condominiums a year earlier, according to statistics released yesterday by the Honolulu Board of Realtors.”
“The significant drop in sales transactions also has been linked to the 5 percent or so drop last month in median prices for both houses and condos. Oahu’s median single-family home price fell to $615,000 in April from $650,000 in March. Condominium prices fell to $296,500 in April from $312,000 in March.”
“For the full year, prices are expected to increase between 10 percent to 15 percent, said Harvey Shapiro, economist at the Board of Realtors. ‘We’re still on our way up,’ Shapiro said, though an increase in the number of homes for sale combined with a rise in prices and interest rates is expected to create further slowdown in the marketplace.”
“Last month, 1,644 single-family homes were on the market, more than double the 814 that were listed in April 2005. The number of condominiums that were on the market last month, 2,278, was nearly 2.5 times the inventory recorded during the same period last year.”
“‘The market is a supply and demand model and right now supply is expanding but demand is not,’ Shapiro said.”
“Some in Honolulu’s real estate industry blame April’s dampening in home sales on the rain. While weather could have played a factor in the market last month, it’s unlikely that it could have been responsible for such dramatic fluctuation, said (broker) William S. Chee. ‘I’ve never heard anyone here blame the real estate market on the weather, that sounds like something you’d hear from a much colder climate,’ Chee said.”
“Honolulu’s residential real estate market has been cooling since last October, he said, and sales are expected to continue softening with prices appreciating at a slower pace.’
“Experts say home buyers are finally gaining an edge. The saying goes that patience is a virtue, and for home buyers, patience may finally be paying off. ‘You can’t just put anything at all on the home and ask any price you want to like you could a couple years ago,’ says Mary Flood, Honolulu Board of Realtors president.”
“A property in Makiki Heights has been on the market for five months. The owners, who live in Virginia, were originally asking for $1.2 million. The price today for the four-bedroom, three-bath property is $988,000. Industry insiders say there’s plenty to choose from, especially new condo projects.”
‘You can’t just put anything at all on the home and ask any price you want to like you could a couple years ago,’ says Mary Flood, Honolulu Board of Realtors president’
People will likely look back on such statements and ask, ‘how could that not seem unsustainable?’
“Experts say home buyers are finally gaining an edge. The saying goes that patience is a virtue — and for home buyers, patience may finally be paying off.”
An edge? Paying off? I wonder how many buyers are falling for this BS. In hindsight they will realize the “edge” was just beginning to surface.
These “experts” and reports are using the same ol’ psychology….basically saying that it is still the cat’s meow to buy a house. They still put the onus on the buyer…to have patience, to time the market, to not be stupid and let opportunity pass you by!
When these “experts” finally come out and lay this at the feet of the SELLERS…that’s when the psychology will change to something more reasonable…like, price your home to sell at a reasonable price and don’t buy what you can’t afford.
I’m sure that these same experts said it was a buyers market in 1990.
Ask the people who purchased homes then and had to sell them 5 years later how good it was to be a buyer. How could it be good to be a buyer at the top?
Yup-Last night the Boston news ran a segment that had some woman crowing about the “$50k” she “saved” in a just completed home purchase.
Duh…hey, lady MA NAR is cookin’ the numbers.
They report homes sales up 2% YTD, but independant reporting agency the Warren Group in Providence RI says numbers are down 8.4%.
So what else has your Realtor lied to you about today???
CATCH THAT FALLING KNIFE!!!!!!!!!!!!!!!!
She’s be underwater triple digits in 2 years.
10 Y AT 5.17%
How long before the fundamental implications finally catch up with bloated Wall Street stock prices? Do we have to wait until October like back in 1987?
Maybe October 1929??
Ben, Just did a quick scan of your “Money and Metals Link” I’ve got to start reading that one too but Get Stucco’s post made me wonder if anyone from this blog had started a Market Blog regarding Dow (or others) Would be interesting to poster’s thoughts/comments on that too.
“compared to 418 single-family hones and 754 condominiums a year earlier”
Single family hone? I’d say. Freudian slip?
I just love bubble news from far flung places. It speaks volumes as to just how far out of control this thing has gotten. Back in 2000 I’d seen an ad in the Oregonian where some poor guy that paid 12K for a lot on the “Big Island” in the late 80’s and was offering it for 1.2K. I thought it must have been a misprint so I called the guy. Turns out it had sold but he said there were plenty just like it. Fast forward thru 9/11 and a bubble that just didn’t seem to want to stop and these lots punch through the 12K and well beyond. Now an “ice” infested back water becomes a “paradise” anew. Most of the lots were left vacant after their last bubble broke when the Japanese pulled out. Guess what? They are still mostly vacant lots sold “as is” and they’ll be there ready and waiting for the next bubble.
Longer than most posts but shorter than Mitchner!
Interestingly enough, when rapidly expanding supply results in falling prices, demand can actually contract in response, violating the laws of economics which are taught in undergraduate microeconomics courses.
Actually, if you think about it, it makes perfect sense, as people will wait for the price drop to end. If you can get object x today at $5, but wait a day, and get it for $4.50, would you not wait, unless it is a life or death scenario?
This doesn’t violate any laws of economics. More people have been treating housing as an investment. When investments are going up 10-20% a year, higher p/e’s are justifiable(peg). When shrinking, the higher p/e’s are not justifiable. This means that as an investment goes down in price, the demand actually goes down lower.
I said “he laws of economics which are taught in undergraduate microeconomics courses.” The qualification makes all the difference…
Even in those classes (mine anyway), it was drilled into us that quantity demanded and demand were two very different things. The demand curve for housing is still upward sloping, but it has shifted to the left due to new information (interest rates, insurance premiums, expected return on investment etc).
- The demand curve was downward sloping in my classes.
- But I agree it has shifted to the left for the reasons you cite.
You guys are too funny! Which ever way the demand curve is sloping it don’t make a lick of sense. What’s amazing is how people think they’re buying more of a house because they buy with a low interest rate and that some how makes it okay to over pay. It doesn’t make sense to most to buy at a lower price with a higher rate, but to me it does because there’s more upside potential.
There are no laws of economics. None.
There are no laws of physics. None.
There ain’t no laws of grammar. None.
There are no laws of mathematics. None.
1+1=3
Loser = Noun = FBs
Lose = Verb (as in I will lose my house when my ARM resets)
Loose = Not tight, as in recent lending standards
There are some rules of grammar!
Taxes.
I went so far as to call a local realtor there in the “Puna District” and he assured me that had you went to the trouble of building a house there it would surely be broken into AND vandalized. The drug problem (even in 2000) was out of control. Can’t even imagine what it’s got to be like now. Still it’s my weakness to love HI. Spent time there in the service and it’s much closer than than the P.I and no need for a passport. Problems persist and they seem destined to continue to be at the whim of outside “investors”.
This earthquake and tsunami warnings isn’t going to help either.
What a joke… when I lived on the Big Island in the 80s, lots of people were buying “lava lots” for $5000.00. No dirt Just lava, and miles and miles from anything. Only industry in Puna is Papaya plantations, and pot growers. “No tourism on Puna side Bra”
Puna district on the Big Island not a good place to raise a family. I live in Honolulu and we definitely stay away from Puna if we ever visit that island. Never venture there if you do not have some sort of relatives living in the area.
You also have to account for volcanoes on the Big Island. Kapalama gardens was a hot real estate market at one time until it was demolished by an active volcano.
One thing to note is that there are so many out-of-state people, or I rather call them fools, that buy these properties.
down 10-15% is already in the cards bro
LAND prices- good topic
usually they move 2-5 times the SFH price
got any ?
The big Wall Street builders do — watch those inventory items on their balance sheets over the next five years if you want to see what Liareah means by “the air leaking out of the balloon”…
Tsunami. This should increase sales in HI
OT: USA Capital update
http://www.reviewjournal.com/lvrj_home/2006/May-03-Wed-2006/business/7172527.html
I find it interesting that whenever there is a blip in RE data, the Real Estate Industrial Complex blames the weather.
sounds like DC
http://www.dcbubble.blogspot.com
I lived in the Puna district for five years, and it’s not as bad as a lot of folks here on O’ahu and elsewhere seem to think. However, along with the lower prices, be prepared for a lack of infrastructure, high rainfall, and the growing noise from the coqui frog infestation. (On another note, Hawaii does have a decent tsunami warning system, unlike much of SE Asia, Tonga, etc. )
But even in relatively inexpensive Puna the real estate bubble is starting to turn. Just talked to a friend today from there who works in construction, and he was telling me about someone who recently built seven spec homes in the area, and not one of them has sold yet.
Also, Puna is not the place to buying land or houses sight unseen, since the quality of construction varies widely and there are a lot of unpermitted structures, as well as numerous homes and lots in areas susceptible to volcanoes.