‘The Euphoria Is Gone’ From Hawaii’s Housing Bubble
The Star Bulletin reports on Hawaii’s housing bubble. “The start of the New Year saw a continued lag in Kauai’s housing market. The pace of house sales declined 34 percent, with as few as 35 homes changing hands. ‘It’s more of a realistic market, which ties in with the national vibe of people buying hybrids not hummers,’ said Jimmy Johnson, broker in Kauai. ‘The euphoria is gone.’”
“Almost every category of Kauai’s residential real estate has changed into a buyer’s market, Johnson said. ‘If a property is overpriced no one will look at it: There are too many other available properties.’”
“While seller’s cannot command the ‘dream on’ prices of the past, Kauai’s home values are still strong, Johnson said.”
“On the Big Island, the number of single-family home and condominium sales dropped last month. Single-family home sales fell 25.3 percent to 142 in January, while condominium sales fell 31.5 percent to 61.”
“Buyers looking for Big Island properties aren’t showing the frenzy of the previous year’s market, Paula Beamer said. ‘A lot of our buyers come from the mainland and live in markets that are slowing down,’ Beamer said. ‘Buyers aren’t showing nearly the hysteria they did last year. They aren’t in such a great hurry to put an offer on the table.’”
“Home values haven’t dropped as a result of the change in the market, but returns on investment aren’t strong enough to support the speculation that was going on in 2005, she said. ‘We’ve lost the flippers,’ Beamer said. ‘These days, it’s difficult to buy a property and see the value double in a matter of months.’”
The rolling bubbles other side seems to be shown in this article…
All is well until the epicenter of price increases is not longer increasing.
The rolling bubbles other side seems to be shown in this article…
All is well until the epicenter of price increases is no longer increasing.
I tried to find monthly price/inventory numbers, but no luck. Prices are likely falling if inventory is growing. I did check the Hawaii Information service referenced, and a search returned 299 properties ‘reduced.’
/delurk
I’m not surprised at the Hawaii bubble popping, because the local economy can’t sustain those kinds of housing prices. A tourism-based economy isn’t exactly known for high wages. There are only so many wealthy retirees, second-home buyers, movie stars and trustafarians able to buy overpriced homes in low-wage areas.
where are the people who insisted that there was not a national housing market, therefore there could be no national bubble. seems like we’re getting the same stories from all over the country
I think thats because it is more of a liquidity/lending bubble rather than a typical housing bubble.
Oh, man. Kauai is my ultimate fantasy destination. I’d kill to live there. Bring on the crash.
Hawaii is an interesting barometer of global trouble in housing…a very large part of Hawaii sales are from foreign Asian (mostly Chinese for the past few years) investors. The Chinese control a huge part of Waikiki and much of the luxury market. An indication that this housing decline is much larger in scope than US urban markets.
Very good point Catherine. Hawaii got hammered when Japan’s real estate market crashed. There were alot of Japanese investors in Hawaii and they were forced to sell for losses because of liquidity issues etc.. Hawaii is vulnerable to not only the US mainland but also to parts of Asia because of the the foreign investors.
“Home values haven’t dropped as a result of the change in the market…”
Yes, they have. The “value” is simply what other people are willing to pay for your house. If sales are down, and inventories piling up, then the market clearing price has dropped. Just because a house owner doesn’t reduce the selling price, that doesn’t mean that the price at which the house will sell hasn’t fallen.
OT but important….
Today, eleven homebuilders were treated identically in the stock market. All started the day falling off rather sharply. Then at 10:02 precisely, an “angel” appeared and lifted all eleven from their low of the day. They rocketed up to their high of the day in about 30 minutes. Thereafter they have been drifting back down, now that the “angel” is gone.
This pattern is not present in other stocks that I follow.
How could all eleven trade identically for 30 minutes? How can each of them reverse the sharply downward direction that they started the trading day with and suddenly, and at exactly the same time, rocket upward for 30 minutes? And why did they stop rising then and drift off for the next two hours? Ahh….the sweet mystery of life.
Go here and see the charts for each of the housing stocks. What a CO IN SEE DENSE, eh?
http://www.marketwatch.com/tools/quotes/quotes.asp?addsymb=WLS++LEND+WIC+FED&symb=bzh+ctx+dhi+hov+len+phm+ryl+spf+tol+fnm+kbh&siteid=mktw&vc=1&x=9&y=4
Short covering and or market basket purchses following:
http://finance.yahoo.com/q?s=%5EDJUSHB
It’s called trading not conspiracy.
Dawnal
thank you for a superb post.
The beauty of ETFs and other program trading. Most stocks are now purchased on behalf of funds and ETF by programs. Humans are becoming less and less relevant in the market.
Comment by Kaleidoscope Eyes
2006-02-15 09:09:10
I’m not surprised at the Hawaii bubble popping, because the local economy can’t sustain those kinds of housing prices. A tourism-based economy isn’t exactly known for high wages. There are only so many wealthy retirees, second-home buyers, movie stars and trustafarians able to buy overpriced homes in low-wage areas.
DITTO FOR SANTA BARBARA.
IT’s hilarious how all of these prestigious COASTAL BEACH communities (East Coast/WestCoast/Hawaii…doesnt matter) tout their markets as “untouchable” due to the babyboomer retirees etc. even though jobs and infrastructure won’t support the pricing without SPECULATION of a quick buck down the road.
Well, history is writing it differently for the realtors and flippers that still own their “projects” in these areas. I personally know alot of people that did do very well over the years in these markets… but if you’re still in it today…. GOOD LUCK to ya!!
I read somewhere about a woman who was upset that her doctor was moving away from Santa Barbara because she (the doctor) couldn’t afford to live there!
Of course, this sucks not just for the doctor but her patients, too. And you know that home prices are not sustainable when highly-paid professionals can’t afford to live there. I don’t think it’s sustainable for entire swathes of the country to be “Aspenized.”
Kaleidoscope-
You are right. These stories are a dime a dozen in Santa Barbara. Years ago they would write about the Policeman/Fireman/Nurses that had to commute from far away bedroom communities- to jobs in SB.
Now, the stories are about the highest paid professions that are leaving (or not accepting jobs to come here) because they cannot afford housing.
Pretty sad when a DOCTOR cannot afford a $1mil termite infested SHACK on the East Side!
I live on the Big Island. For Sale signs are sprouting like weeds. On my street there are three houses for sale, and all three sellers have cut their prices. One started off at $735K, and is now down to $665K. It will probably have to be cut another $50K to have a chance of selling. The bubble is shrinking fast.
What are these houses like and size? I’m just curious about what you get there for 600K these days.
Go to http://www.hawaiiinformation.com
Click Big Island. Click residential. Click North Kona.
$600k buys you very little in Kona -the dryer side of the Big Island. Lots of poorly built homes and very few with air conditioning even at $1m.
Also check hilo-brokers.com.
Type in Leilani. Click all Homes. Select Pahoa.
There are spome nice homes $250-400k. No need for air conditioning on the east side of the island.
Prices are much lower in the Pahoa area because it’s of limited appeal. It’s quite rural, most homes aren’t even connected to water mains - they rely on catchment systems that collect rainwater. That’s usually not a problem, because it rains an awful lot on the east side.
would you guys pipe down until I sell my house in Kona!
I’m curious to see what happens to our high-rise condo market here on Oahu during this bubble deflation–particularly the high-end projects–as several 30-40 story buildings are still under construction or just preparing to break ground. If prices start to plummet, it will be interesting to see how many buyers pull out of their sales contracts and wait on the sidelines for prices to bottom out.
Driving around the island today, I noticed a considerable increase of for-sale signs in some of the pricier beach neighborhoods in Honolulu, as well as here in Kailua.
I agree, I don’t see any fundamental value in the track homes selling in Enchanted Lakes that have single wall construction and were built in the ’50s. And Lanikai is out of control! It used to be a quite beach community that has now turned into a tourist trap. My family moved out of there a year ago to get away from the noise and traffic.