I am asked this question almost every day. Here is a quick post. I will expand on this throughout the week with statistics. But for now, this will be just a quick overview and purely my opinion.
So how is the real estate market in Hawaii? I guess it would depend on where you stand. If you are comparing today to the past 4 years, the market has slowed down considerably in terms of days on market and number of transactions. Also, compared to that last few years, prices have come down a bit. Not a huge amount, but they have come down.
Also, compared to the last few years, it is harder to get a mortgage. People with less money down and not so great credit are having a more difficult time getting a mortgage. Plus, interest rates are fluctuating and no one knows how the Fed will manipulate them next.
We are in a credit crunch. To hear the best explanation of this that I have ever heard, check out these 2 podcasts from NPR’s “This American Life.”
Part 1
http://www.thisamericanlife.org/Radio_Episode.aspx?episode=355
Part 2 (sort of)
http://www.thisamericanlife.org/Radio_Episode.aspx?sched=1263
So it sounds pretty bad, right? Well, I’m not so sure.
Based on anecdotal evidence, properties that are priced right. Meaning they are priced competitively, will sell right away. In addition, they will get multiple offers. In fact, over the weekend, I was representing a buyer in a multiple offer situation. Without disclosing too much, the client went above list price. Mind you, the property is an awesome value and priced right. So the buyers that are ready now, want to get in.
Maybe you’re asking, does that mean the bottom has already hit in Hawaii? Of course, I don’t know the answer to that. Knowing when the bottom of the market hits, is a hindsight proposition at best.
I think what that means, is that conditions are right for some buyers. If you have a good down payment, good credit, and good income, there are some deals out there for you.
Will we see a huge crash like the Japanese bubble? Who knows?
I hope we don’t because that means a lot of people will suffer. But, there is always a silver lining. If it does crash, than that would be a buy signal. If you have been preparing for such an occassion, you may want to get ready.
But to look at it from another perspective, even if you bought at the bottom of the market at the last “Hawaii real estate crash,” you are still better off today.
What does that mean? Hawaii, historically, has a cyclical real estate market that sort of looks like a staircase that is climbing up. We have periods of flatness and dips, followed by steep rises in price.
We are getting ready to film the 3rd season of the Hawaii Real Estate Report. We will have Harvey Shapiro, the chief economist for the Honolulu Board of Realtors, on the show. And we are confirming a date for regular guest, Paul Brewbaker chief economist for Bank of Hawaii. When we tape those shows, we’ll be sure to ask them the same questions.
Also, keep in mind, we live in one of the most desirable places in the world. The weather is perfect year round, the people are wonderful, the food is great, we have incredible beaches. And we are an island which means supply of homes is limited. We can not endlessly expand into the open prairie like in the Midwest or Texas or even California.
In addition, with advances in Technology, Travel, and the Internet, it is becoming easier for people live and work here.
Plus, we are an international hotspot. When our economy goes down, for other countries where their economy is good, our real estate starts to look like a bargain.
For me, the key is to get in the game. Get a foothold in Hawaii real estate when the time is right for you.
This is not advice since everyone’s situation is different, if you want a free one on one session to discuss your situation, let me know. I’d be happy to meet you for coffee or tea.
Open for discussion. Comment below. And again, I will be posting research and ideas on this topic throughout the week.
Aloha!