Honolulu Homes Overvalued

In what comes as no surprise to readers of this blog, the Star Bulletin reports that Honolulu homes are overpriced by over a third:

The study found Honolulu's housing market to be 39.2 percent overvalued in the first quarter of 2006. That's a major increase from the first quarter of 2005, when homes were found to be 19.1 percent overvalued.

...

National City Corp. considers overvaluations greater than 34 percent to be "extreme." With an overvaluation rate of 39.2 percent, Honolulu would fall into that category.

The scary part is that Honolulu is ranked 59th out of the 317 metro areas surveyed. So no matter how bad things may get in Honolulu, there are 58 cities who will feel it worse than we are!

"We're looking at a recession"

The Hawaii Tribune-Herald reports a big cooldown on the Big Island:

Between January and April, median home sales prices in West Hawaii have leveled off or declined up to $200,000, according to the Hawaii Information Service (HIS).

With the exception of North Kohala, however, median home sales prices overall remain significantly higher than the same months last year. Based on April 2006 statistics from the HIS, South Kona home sales prices are up nearly 20 percent from the same time last year, North Kona is up about 11 percent and South Kohala is up just two percent.

Even the rosy cheeked optimist Realtors are starting to panic:

"We're looking at a recession," said Koa Realty agent Dave Lucas, a real estate agent since 1985. "We follow the mainland and we're about six months to a year behind. The decline starts on the East Coast and moves west."

Lucas said states that experienced "horrendous bubbles," such as Arizona, Florida and California, are now seeing a dramatic rise in for-sale inventories.

He said the real estate market is influenced by radical emotional changes -- primarily fear, greed and denial. Any of these unpredictable factors have the potential to shift the market in any direction, he said.

This is an important read, and perhaps a sign of things to come on the other islands.