Hawaii Housing Bubble

Hawaii foreclosures up; the beginning of the end?

2007-05-26T00:04:00.000-07:00

TheHawaiiChannel.com reports that foreclosures have risen sharply on Oahu this month:

"Six months ago, we were looking at maybe 30 foreclosures a month. Today, we are looking for 100 new foreclosures a month," foreclosure investor Courtney Brown said.

Keep your eyes open - Hawaii follows Mainland trends by several years. It's about time all the sub prime loans came to pay the piper.

Is the Hawaii housing market becoming more "balanced"?

2007-05-10T13:18:00.000-07:00

The Advertiser runs a sunny story on the good health of the housing market in Hawaii.

The number of O'ahu single-family home and condominium sales peaked in 2005 at 12,607. Sales dropped 17 percent to 10,421 last year, and have continued to decline this year but at a slower pace.

Homes that a couple of years ago spent a median 15 to 30 days on the market before selling have spent a median 40 to 70 days on the market this year.

Inventory, which dropped to roughly 1,700 units in mid-2005, has been around 4,000 this year.

Median prices, meanwhile, began to wobble late last year after doubling since 2001. This year through April, the single-family home median price is up just 1 percent to $630,000. The year-to-date median condo price is $322,000, up almost 6 percent compared with a 15 percent rise last year.

The article also touches on "lending challenges" created by the fallout from the subprime lending fiasco currently taking place on the Mainland.

"It has a tremendous effect," she said. "I find that more challenging than selling. I have the product, but it's the mortgage companies now providing the pressure."

The Hawaii housing product is unique, certainly, but this bubble was built on "creative financing" and "exotic mortgages".

Forbes: Honolulu has 6th least affordable housing in US

2007-05-05T11:39:00.000-07:00

It doesn't come as a surprise to anyone in Hawaii, but Forbes just named Honolulu one of the top 10 most overpriced housing markets in America.

With a median home price of $630,000 and P/E ratio the 3rd highest in the nation, you aren't just imagining things when you look around at all this pricey real estate and wonder how people are buying on Hawaii's low wages.

It hasn't popped yet - Oahu prices rise

2007-05-03T14:35:00.000-07:00

The Star-Bulletin reports that prices on Oahu are still on the rise.

Home sales were still brisk:

The median single-family home price on Oahu climbed to $665,000 in April, beating out the median last month by 3.3 percent and last year by 8 percent, according to the latest data from the Honolulu Board of Realtors.

Home sales were strong, with 342 existing homes changing hands, compared to 332 a year ago.

While condo sales slowed:

The condominium market on Oahu reached a median price of $325,000 in April, 9.6 percent higher than a year ago. Condo sales fell, however, by 9.8 percent to 527.

I know I've been away for awhile, but it's still a jungle out there, folks!

Neighbor island sales and prices down in 2006

2007-01-11T10:01:00.000-08:00

While Oahu saw sales slow and prices rise slightly in 2006, both sales and prices were down on the neighbor islands last year. The Star-Bulletin has the breakdown:

Sales remained fairly steady for homes on Kauai in December: Half sold for more than $592,500, and half for less, as the median price dropped 2 percent. In December 2005, the median price of a Kauai home was $605,000.
At the market's height of summer 2005, Blachowiak recalls the median sales price on Kauai reached close to $700,000.

The Big Island is seeing the same housing trend:

On the Big Island, the median home price dropped 18 percent to $353,500 from December 2005. Despite the drop in prices, the number of homes sold declined by 41 to 160 in December.

Maui trended similar to Oahu, with home prices slightly up while sales slowed. The Maui News reports:

For the year just ended, the average price of a single-family house was $941,434, according to the Multiple Listing Service of the Realtors Association of Maui.
The median was $679,000, which means half sold for that amount or less.
Prices rose just 2 percent, after four years in which they rose by 23 percent to 25 percent per year.
The pace slowed a bit, but unlike sob stories from the Mainland, Maui’s real estate market continued active. The total of single-family closings was 1,088, which was down from 1,316 in 2005.

Oahu prices up, sales off for 2006

2007-01-05T21:51:00.000-08:00

No surprises here: as we've been following all year, prices were up but sales slowed in 2006. The Advertiser reports that the number of homes sold was the fewest since 2002.

Last year, single-family homes sold for a median price of $630,000, or 7 percent more than $610,000 in 2005. The median is the point at which half the prices were higher and half lower. For condominiums, the median was $310,000, up 15 percent from $305,000 during the same comparable period.

Jim Wright of Century 21 says he "expects prices to decline around 5 percent and sales to rise by about 5 percent in 2007."

O'ahu median home prices fall

2006-12-04T16:07:00.000-08:00

The Honolulu Board of Realtors reports that the November median price for an Oahu home fell 4.8% from last year. The median is at $610,000, down from November 2005's median of $640,500. This is the first drop since the late '90s.

On a year-to-date basis, sales of single family homes are down 14.1 percent from the first 11 months of 2005. Condo sales were down 20.5 percent during the same period.

Condo prices rose yet again, but volume of sales declined 19.1% for homes and 32.5% for condos from November 2005.

Forecast: Hawaii's economy will continue to slow

2006-12-02T13:16:00.000-08:00

Hawaii's economy will continue to slow as the state's labor, housing and tourism markets remain tepid, inflation soars and personal income growth idles, according to the latest report from the University of Hawaii Economic Research Organization.

Not much good news in this report.

Hawaii's economy isn't likely to sour as badly as it did in 1991 and 1992 after the state's last housing boom took its turn for the worse, he said.
"This is a much more stable slowing," Bonham said. "We have lots of military construction, the housing bubble wasn't as big and our population isn't downsizing. This is a slowdown; it's not a contraction."

"The housing bubble [isn't] as big"? Ahem.

Rental market cooling on O'ahu

2006-11-26T13:16:00.000-08:00

The same day the Advertiser reports on the shifting housing market, it reports that the average rise in rental rates this year is the smallest in six years:

Average asking rent for available housing, including single-family houses, townhouses and apartments, is up 2 percent to $1,661 from $1,628 last year, according to the report by local market researcher Ricky Cassiday.

For renters, it's a big improvement over the previous four years, when average asking rents jumped 10 percent to 18 percent per year.

I wouldn't call it a renter's market just yet, but our rent didn't increase at all when we resigned in August. Right now we're paying $1750/month for a 3 bedroom condo that would be $500k in today's market. We're sitting tight and investing the difference between our rent and our potential mortgage payment (15 year $400k mortgage at 5.75% is $3300/month). Once prices hit 2002 levels, we'll be back in the market!

Incentives increase as market slows in Hawaii

2006-11-26T13:12:00.000-08:00

The Advertiser reports that builders are offering incentives to buyers now that the market is shifting:

To be sure, many new home projects are not luring buyers with freebies, but to see incentives emerging at a few projects underscores the shift under way in the local real estate market that in the last few years had developers turning away buyers.

The number of new-home sales this year is still up because of several high-rise condominiums that are nearing completion.

But weaker demand is evident in O'ahu's resale market, where sales of previously owned homes fell 17 percent in the first 10 months of the year compared with the same period last year.

We're going to start seeing a lot more incentives as the market continues to slow. Probably not any trips to Hawaii, though!

Invaluable Hawaii real estate website

2006-10-09T14:49:00.000-07:00

This morning I discovered the best Hawaii real estate/MLS search around.

Not only can you search by standard criteria like price and location, but they also offer data on price drops, flippers, and fixer-uppers. The Google maps integration is handy, too.

I'm not affiliated with these people at all; I just wanted to pass on this tool that's kept me entranced all morning!

Oahu home prices plummeting

2006-09-28T11:55:00.000-07:00

The Honolulu Advertiser carries this report:

There's been a dramatic turn in O'ahu's residential real estate market in the last year.

It's as though value is evaporating into the salty air — $50,000 here, $150,000 there, $720,000 in Choi's case.

This turn hasn't been reflected in regularly reported median sale prices, which continue to be up in year-to-year comparisons. The median price for a single-family home on O'ahu in August was $635,000, up 1.6 percent from a year ago.

The whole article is a must-read. This is the one that we all knew was coming; irrefutable proof that we're transitioning to a buyer's market. More highlights:

According to O'ahu home sale data available at Kaufman's Web site, OahuRE.com, there were 1,798 cases of sellers dropping their asking price last month, compared with only 633 a year earlier.

The number of price drops for homes on the market, which includes more than one drop for the same property, has been steadily rising from 1,081 in January to 1,604 last week. The average drop for single-family homes was 7.6 percent.

It's a fire sale, folks!

The median list price on O'ahu hit a peak in May 2005 at $850,000 and now stands at $770,000. Median list prices for single-family homes have been below their year-ago levels in each month this year except January.

The whole thing, including some nifty graphics, is here.

Oahu prices level, sales down

2006-09-11T18:25:00.000-07:00

The Star Bulletin reports that sales have plunged on Oahu but prices are still level:

As prices continued to rise, the number of sales of both single-family homes and condominiums dropped. The number of houses sold fell 22.8 percent to 351 in August from the year-earlier 455. Condominium sales also declined 30.2 percent to 580 last month from the 831 in August of 2005.

Something's going to give; there's a house on our street that's been on the market for 7 months now. Last year, that house would have been snapped up in a week. How long until sellers start slashing prices?

Neighbor Island Report: Sales plunge

2006-09-08T18:20:00.001-07:00

From the Star Bulletin comes this report that sales have declined dramatically on the neighbor islands:

» On the Big Island: Only 169 homes were sold in August, compared to 256 at the same time last year.
» On Kauai: Sales dropped to 35 in August compared to 56 at the same time last year.
» On Maui: Sales fell to 95 compared to 129 in August 2005.

Prices were up on Maui and Kauai, but Big Island prices have fallen 14% over last year.

Home sales were notably lower in the high-end resort areas of North and South Kohala. Only 11 homes were sold in South Kohala, compared to 29 in August 2005.
"Whether the market turns, whether up or down, resort areas are always the ones to feel it first," said Dana Kenny, broker in charge of Hawaiian Island Homes in Hilo. "The market has slowed here, and you're seeing some price adjustment. But I don't believe we're looking at a market-turn type of situation as much as a correction."

Hawaii Economy Slows, Inflation Highest in Nation

2006-08-31T15:27:00.000-07:00

The Star Bulletin has this sobering update:

Hawaii's projected inflation rate for 2006 was revised up to 4.8 percent from the 3.8 percent predicted in May's forecast to reflect higher oil prices -- which boost the costs of goods throughout the economy -- as well as increases in housing costs.

Even the builders are slowing down:

But growth in construction is expected to level off in the next few years, due to rising interest rates and a decline in demand for housing in recent months.
Job growth forecasts were revised upwards to 2.5 percent from 2.2 percent in the previous quarter's report. But this is expected to slow to 1.5 percent in 2007, and 1.2 percent in following years.

Glut of Houses on Big Island

2006-08-29T15:21:00.000-07:00

The Hawaii Tribune Herald reports that there is "more supply, less demand" in East Hawaii:

The situation is most noticeable in places like Hawaiian Paradise Park, where numerous speculative houses line the red cinder roads, waiting for buyers. In a one-mile stretch on 15th Avenue, five "For Sale" signs can be seen along their respective properties.

After Susan Rosario put her family's two-house lot on the market "a few months" ago, they've had with just two visits and no offers.

"I'll just wait. When they want to buy, they buy," she said of the 25th Avenue property. "If you can find me a buyer, go right ahead."

"There's a lot more supply and a lot less demand. Economics 101," said real estate agent Henry "Hank" Correa Jr., owner of Hank Correa Realty. Asked whether he thought home prices have reached bottom, he said, "I think it's early."

This is confirmed by commenters on Ben Jone's incomparable Housing Bubble Blog. Commenter Kaneui says:

It’s been interesting to watch the bubble expand and now start to deflate here in Hawaii. I sold a property in the Puna district (east Hawaii Island) for someone three years ago, when things were just heating up–everyone was telling me we’d never get our asking price, but we did. And from then on, the market took off.

Well, I was recently talking to a friend who is still in Puna, and he tells me that there are over 40 new spec homes for sale in the Hawaiian Paradise Park subdivision, and not one has sold. My, how times have changed since 2003!

The market in Hawaii is unraveling there first, as Puna has some of the cheapest housing in the state–however, the initial signs of a deflating bubble are already here on O’ahu: YOY sales have declined, and price drops will soon follow. (Never mind the fact that an estate here on Kailua Beach just sold for $24M last month–but again, the very high-end is a separate world…)

I'm on Oahu as well and prices should stop dropping any day now....

Neighbor Island News: Sales Down

2006-08-14T19:13:00.000-07:00

The Honolulu Advertiser reports that sales continue to slow on Kauai, Maui and the Big Island.

July's median price for previously owned single-family Maui homes tied the record set in May 2005 at $780,000, up from $750,000 in June and $642,600 in July 2005.

But there were 30 percent fewer single-family home sales on the Valley Isle: 88 in July compared with 125 a year earlier.

Maui condominium sales fell even further, dropping 66 percent to 78 in July from 228 a year earlier. The 78 July sales were the fewest in any month since January 2002, according to the Realtors Association of Maui.

The real shocker is this figure:

The median Maui condo price last month was $525,000, which was off the record $645,000 set in June but up from $380,000 in July 2005.

The median price of a Maui condo fell $120,000 in one month?! Hmm, what's that term I'm looking for....

"There's a correction going on," [broker Keone Ball] said, noting that he's witnessed deals where sellers accept offers $100,000 below asking price. "There's price reductions all over the place."

Honolulu Housing Market Ready to Pop?

2006-07-28T14:44:00.000-07:00

The Milwaukee Journal Sentinel runs a piece comparing their local housing market to the national market. Hidden in the article is this:

Price appreciation, here and across the nation, is slowing down markedly, however. Market analysts at Friedman Billings Ramsey Co. Inc. in Arlington, Va., this week predicted that U.S. house appreciation, at 7.1% in the year that ended June 30, will dwindle to less than half that by April 2007. They see one major ready-to-pop housing bubble - the Honolulu, Hawaii market - and 24 metro areas headed for smaller price dips, mostly in high-unemployment areas and none in Wisconsin.

A bigger bubble than Phoenix, San Francisco and Boston? I looked all over for more on Friedman Billings Ramsey Co. Inc.'s prediction and could not find anything beyond this. Intriguing....

Oahu prices up; Homes staying on the market longer

2006-07-06T18:13:00.000-07:00

The Advertiser reports that although prices continue to rise, there are signs that a buyer's market is coming:

In June, an average home was on the market for 50 days in June compared with 15 days a year earlier. The number of homes on the market totaled 1,836, or more than double June 2005's number.
"It's not so much of a seller's market anymore," said Harvey Shapiro, the board's research economist. He said it's now uncommon for buyers to offer over asking price for a property, something that occurred frequently last year.

"We peaked in the third quarter of last year, and we're coming down to more sustainable levels. The last few years have been a frenzy."

It's still got far to go, but it looks like the tide is definitely turning on Oahu.

Honolulu Homes Overvalued

2006-06-15T15:19:00.000-07:00

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"

2006-06-02T15:35:00.000-07:00

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.

Oahu sales slow

2006-05-31T19:19:00.000-07:00

New homes sales have slowed to less than half the volume of the last two years, Pacific Business News reports:

First quarter new home sales on Oahu slowed to 282 units, less than half of the volume of the past two years.

"This is thanks to limitations on supply," said Ricky Cassiday, who tracks Oahu new home sales for Central Pacific Bank. "Builders have not been able to produce at the same pace as demand."

Prices are still up over last year, however:

Average list price: $552,619, up more than $89,000 from a year ago.

Move in! Please, move in!

2006-05-31T19:16:00.000-07:00

KHON in Honolulu reports that rents are falling:

Prices are still high -- but there's been a definite change recently in the overall rental market. Fewer renters are knocking on the door, and landlords are having to try harder make a deal.

The landlord featured in this article says:

"If it works, great, if it doesn't work, well you know, you'll see it on the market. We'll sell it," she said. "Life is just an adventure, and you move on... or move in. Move in! Please, move in!"

Who exactly is she planning on selling to? The other thousands of flippers who will be stuck with houses they can't afford?

Rents are dropping in Hawaii, but that doesn't mean inventory will last forever. Find an apartment NOW!

Oahu home prices up, sales down

2006-04-19T15:18:00.000-07:00

The Advertiser reports that the median single-home price for Q1 was $625,000:

Single-family homes sold for a median price of $625,000 between January and March, up 18 percent from $529,100 in the same quarter a year earlier.

The 18 percent rise was down from 27 percent in the year-over-year comparison for the fourth quarter, and down from 31 percent in the third quarter, when the board began publishing quarterly sales data.
...

The volume of sales was down 3 percent for single-family homes and down 5 percent for condos during the quarter. That was a smaller decline than the fourth quarter when sales dropped 11 percent for both types of homes but about even with the decline in the third quarter.

Pacific Business News digs deeper:

A total of 943 homes were sold in the first quarter of 2006, down 33 compared to the first quarter of 2005. The median price, however, was considerably higher, at $625,000 compared to $529,100 last year.

They also provide a nice breakdown of median home and condo prices by neighborhood:

Homes:

Metro Oahu: $735,000
Diamond Head: $993,000
Hawaii Kai: $850,000
Kailua: $780,000
North Shore: $900,000
Leeward Coast: $355,000
Ewa Plain: $515,000
Pearl City: $590,000

Condominiums:

Metro Oahu: $300,000
Diamond Head: $450,000
Hawaii Kai: $555,000
Kailua: $412,000
North Shore: $327,000
Leeward Coast: $178,000
Ewa Plain: $309,500
Pearl City: $280,000

Diamond Head and North Shore are thisclose to breaking $1 million. Think it'll happen Q2? Later? Never?

High prices, cooling market?

2006-04-06T19:03:00.000-07:00

The Star Bulletin reports that Oahu housing prices set a new record in March:

"The median sales price for single-family homes continues to increase, establishing another record for Oahu at $650,000," said Mary K. Flood, president of the Honolulu Board of Realtors. The condominium median price declined slightly this month, but it is still near the record level achieved in February of $315,000."
The median price among the Oahu houses sold in March rose 23.7 percent from the year-earlier median of $525,500."

Not everyone thinks the news is entirely rosy:

"I would really think that it was just a blip, because the trend is down and we have passed the peak of sales," said Harvey Shapiro, Honolulu Board of Realtors research economist. "A rest is clearly in order."

"Even with the higher number of residential sales in March, total sales for the first quarter showed a small decline from last year," said Shapiro. "This reduced demand, along with the renewed availability of housing, means that the market is moving forward on its path toward stabilization."

When realtors start talking about "a rest" and "stabilization" and "normalization", isn't that just code for "downturn"?

Rates, prices continue to rise in Honolulu

2006-03-10T14:24:00.000-08:00

Mortgage rates have climbed to levels not seen since 2003, according to this article from the Honolulu Advertiser/AP:

The rising rates have begun to cool the sizzling housing market with sales of both new and existing homes posting bigger-than-expected declines in January.
Nothaft said the housing sector, which posted record sales levels for five straight years, was shifting to a slower pace, but he predicted the decline would not be severe enough to disrupt the overall economy like the stock market slowdown did in 2000.

"We see no signs of a bursting bubble, but rather a return to a more normal pace of activity," he said.

Some economists believe that 30-year mortgage rates could rise as high as 7 percent by the end of the year.

Check out this chart featuring real estate trends for a couple Honolulu neighborhoods (click on the image to enlarge):

Sales down on Neighbor Islands

2006-03-10T14:21:00.000-08:00

The Advertiser brings us news that home sales are slipping on the Big Island, Maui, and Kauai in February:

"The market is off and the national trends say we'll be down 4 percent on volume this year — and Hawai'i's reflecting this trend," said James Wright, president and CEO of Century 21 All Islands. His company's sales are nevertheless running 20 percent ahead of last year, Wright said, and "even with the drop off, it's a positive market still."

Condo sales were up in Kauai, but down on Maui and the Big Island. But we're still cheaper than California:

"A lot of the higher-priced condos have been sold to Mainland investors, especially from the West Coast. Especially if you're from California, a two-bedroom condo on the ocean in Kona can go for $800,000, whereas that same condo in California would cost $1.5 million."

Oahu Real Estate Cycle is "Pau"

2006-03-03T15:24:00.000-08:00

Each of Honolulu's dailies reports today on the changing state of real estate sales on Oahu.

From the Advertiser:

O'ahu's housing market mellowed further last month as fewer people bought homes at prices that reached a record high for condominiums but were little changed for single-family homes.

...

The Honolulu Board of Realtors, which released the sales data, said the number of transactions declined 7 percent. There were 248 single-family homes sold last month compared with 266 a year earlier, and 487 condo sales compared with 525 in the same period.

The broad softening of the market is particularly being influenced by a flood of properties put on the market by sellers, some of whom perceive the price peak is near and want to get top dollar.

And from the Star-Bulletin:

The last time Oahu had this much inventory was in March 2003, Riggins said. There is a 5.3-month supply of single-family homes and a 4.4-month supply of condominiums remaining for sale.

The buildup in inventory and slowdown in the market is "absolutely incredible news" for a buyer, Riggins said.

...
"We're in the zone," Brewbaker said, forecasting that median home prices on Oahu, Maui and Kauai will soon start to echo those in California's now cooling markets.

Three out of five of California's top markets, including Silicon Valley, San Francisco and Orange County, have gone flat, with median prices staying in the $710,000-to-$730,000 range, he said.

"I always say that Hawaii is the western edge of Orange County," Brewbaker said.
...

"Frankly, the market is just not that good," said John Riggins, owner of John Riggins Real Estate. "The economy is doing very well, but the market is taking a rest. The consumer needs time to rethink and adjust to the higher prices and higher interest rates."

I wondered how long it would be until MSM and realtors could no longer pretend that real estate has nowhere to go but up.

Neighbor Island Watch

2006-02-27T14:12:00.000-08:00

Lawmakers on Maui are calling for 80% of future housing to be made designated as "affordable housing". Maui News has the scoop:

Four months ago, Tavares proposed that 80 percent of all housing projects be earmarked as affordable to families in a range of 50 percent to 160 percent of median income ($31,180 to $99,760 for a family of four). The county’s policy for affordable housing now is for households earning between 80 percent and 120 percent ($49,880 to $74,820) of median income.
That policy leaves out the very low income and the “gap group” of working families – those who make more than 120 percent of median but who still are not able to buy a house on the open market, where the median price of a single family house in 2005 ranged from $613,500 to $679,000.

Plans are being draw for a "New Age socialist republic in Hamakua" on the Big Island. Hawaii Reporter breaks it down here.

The Rising Cost of Living in Hawaii

2006-02-27T14:08:00.000-08:00

The cost of living on Oahu was up 3.8% last year, the Advertiser reports.

O'ahu's energy prices rose 16 percent year over year, largely because of higher oil prices. A rapid rise in land prices helped push housing costs — meaning rent and mortgage expenses — up 5.6 percent last year.

My rent went up 12% last year, (and I'm still getting a great deal compared with other units in the area). My salary, however, only went up 2%. Among my friends and colleagues, these figures are average.

Beginning of the end?

2006-02-27T14:02:00.000-08:00

Whew...it's been a rough year for sellers on Oahu. The Advertiser reports that many sellers are surprised at how fast the market has slowed:

Alicia and Jon Sturnick of 'Ewa Beach dropped the asking price on their Ocean Pointe house by $15,000 and are starting to get the uneasy feeling that they missed the peak of O'ahu's latest housing boom.

"If we had put it on the market earlier, we would have definitely sold it already," Alicia Sturnick said. "I knew the market would slow down but I didn't know it would happen so soon."

Last month, they lowered their asking price from $590,000 to $575,000, which positioned it well below January's median sale price of $615,000 for a single-family home.

In my Oahu neighborhood, I'm noticing For Sale signs sticking around longer and longer. There's one house on the corner that has sold twice in the 3 years I've lived here - both times in under a week - that has now been on the market since Christmas.

Pacific Coast Slowing; Defaults Rising

2006-01-30T17:03:00.000-08:00

ForeclosureS.com reports that the Pacific Coast is beginning to shift to a buyer's market:

"We're seeing reduced price appreciation in the Pacific Northwest, and Alaska although population growth and job growth there remain strong," said ForeclosureS.com president Alexis McGee. She added that while the pace of home price increase in Hawaii had slowed slightly, annualized price appreciation year over year was still above 20%.

Also, defaults are on the rise:

She said that several overheated California markets were beginning to correct with prices declining slightly in the North, and slowing sales and less price appreciation in the South and that defaults were rising.
"A great many risky loans were issued in California as home prices reached the stratosphere," Ms. McGee pointed out. "Interest only and option ARMs were used by many buyers to qualify for homes they could not otherwise afford. That means trouble in the near and intermediate future."

Isle Teacher Pay Comes in Dead Last

2006-01-30T16:56:00.000-08:00

Worried about the public school system in Hawaii? You should be.

The Star-Bulletin reports that teacher salaries were the lowest out of 50 metropolitan U.S. cities when adjusted for cost of living.

Hawaii's average public-school teacher salary of $45,467 for that period -- the most recent complete set of data -- ranked 26th in the country, according to the conservative National Center for Policy Analysis,which compiled the inaugural study.
However, Hawaii's high cost of living reduced that figure to an effective $27,048, dead last in the survey, it said.

I don't think anyone expects to get rich when they become a teacher, but dead last?

Hawaii Flunks Report Card in National Study

2006-01-30T16:51:00.000-08:00

Hawaii Reporter carries a piece referencing the results of a Corporation for Enterprise Development study. Hawaii received an "F" grade in the categories of Business Vitality and Development Capacity. Translation?

Hawaii’s residents face some real challenges such as scarce quality full-time jobs, a low homeownership rate, and a relatively high crime rate. However, the state should be commended for its efficient and responsible use of energy and environmental resources.

...

Two of the most difficult development challenges facing Hawaii are its poorly maintained physical infrastructure and its unusually high energy and urban housing costs.

Hawaii Residents "Trading Off" Lifestyles for Homes

2006-01-24T18:40:00.000-08:00

The Housing Bubble 2 examines a report at MSNBC that Hawaii residents are "trading off" lifestyles for expensive homes:

"Mortgage payments are eating up a bigger share of many household budgets in Hawaii. Families on Oahu, for example, are expected this year to spend nearly half of their monthly salaries on mortgages because of higher housing costs, the highest level since the early 1990s."

"Most banks say families should ideally spend 25 to 30 percent of their gross income on home payments. 'Mortgage payments across the state are running at 42 to 44 percent of monthly salaries,' said Steve Higa, president-elect of the Hawaii Association of Mortgage Brokers. 'People are managing because they don't spend much on anything else.'"

Check out the revealing comments as well.

Exotic Mortgages on the Rise in Hawaii

2006-01-24T18:27:00.000-08:00

No money down? No problem!

Can't afford the payments? Get an interest-only loan!

The Honolulu Advertiser claims that such previously rare mortgages are rising in popularity:

It's clear why home buyers are attracted to the new mortgage types. Higher prices — the median price of a single-family home was $640,500 in November — and slightly higher mortgage rates have made it impossible for many families to buy a home using a standard 30-year fixed-rate loan with a 20 percent down payment.

Traditional financing leaves you with a monthly payment of $3,347 on a median-priced home at current interest rates, according to Mortgage Plus, a Fort Street Mall mortgage broker. The monthly payment grew by $846 in the past year alone.

The nontraditional mortgages include 40-year loans and interest-only mortgages that can feature either fixed or adjustable interest rates. They generally carry higher interest rates than conventional loans.

There are even Hawai'i buyers taking out so-called "option ARMs," or mortgages under which the borrower can choose to make payments that are less than the interest that's owed. In that instance, the amount of loan increases, or goes into what's called negative amortization.

Prices continue to rise on Kauai

2006-01-24T18:13:00.000-08:00

The Kauai Garden Island News reports that 2006 sales are brisk on Kauai:

This year, there has been a flurry of sales in the first two weeks, with agents at Century 21 All Islands (with offices at Princeville, Kapa'a and Koloa) closing 15 sales in the first week of this month alone, said Kenneth W. Kubiak, vice president in charge of Kaua'i operations.

The lack of inventory, Kubiak said, even with new projects like the Villas at Puali in Puhi, Regency at Puhi and Plantation at Princeville, remains a concern. That lack of inventory keeps prices high on those properties that are for sale, oftentimes effectively pricing many residents right out of the market.

43% of first-time home buyers put no money down

2006-01-24T18:10:00.000-08:00

As adjustible rate loans start creeping up, many first-time home buyers will find themselves upside down, according to USA Today:

As housing prices soared last year, an eye-popping 43% of first-time home buyers purchased their homes with no-money-down loans, according to a study released Tuesday by the National Association of Realtors.
The trend is potentially ominous. The real estate market is cooling in some areas, and rates on adjustable-rate loans are creeping up. As a result, some no-money-down buyers could owe more than their homes are worth.

Home Prices Drop in Metro O'ahu, Windward O'ahu, Hawaii Kai and North Shore

2006-01-24T18:02:00.000-08:00

According to the Honolulu Advertiser, prices are dropping in the high-end areas of Oahu:

O'ahu single-family home prices showed significant declines in nearly all of the island's most expensive neighborhoods during the last quarter of 2005 — another sign the state's blazing housing market is cooling.

Prices keep rising in other areas, however:

In contrast, the six least-expensive markets on O'ahu — where median prices were all under $600,000 — showed price increases in the fourth quarter compared with the third quarter.

The Realtors board said those six markets were Central and Leeward O'ahu, the 'Ewa Plain, Makakilo, Waipahu and Pearl City (see map on A8 for how the board defines each region).

These are the areas in which many first-time home buyers concentrate their efforts.

Oahu Q4 Prices drop for first time in 8 years

2006-01-24T17:58:00.000-08:00

According to the Star-Bulletin:

The number of previously owned homes sold on Oahu fell 11.4 percent in the fourth quarter compared with the same period last year, ending more than eight years of quarterly increases.

The "good" news is:

Harvey Shapiro, research economist at the Honolulu Board of Realtors, said the board is not concerned about the decline in volume because sales previously had risen for 33 straight quarters. The drop in the number of sales does not validate any predictions of bursting bubbles, he said.
"This doesn't speak at all of a bubble," Shapiro said. "The bubble (that) people have been talking about is prices."

So, Mr. Shapiro is saying that the level of inventory won't affect prices? What's this supply and demand I keep hearing about?

No bubble? At least one BoH economist thinks so

2006-01-24T17:48:00.000-08:00

One Bank of Hawaii economist thinks that there is no bubble:

"But it's a serious problem in a state that has essentially a lower-paying service economy when housing costs this much."

Eh, no worries. If you're a bellhop making $10/hour, you can just get a no-interest loan! Don't get left behind!

Bank of Hawaii Economist Paul Brewbaker also has predicted that housing prices will not collapse in the manner of the 1990s bubble and will probably rise more. And Harvey Shapiro, the economist for the Honolulu Board of Realtors, feels the same way.

"We expect somewhat lower sales in 2006 but a continuing pattern of price increases," Shapiro said. "Even with fewer sales, the level of activity will remain near record levels. Prices will grow approximately 10 percent to 15 percent."

Think prices will continue to rise in 2006 and beyond?

O'ahu Home Prices Slip in December 2005

2006-01-24T17:42:00.000-08:00

From the January 5, 2006 issue of the Honolulu Advertiser:

The transition from seller's market to buyer's market is under way.

Hard braking was finally applied to O'ahu's seemingly run-away real estate market in December. Sales of single-family homes dropped 24.5 percent, the biggest decline in nearly 10 years, while the inventory jumped 47 percent.

Hawaii Housing Bubble Following Mainland?

2006-01-24T15:26:00.000-08:00

The San Francisco Chronicle reports on the cooling housing market in Hawaii:

Typically, Hawaii's real estate market lags the mainland's by six to 24 months and is often more difficult to read because of the relatively high number of homes owned by out-of-staters, experts say. In November, the median price for a home on Oahu was $418,000, well below a peak of $569,000 in August and 8 percent below the year-ago median.