Hawaii Investment Property Homes and Condos
Hawaii follows an 8 to 10 year cycle of plateaus, dips and rises in value. Home prices doubled (5MB PDF) from 2003 to 2006. On Maui they nearly tripled. Another interesting item is that recessions have been occurring approximately every 11 years, 1980, 1991 and 2002. After each recession home prices climbed for 6-8 years then leveled off or dipped. Prices peaked in 1983, 1991 and early 2006. As of the fall of 2009, median prices are aout 20% below their peak, and approaching 2005 prices. Now is the time to make a Hawaii real estate investment for numerous reasons, not the least of which is interest rates have bottomed out.
HEC’s (Hawaii Economic Council’s) survey also shows that 44 percent of company job groups will not see an increase in their pay for 2009.
Visitor industry recovery will be slow, held back by cautious consumers in the US and Japan. The hotel occupancy rate will average an abysmal 66.1% this year and will remain below 70% until the end of 2011. Job losses will end by early 2010, but the average job count in 2010 will still be eight-tenths of a percent lower than this year. The unemployment rate stabilized over the summer in the 7.0-7.4% range, but we expect a further rise to an average rate of 8.1% in 2010.
Combine all of this with a massive decrease in State spending, a$2 billion budget shortfall and union and school layoffs, and you have a “Buyer’s Market.” Hawaii’s unemployment is the highest that it has been in 30 years. The Department of Business, Economic Development & Tourism economic indicators shows a decline in general excise tax payments of over 30%! Existing home sales volume is down over 15% from last year. Maui, Kauai and Hawaii are seeing similar or worse numbers.
“Between 2017 and 2020, the median home price will be over a million (dollars), said Carl Bonham, UHERO executive director. “When we get to the peak of the next housing cycle, home prices will have doubled again,” as they did from 1998 to 2006 according to a Star Bulletin report. This is often said about an investment in Hawaii homes, they double in cycles.
Due to an anticipated rise in mortgage rates and additional factors, the affordability index will likely be at 50 percent or below by 2017 or 2018, “so the most affordable time (to buy a single-family home) is probably this year and next year,” Bonham said. The last time the index exceeded 100 percent was in 2001.
So, when you’re ready to take a serious look at hawaii investments, properties such as commercial real estate, homes and condos should be at the top of your list. Send me an email at frank@hawaiihome.biz
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