Where are our Housing Prices Headed?

I just had a conversation the other day with a friend of mine asking "what do you think is going to happen to prices here on Oahu?" He said that a from all sources he's been hearing from "if Hawaii hasn't been effected yet, it will be" and that prices are "going to go down".  Now, we all wish we had a crystal ball & could predict where prices are headed.  If that were the case, we would all be very wealthy....

My response was, I wouldn't mind if prices went up or down.  Realtors make money helping their clients when prices go up and when prices go down.  If prices stay flat and nobody is buying or selling, it would be hard to stay in business.  We are also fortunately enough to have bought 5 years ago.  Even if there is a correction, we've still got a lot of equity in our home & intend to be here for awhile.  For those looking to buy in the next month or two and sell or "flip" for a profit in the next year, now is not the time.  If you are however looking to buy, you are in a much better situation than 2 years ago and interest rates are still great.  We were just able to refinance our home at 4.875% for a 30 year fixed loan! There are still great buys out there. 

What's keeping Hawaii's prices stable is that there are still more people wanting to move to Hawaii than are leaving.  This is because more &  more Baby Boomers that are looking to retire are choosing Hawaii as their destination.  We have also seen a slew of international (in particular, Canadian) buyers over this winter due to the following reasons:

1.       Strength of Canadian Dollar vs. U.S. Dollar

2.       Honolulu's economy has been one of the strongest in the U.S., averaging some of the lowest unemployment rates over the last several years

3.       Honolulu is a "stepping stone" to Asia with an influx of Chinese and South Korean buyers predicted over the next decade

4.       They aren't producing any more land (outside of the Volcano on Big Island which is uninhabitable for the foreseeable future) Also, demand outpaces supply- that is why we are one of the few U.S. markets including San Francisco and New York City that has held prices stable amid all the bad news in the U.S. housing market

5.       It's a beautiful place to be!

6.       Canada gets a bit cold this time of year J

There were over 100 transactions from Canadian buyers over the past several months.  In addition to that, an Australian scooped up several lofty properties on Kahala Ave. & a Japanese buyer paid $22 million cash for an oceanfront parcel in Kailua....

CNBC also featured Hawaii real estate in last week's episode of High Net Worth and talked about how Hawaii has one of the lowest foreclosure rates in the nation and why it might be a time to invest here since we have been somewhat insulated from all the subprime mess in the media.

There is no doubt we have seen a great run in appreciation over the past 5 years.  We are also very fortunate not have crashed like many mainland cities in recent times.  If prices do go down, that's fine by me.  I now have significantly more buyer than seller clients (as I have most of my career thus far).  What I have noticed is the one that are "waiting for a good deal" can sometimes wait for years because they don't realize a good deal when they see it.... I've bought some of my best buys on properties I presented to clients that they decided to pass on because they were "waiting for something better to come along".....

Finally, where are prices headed? Only time will tell... I do however still see a lot of opportunity out there!