Buying a Home in Hawaii Kai is a Good Long-Term Investment

Historical data from the National Association of Realtors (NAR) (adjusted for inflation by Businessweek.com) show that in 18 of the 25 largest metro areas in the U.S., the value of homes purchased in 1990 had increased by 2010, often by double digits.   For the millions who bought during the boom and now want or need to sell, those numbers don't offer relief.  But many more have owned their homes long enough to realize a gain on their asset, just not as much as if they had sold a few years ago.

Homeowners who buy for the long term have historically seen the value of their investment increase over the years. In inflation-adjusted terms, the median U.S. home sale price in the third quarter remains approximately 9.5% higher than in 1990, despite falling 26% from peak levels, according to calculations based on NAR data.

Hawaii Kai has the advantage of enjoying a supply:demand benefit not found in many parts of the country.  Not only is housing limited on Oahu, or the Islands in general, because they are islands, but Hawaii Kai is a unique community and cannot be expanded.  Plus there is very little undeveloped land left in our part of Oahu.

A post on Finance.Yahoo.com, quoting Lawrence Yun,  NAR's chief economist, explains it this way, "Based on data since 1968, nominal U.S. home prices have risen 5.5% annually and outpaced inflation by about 1-2%.  The main reasons housing grew faster than inflation are that more people wanted to buy in places with a finite supply of developable land, which drove up prices, and owners increased the value of their properties through home improvements.

"Home prices followed this pattern through most the 1990s but started shooting up in the early 2000s. Between 2000 and 2006, nominal prices rose 89%, according to data from Moody's Economy.com and Fiserv, a financial service company in Brookfield, Wis.

"Economists from NAR, Fiserv, and Moody's Analytics expect home prices to continue to grow slightly more than inflation in the long term."

NAR estimates that in 2010, 4.8 million homes will be sold in the U.S.-less than the 5.2 million sold in 2000, which is regarded as a "normal" year, says Yun, when the market had not yet overheated.   As the market normalizes, Yun expects sales volume to rise 6% year-on-year in 2011, assuming GDP grows 1.9%, 1.5 million jobs are created (bringing the unemployment rate to about 9.5%), and mortgage rates stay near 5%.  Markets with high foreclosure rates, such as Nevada, Arizona, and Florida, will remain volatile.

David Stiff, chief economist at Fiserv, says despite hopes that we can avoid another housing bubble, there likely will be upswings again in the future. "In general, people are optimistic" and get caught up when times are good, he says. "When you see the next cyclical upswing in housing, try not to get carried away."

For details on specific metro area prices, Portland, OR, Baltimore, MD, Denver, CO, Seattle, WA, New York-New Jersey, Miami-Fort Lauderdale, Washington, DC, Boston, San Francisco, and Houston read the full article on Finance.Yahoo.com.  In every one of these metro areas, housing prices now far exceed those of 1990.

If you would like a detailed analysis of any neighborhood in Hawaii Kai, or community on Oahu, for price trends, just call or email.  Our Honolulu Board of Realtors compiles excellent monthly statistics which go back for many years.  You will see what a good long-term investment homeownership is in Hawaii Kai.