The Current Housing Bubble, Is it Really 2005 all Over Again?

By
Real Estate Agent with Kona Home Team (luva llc) RS 62947
https://activerain.com/droplet/5nZk

I keep hearing from buyers on the fence….. “Its 2005 all over again” or “this bubble is ready to BURST !"  even better "I'm waiting for the rush of foreclosures in 2021 … 

Aloha, Lance Owens (RS) with LUVA Real Estate bringing you the latest in real estate news and I wanted to point out a few differences.

Those of you that have been following my blog over my 16 year career know that I have been a full time Realtor here in Kailua-Kona Hawaii since 2004, the 2018 President of West Hawaii Realtor Association of Realtors , I currently serve on the Hawaii State Board of Realtors, and the 2020/21 RPAC Trustee for WHAR, so when I reference what happened in 05,06,07….. this is not something I read on the Internet, found in a book, or heard at the water cooler. I lived it, I worked it, and I can tell you back in 2005 it was a lot different buyer coming in.

(My office was in the lobby of the oceanfront “Outrigger Keauhou Beach Resort” )

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The 2005 buyer, would fly in from the West Coast, on a Friday afternoon, pick a home on Saturday, write an offer on Sunday, be back at work on Monday and by Tuesday they had a pre-approval sent to me......

A first mortgage for 80% of the home value at an interest rate of 5.85%

A second mortgage for 20% of the home value at an interest rate of 7.5%

And if you do the math people,  these buyers had no skin in the game, zero out of pocket money, and they just bought a new home in Hawaii. Okay, ok, I will give them a little credit, they were out an airline ticket, a hotel room charge, and rather large tab at "Don's Mai Tai Bar" 

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Don’t take my word for it, click the graph below to be taken directly to report, at the bottom of August 2020 report, I added the 2005 numbers (after you finish reading my blog of course) and only in Hawaii, is West Hawaii located in North Kona - so when looking at reports, look for "North Kona"

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August 2005: home sales for West Hawaii (Kailua Kona)

67 homes sold (15% over 2004 numbers) 

Median Sales Price $615,000 (YTD)

57 were financed, (many at the 80/20 )

7 were cash

3 were a 1031 exchange

Fast Forward August 2020: August home sales

Median Sales Price $732,500 (YTD)

64 sold (30% more than August 2019) 

44 were financed (*many with 50% down or more)

0 - 1031 exchanges reported.... what does that mean? These are going to be a "primary residence" and not investment properties exchanged from another.

 Let me briefly sum this up…. ITS NOT 2005 ALL OVER AGAIN. 

Its an entirely new market, and nobody has seen one like it before, and as far as 2021? I have no crystal ball, but using “past performance” as my Navigator into the future: I know of no past performance in which homeowners walked away from 50% equity in their homes, and remember as of right now, over 50% of America has over 50% equity in their home.

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On that note, now that you know you can work from home, why would you do it anyplace other than Hawaii? Give me a call" Lance Owens (RS) 808-936-8383 or email Lance@KonaHomeTeam.com and lets make your dream come true

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Aloha, and have a great day 

Lance Owens (RS)

(808) 936-8383

Lance@KonaHomeTeam.com

www.KonaHomeTeam.com

LUVA Real Estate 

75-240 Nani Kailua Dr #8 , Kailua Kona, HI. 96740 (Pines Plaza

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Kona Home Team (luva llc) Lance Owens (RS)

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