- It's a challenge keeping
up with the still-escalating real estate prices. The frenzy is
still going strong, although you'll hear differing evaluations
from different real estate professionals. Some say the market
is stabilizing and others insist that it is still nuts. I'm going
with nuts.
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- We keep on top of the
market pretty well and there are some interesting reasons why
from some perspectives, the market appears to be "stabilizing."
Our sense of this comes from some of the properties that have
been on the market for months. Any time there are properties
on the market for long periods, it seems like things are slowing
down. But when you take the time to examine these properties
and figure out why they're still available, it all makes sense.
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- It is our experience
that any reasonably-priced properties still sell almost instantly.
So what we have here are some sellers, and perhaps they are encouraged
by their agents, who price their properties way beyond reasonable.
They do this because they are in no hurry to sell, or worse,
don't even care if they sell. They just figure, hey what have
I got to lose? Some nut from San Francisco might come over here
with a boat load of money and pay this insane price, and if not,
it costs me nothing to list the property.
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- There are some homes
here in Hilo that have been on the Multiple Listing Service (MLS)
for many months. We've looked at most of them and it is obvious
to us why they don't sell. Apparently, it is obvious to all the
eager buyers, too, because the houses just sit there, unsold.
So having a bunch of unsold properties on the MLS makes it appear
that the market is no longer in a frenzy, when in fact it really
is.
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- We've looked at a number
of houses in just the last few months that we felt were a bit
overpriced, and they are usually in escrow within the first few
days on the market. Homes that are priced right on today's market
value often sell the day they're listed, so yes, we still have
a strong market. Observe the listings at Hawaii Information
Service for your
own evaluation. If you see what appears to be a reasonably-priced
property, check it again in a few days. More than likely, at
the bottom of the listing will be a notation like: "This
property is in escrow but the seller is taking backup offers."
And as I described in my last Report, some properties are also
sold before they ever make it onto the MLS. If you want to know
how this works and haven't read that report, check it out.
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- My last Report on real
estate values was nearly a year ago, and according to most sources,
property values have risen anywhere from 30 to 60 percent in
that period. Why the big range? Again, it depends a lot on where
you're looking. Premium properties have had the highest increases,
while outlying properties are still going up, but nowhere near
as fast as anything right in town, with an ocean view, or on
the now-really-expensive Hamakua Coast.
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- Hamakua Coast properties
have gone from double to triple what they were only two years
ago. It is absolutely unbelievable what people are now paying
for 20 acres of cane field. We thought these subdivisions were
high at $150-200K. Now they're going for $400-600K. It's hard
to imagine paying that much for the land on which you will be
building a home that will likely cost you another $200,000 or
more. And some of these properties are beyond the utility lines,
too. Some have really basic access, like a half mile of road
that looks like a washed-out river bed. We've looked at some
of these properties that were four-wheel-drive access year 'round
with the caveat that after a heavy rain there's no way of getting
in or out for a while.
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- Mortgage rates are
climbing again, and that will eventually cool of the buying spree,
but not in the near future. So if you are seriously planning
on buying a home or land in Hawaii, you might not want to wait
until prices come down. There are some who will tell you about
the market surge in the late '90's and then how the bottom fell
out two or three years later. "History repeats itself,"
they like to warn you. Well, history does evidently repeat itself,
but it seems to choose its own course of time. The forces driving
today's market surge are not the same as any that have come before.
Blame it on the boomers, blame it on word-of-mouth about "discovering"
Hawaii, blame it on the fact that even at the higher prices,
Hawaii real estate is still a bargain compared to a lot of places
on the Mainland. This applies well to West Coast property values,
and that's where a large percentage of our new arrivals are coming
from.
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- The bottom line: Expect
to pay at least $250K for a decent house in Hilo. They come up
for that price from time to time, but you have to be on top of
it to score. This means you must be here at the right time, and
not on the Mainland looking at ads. In this market, that won't
work.
- There are too many
buyers who are lurking around the Island, cash in hand, diligently
following up every lead. Unless you are one of them, you'll have
t count on extreme luck.
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- News Flash! As I just drove into our driveway
here in the beautiful hills of Hilo, I saw a "for sale"
sign posted on the house next door. Surprise! So I immediately
went to my computer and was again surprised to see it listed
for $249K. This is a 1440 sq. ft. house on a large lot that backs
up to Forest Reserve. The street is a very quiet dead-end and
it's in the desirable DeSilva School district. I wish we could
afford to buy it, because it is certainly priced right. I wish
our neighbors had told us they were going to sell, because removing
the $15,000 commission that the realtor will receive would have
made it irresistible. Anyway, my point in bringing it up is that
there are still great deals to be found, even in Hilo.
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- Prices in the huge
East Hawaii subdivisions have gone up again, too. Expect to find
prices of $40K on up for the one-acre lots in HPP, slightly more
in Leilani Estates. There are far cheaper properties in Orchidland
and up in the Mountain View areas. Hawaiian Beaches and Shores
subdivisions are showing some reasonable prices for both homes
and lots - as long as there is no ocean view!
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- What is surprising
is that the values of East and West Hawaii properties are now
quite comparable, where only two years back, Kona-side values
were substantially higher. Unfortunately, East Hawaii has indeed
been discovered, and there are lots of investors actively engaged
in escalating prices for everyone. It's making it really hard
on the folks who have lived here forever and can no longer afford
to buy a home. We see many properties listed on the MLS, then
they disappear only to reappear a few months later at twice what
they sold for.
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- Greed is never a pretty
thing, and it sure isn't helping anyone other than the profiteer
here. We're hoping that things do level off a bit so that the
people who are in it just for the money will go elsewhere and
let those who cherish the idea of living in Hawaii have a chance.
That's it for now!
A hui hou!
Skip Thomsen
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