Million-dollar mansions just ain't what they used to be

[Glen Miyashiro]

Remember we were talking about how the median price of homes in Hawai'i keeps going up, past a half-million dollars? Well, it gets worse.

If a half-million dollars won't even buy you an average house, then what can you get for a million dollars? Four years ago, there were only 141 homes on O'ahu that were valued at a million. But now, there are 15,000 homes assessed at $1M or more.

[kamuelakea]

Re: Million-dollar mansions just ain't what they used to be

Four years ago, there were only 141 homes on O'ahu that were valued at a million. But now, there are 15,000 homes assessed at $1M or more.

Can you say "HOUSING BUBBLE" and "CRASH"?

3 to 5 years, we see who's standing.

[timkona]

Re: Million-dollar mansions just ain't what they used to be

Guru's been talkin Bubble & Crash for over 3 years now.

A simple review of population demographics would indicate that over 60 million Boomers are starting to retire. A few of them have enough money to move to Hawaii to fulfill a lifelong dream. Are YOU a boomer? You would also find that housing markets in $hl+ hole areas of America like Detroit, and pretty much anywhere it snows, are sagging at best. Ever see a 70 year old man shovel snow? Not likely. "Martha, it sure feels colder this year." It's not colder. You're just older.

The housing boom in Hawaii (and other sunny climes like AZ, NM, etc) will continue until about 2017 when the Boomers will be done migrating around the nation, from cold to warm.

In Hawaii, appreciation has dropped from over 40% annual to around 15%. Some call it a bubble. I call it a great ROI.

"Boomers are moving through society like a pig in a python. It's easy to predict what they will buy next."

[na alii]

Re: Million-dollar mansions just ain't what they used to be

Guru's been talkin Bubble & Crash for over 3 years now.

A simple review of population demographics would indicate that over 60 million Boomers are starting to retire. A few of them have enough money to move to Hawaii to fulfill a lifelong dream. Are YOU a boomer? You would also find that housing markets in $hl+ hole areas of America like Detroit, and pretty much anywhere it snows, are sagging at best. Ever see a 70 year old man shovel snow? Not likely. "Martha, it sure feels colder this year." It's not colder. You're just older.

The housing boom in Hawaii (and other sunny climes like AZ, NM, etc) will continue until about 2017 when the Boomers will be done migrating around the nation, from cold to warm.

In Hawaii, appreciation has dropped from over 40% annual to around 15%. Some call it a bubble. I call it a great ROI.

"Boomers are moving through society like a pig in a python. It's easy to predict what they will buy next."

I met this couple in the late 80s at the Ilikai during Pro Bowl week and they come to Hawaii every year around that time. They were from Minnesota near International Falls where winters go below 0. Somewhere in the 90s I asked them how was Minnesota and they told me they are now retired and moved south to Arizona.

[kamuelakea]

Re: Million-dollar mansions just ain't what they used to be

Guru's been talkin Bubble & Crash for over 3 years now.

A simple review of population demographics would indicate that over 60 million Boomers are starting to retire.

In Hawaii, appreciation has dropped from over 40% annual to around 15%. Some call it a bubble. I call it a great ROI.

"Boomers are moving through society like a pig in a python. It's easy to predict what they will buy next."

Home prices in the long run have less to do with demographics than they do with INCOME and INTEREST RATES always tempered by ROI or RENT. You must be in the real estate business because there is NO residential real estate market that has consistently returned 15% over the long run.

Who will continue to buy a 800,000 termite palace in Kapahulu and pay 5000 per month in expenses, when they could rent the same dump for 2000? That's a silly investment.

Hawaii's appreciation since state hood is just over inflation at about 6% per year on average. Add in the tax savings and subtract out all the Home Depot costs and its really a no big deal investment. Piece of mind and pleasure, sure, but investment? Barely.

Hawaii's average household income was around 60K last I checked. People usually can purchase a home for 3 times their income. Low interest rates and desperation in Hawaii could bump that up to about 5 max. That means that the median home in Hawaii should sell for 300K. Instead its double. Thats a bubble.

The only way you will be right is if Hawaii becomes entirely rich mainlanders and poor filipinos to clean up the hotels. No police, no fire, no teachers, no state workers, nobody. I doubt it.

Many properties in Hawaii dropped by 50% between 1993 and 1998. How short our memories are.

[kamuelakea]

Re: Million-dollar mansions just ain't what they used to be

A simple review of population demographics would indicate that over 60 million Boomers are starting to retire. A few of them have enough money to move to Hawaii to fulfill a lifelong dream. Are YOU a boomer? You would also find that housing markets in $hl+ hole areas of America like Detroit, and pretty much anywhere it snows, are sagging at best. Ever see a 70 year old man shovel snow? Not likely. "Martha, it sure feels colder this year." It's not colder. You're just older.

This is classic Real Estate Agent speak. Hawaii is not a magnet for massive numbers of retirees. Never has been. Real estate types all have the same talking points. "They don't make any more land" "This is an island" "We are unique" "Everybody wants to live here" "This is paradise, god's country" blah blah blah.

Guess what? They say the same thing in San Diego, San Francisco, Marin, Arizona, Pheonix, Orange County, Florida, etc etc etc. Most mainlanders I know see Hawaii's beaches and weather as great places to visit but they would never want to live here.

They said the same things in Japan in 1990 and guess what? Prices were at silly levels and sure enough fell to 50% or less. Many properties in Japan today have not recovered from their highs 15 years ago. Many properties in Texas today have not returned to their highs of the 1980 oil boom.

Hey Tim, don't you ever feel guilty talking these poor folks into lifetime servitude to pay off their mortgages or worse bankruptcy?

[timkona]

Re: Million-dollar mansions just ain't what they used to be

This is classic Real Estate Agent speak. ....

Hey Tim, don't you ever feel guilty talking these poor folks into lifetime servitude to pay off their mortgages or worse bankruptcy?

You must know by my abrasive truth telling that I'm not in sales of any kind. I am an Appraiser. I work for the banks who lend the money to the people who really want a house, but can barely afford it.

To most of you born in these islands, I am like Robin Hood. The banks are the rich. The locals are the poor. My job is to help the big money change hands.

It's a "feel-good" job when I know that my timely appraisal helped close the deal for "Aunty & Uncle".

Funny how some folks would hitch the Gift Horse to the Budweiser wagon.

[kamuelakea]

Re: Million-dollar mansions just ain't what they used to be

You must know by my abrasive truth telling that I'm not in sales of any kind. I am an Appraiser. I work for the banks who lend the money to the people who really want a house, but can barely afford it.

To most of you born in these islands, I am like Robin Hood. The banks are the rich. The locals are the poor. My job is to help the big money change hands.

It's a "feel-good" job when I know that my timely appraisal helped close the deal for "Aunty & Uncle".

Hahahah, you gringos, you could talk an indian into selling Manhattan. No shame haoles.

The banker/mortgage/appraiser/real estate industry is one of the most whore filled endeavors in America today.

The way I see it, the Appraiser is supposed to act like the Pharmacist does in medicine - as an "independent regulator and guardian". Pharmacists seem to do a pretty good job at protecting the public and the physicians from drug abuse.

But appraisers as a group are just another player in the game. Your buddy the agent gives Timkona a call and says he needs this appraisal to be so much higher in order to get the loan. And of course, even without legitimate comps, good old Timkona, who believes real estate increases in value 15% per year in perpetuity, jacks the appraisal up accordingly. Everybody's happy, everybody gets paid, except the poor sucker who just overpaid for the home.

I've always been amazed at how some "groups" can be so proud and self congratulatory when they spend their lives being so dishonest.

Brah, you are in sales whether you know it or not.

[Paul]

Re: Million-dollar mansions just ain't what they used to be

For once on this forum I agree wholeheartedly with Kamuelakea. The only people denying the real estated bubble are people who have a financial interest in denying it exists such as real estate agents, loan officers, and appraisers. I believe these same people actually contributed to the bubble forming by a step by step exagerating of prices. I see it happening in my area already. About a year ago the lot next to mine was bought by a speculator who intended to build a house and sell it for a nice profit. Today the house is complete but the owner was forced to live in it after he found out his real estate agent grossly exagerated the value. The agent was saying he could get $480,000 for it but it appraised for $280,000 which is a little less then the cost to build it. Check out the link to an article by Robert Kiyosaki.

http://www.twbookmark.com/jrun/autho...icle21754.html

[shaveice]

Re: Million-dollar mansions just ain't what they used to be

hi paul,

thanks for an interesting post, particularly for the link to kiyosaki's article. i've heard the title but never bothered to read the book (rich dad, poor dad); may i presume you believe the book to be well worth reading? other books/articles you'd recommend, particularly as they apply to hawaii?

[Glen Miyashiro]

Re: Million-dollar mansions just ain't what they used to be

thanks for an interesting post, particularly for the link to kiyosaki's article. i've heard the title but never bothered to read the book (rich dad, poor dad); may i presume you believe the book to be well worth reading? other books/articles you'd recommend, particularly as they apply to hawaii?

We were just talking about Robert Kiyosaki the other day in this other thread.

[timkona]

Re: Million-dollar mansions just ain't what they used to be

For once on this forum I agree wholeheartedly with Kamuelakea. ...... The agent was saying he could get $480,000 for it but it appraised for $280,000 which is a little less then the cost to build it.

So let's see....Appraisers are dishonest and you agree with Kam....then you say the house "APPRAISED" for $280,000, well under someones hopes.

I bet you still don't realize how silly that makes you look.

In fact, today I turned in a very quick refi-appraisal (4 days) for a wonderful family in South Kona, such that their brilliant child can continue to attend a prestigious college.(Not Yale, btw) It's always refreshing to see a member of the "me generation" sacrifice so heavily for their children.

Haters will hate cuz that's all they know. Bwahahahaha !!

[Jonah K]

Re: Million-dollar mansions just ain't what they used to be

For once on this forum I agree wholeheartedly with Kamuelakea. The only people denying the real estated bubble are people who have a financial interest in denying it exists such as real estate agents, loan officers, and appraisers. I believe these same people actually contributed to the bubble forming by a step by step exagerating of prices. I see it happening in my area already. About a year ago the lot next to mine was bought by a speculator who intended to build a house and sell it for a nice profit. Today the house is complete but the owner was forced to live in it after he found out his real estate agent grossly exagerated the value. The agent was saying he could get $480,000 for it but it appraised for $280,000 which is a little less then the cost to build it.

Appraisals can always be double or even triple-checked. To rely on the opinion of a single real estate agent or appraiser is foolhardy and the speculator in the above example probably got what he deserved. As for the "real estate bubble", let's just say that some markets are over-valued to varying degrees and some are under-valued to varying degrees. It might be somewhat enlightening to check out Zillow.com to see what houses in different areas might be worth.

[timkona]

Re: Million-dollar mansions just ain't what they used to be

good old Timkona

if you knew me, or someone who knows me, you would see the paradoxical humor in that statement

i am, explicitly, neither good (dishonest to help my friends), nor old (as in anybody over 40)

but you made me chuckle, and for that I am grateful. LOL

[Miulang]

Re: Million-dollar mansions just ain't what they used to be

Appraisals can always be double or even triple-checked. To rely on the opinion of a single real estate agent or appraiser is foolhardy and the speculator in the above example probably got what he deserved. As for the "real estate bubble", let's just say that some markets are over-valued to varying degrees and some are under-valued to varying degrees. It might be somewhat enlightening to check out Zillow.com to see what houses in different areas might be worth.

Heh. I "Zillow'd" my parents' address in Wailuku and Zillow came up with a price of $400,527 for a 50+ year old, 3 bedroom, 1 bath house. Then I Zillow'd my parents' other house in Kula and the application says it's worth about $827k (3 bedroom, 1 bath + 1/2 bath in the garage on 2/3 acre) that's about 40 years old. I bet my parents could get more than $827k for that Kula house because of the view, if somebody wanted to tear the place down and put up a McMansion!

Miulang