Legislators in Honolulu are targeting real estate speculators

[Tiger Beer]

I saw this on another forum - craigslist..

http://forums.craigslist.org/?SQ=hon...AID=&forumID=6

( February 14, 2006) -- Legislators in Honolulu are targeting real estate speculators with a bill that would require people who sell a property within two years of buying it to pay additional taxes on the sale. The bill is aimed at discouraging flipping, which lawmakers say is to blame for rapidly escalating housing prices on the islands. The median sales price for a single-family house in Maui rose 18 percent in 2005 to $725,000 from $594,500. The bill under consideration would multiply the rate of the conveyance tax — the tax paid to the state on any real estate sale — based on how many times that property had been sold over the previous two years. The seller would pay the tax increase. "I don't think we can ever curtail it,” says State Rep. Jerry Chang. “But I think it's an opportunity for us to capitalize on people who do this.” The additional revenue would be used to for homeless programs. As someone interested and doing for the first time, buying, fixing and selling, and also buying if I come across a great deal, I object to this. I don't think flippers drive prices up, demand drives prices up. If prices did not go up flippers would not flip. I know some of you think that flippers get caught and deserve what they get, but do you really blame them for prices rising? Also, is keeping prices low a good idea? As a homeowner, I want my prices to go through the roof. Why should I worry about afordabliity once I buy? Do they worry about stock getting too expensive for people to afford? Should they impose a tax on those who buy and sell stock too soon?

Any truth to this? Whatever happened with this?

Love the idea though.. just browsing on the websites for affordable housing.. about 99% of the ads are selling them as 'investment opportunities' and 'shows well' for potential rentors.. uggh.. something like this bill would be great for Hawaii.

whatever happened with it? Did it pass?

[poinographer]

Re: Legislators in Honolulu are targeting real estate speculators

I posted about this at my blog a while back.

That particular bill is dead, failed to get a hearing in the House Finance Committee.

[Tiger Beer]

Re: Legislators in Honolulu are targeting real estate speculators

hmm... too bad.. sounded like a great bill.

nice blog by the way.. i might be checking from time to time now too..

[timkona]

Re: Legislators in Honolulu are targeting real estate speculators

Legislators fail to address the REAL problem with housing in Hawaii. Not enough low-end, studio-style, rabbit hutches to house the marginally capable or marginally successful population. We build high end this and that, but we never build any Projects. Poor people need housing too, you know.

Many people believe that Developers and Speculators are the same people. NOT TRUE. Developers hate Hawaii. Speculators love Hawaii. Speculators look for markets where the politics of NO has taken over. They know that the people who practice the politics of NO are CRUCIAL to driving prices upward.

If there is a law of 2 years, and your life circumstance causes you move before that, should it be punished, even if you are just a joe-schmo homeowner.

This kind of misguided legislation is typical of liberal politics.

[Paul]

Re: Legislators in Honolulu are targeting real estate speculators

Many people believe that Developers and Speculators are the same people. NOT TRUE. Developers hate Hawaii. Speculators love Hawaii. Speculators look for markets where the politics of NO has taken over. They know that the people who practice the politics of NO are CRUCIAL to driving prices upward.

Please explain what the difference between a speculator and a developer is. Is it the fact that a developer actually builds and developes a property while a speculator is only interested in selling the property for a profit without building? Both are speculators in my mind. They are both speculating that something will be worth more in the future whether they build or not. There is nothing wrong with doing either. They both are taking risks for future rewards. That being said, I also think the proposed law is stupid. Market forces should control prices and this law would just distort these forces. Besides there is no gurantee that speculators who "flip" houses will keep making money. I believe the day will come when the prices will start going down and some of these speculators will be left holding the bag.

[timkona]

Re: Legislators in Honolulu are targeting real estate speculators

The basic difference between a developer and a speculator is that only one of them fires a nail gun on a daily basis.

Developers are not the bad guys, as is the perception in Hawaii. Developers are the contributors to our solutions. Without them, the homeless problem would be much worse. Yes, they take a chance. But it is a different type of chance that usually involves a much larger capital investment.

Speculators depend upon anti-growth environments, knowing that population and housing demand pressures grow, in spite of the politics of NO. People make whoopie. Whoopie makes children. Children grow up. Then they need homes. Speculators depend upon the basic notion of competition in the marketplace. When there are enough dwellings in a given market, there is very little competition, thereby driving speculators out of the market. When speculators discover markets that are dominated by the politics of NO (Hawaii), they know automatically that there is some easy money to be made.

Housing, Social Science, and Urban Planning are by far the most misunderstood concepts in the State of Hawaii, both at the leadership level AND among the rank and file of those who live here.

Hey Paul, I hope that helps to clarify.

[tutusue]

Re: Legislators in Honolulu are targeting real estate speculators

[...]Besides there is no gurantee that speculators who "flip" houses will keep making money. I believe the day will come when the prices will start going down and some of these speculators will be left holding the bag.

It's happened before and it'll happen again. Real estate is cyclical...almost up there with death and taxes!

[LikaNui]

Re: Legislators in Honolulu are targeting real estate speculators

Developers are not the bad guys, as is the perception in Hawaii.

Really? So you think the mainland company that wants -- no, intends -- to build five more hotels at Turtle Bay are not bad guys?!? Destroying the country ambience of the north shore and ignoring the wishes of almost all of us here on O`ahu, and they're not bad guys?
They're not a non-profit operation, ya know. They're in it for profit, pure and simple.
Sheesh.

[timkona]

Re: Legislators in Honolulu are targeting real estate speculators

That's a specific issue. I was trying to define the difference between Dev & Speculators.

It's certainly a much better plan for everybody on the North Shore to drive into Waikiki everyday to go to work at an older resort. Good thinking Lika.

[Paul]

Re: Legislators in Honolulu are targeting real estate speculators

The basic difference between a developer and a speculator is that only one of them fires a nail gun on a daily basis.

Developers are not the bad guys, as is the perception in Hawaii. Developers are the contributors to our solutions. Without them, the homeless problem would be much worse. Yes, they take a chance. But it is a different type of chance that usually involves a much larger capital investment.

As someone who actually has a degree in economics, I can't agree with this oversimplyfied analysis. A person who builds a house intending to sell it for a profit and not to live in it is a speculator. Why do you think they call them spec houses? Timkona is making this distinction based on faulty reasoning: the builder/developer works hard so he deserves to make money while the speculator just wants to profit without working. Neither of the two are "good" or "bad" guys. The goal of every company or commercial enterprise is and should be to maximize profits by any means legal. These two parties are trying to do just that.

Speculators depend upon anti-growth environments, knowing that population and housing demand pressures grow, in spite of the politics of NO. People make whoopie. Whoopie makes children. Children grow up. Then they need homes. Speculators depend upon the basic notion of competition in the marketplace. When there are enough dwellings in a given market, there is very little competition, thereby driving speculators out of the market. When speculators discover markets that are dominated by the politics of NO (Hawaii), they know automatically that there is some easy money to be made.

Repeating something over and over again will not make it true. If as Timkona says, the politics of NO is what is causing the realestate prices in Hawaii to go up, why didn't they go up in the 90s? Is he saying the politics of NO was less rampant back then and suddenly in 2001 we had a revolution and the politics of NO came in full force? I don't think so. Speculators/developers enter a market when they think profits can be made, plain and simple. There is nothing wrong with this. This is how a market economy works. Government should and does play a role in this too. There should be laws to mitigate what are known as externalities which I won't go into here.

[LikaNui]

Re: Legislators in Honolulu are targeting real estate speculators

It's certainly a much better plan for everybody on the North Shore to drive into Waikiki everyday to go to work at an older resort.

You mean, exactly like they're doing now, and like they've been doing for ages. So tripling the traffic on the north shore is going to help... how?

Good thinking Lika.

Good thinking, Tim.

[timkona]

Re: Legislators in Honolulu are targeting real estate speculators

A person who builds a house intending to sell it for a profit and not to live in it is a speculator.
I consider the folks who fire the nail guns to be developers. Spec Homes are built by developers.

The builder/developer works hard so he deserves to make money while the speculator just wants to profit without working.
I bet many who read that line agree with it, though not necessarily me. I’m for the free market myself.

Is he saying the politics of NO was less rampant back then and suddenly in 2001 we had a revolution and the politics of NO came in full force?
The revolution, in Hawaii, started in the wake of the Japanese implosion, and gained momentum with the “success” of the plaintiffs in the Hokulia lawsuit. No doubt that the politics of NO is much more prevalent now, than at any time ever in Hawaii. There is a generation of Americans who got their "protest" degree during Vietnam, then did their graduate work in environmentalism. They are true experts at saying NO to just about anything. Some call them CAVE people. (Citizens Against Virtually Everything)

Speculators/developers enter a market when they think profits can be made, plain and simple.
Only 1/2 of that is truth. I personally know of 3 large developers who have pulled out of Hawaii Island based upon the fact that they can find easier profits in other locales. There is a growing sentiment in the politics of NO in Hawaii by miseducated members of our population. Speculators keep a very close watch on this phenomenon by hawking newspapers for articles about protests. Where growth protests are loudest, speculators flock like vultures to the kill, and developers run for greener pastures.

An economics degree? That’s right up my alley. I’m an appraiser, and follow the economy very closely. I wrote a paper in an Economics course in 1988 that was called Pig in a Python. I tracked birth rates in the 50’s, toy sales in the 60’s, college admissions in the 70’s, the growth of the economy in the 80’s, and then predicted the explosion in the medical/pharmaceutical industry and the retirement housing trend we are currently just beginning. There are several books nowadays with that title, so I wonder where that thesis ended up. Demographics, as it applies to our economy, should be a surprise to nobody.

[Paul]

Re: Legislators in Honolulu are targeting real estate speculators

I wrote a paper in an Economics course in 1988 that was called Pig in a Python. .........There are several books nowadays with that title, so I wonder where that thesis ended up.

The resemblence of the birth rate curve to a pig in a python was well known for many years. We all know it was the effect of the baby boom. You are being very presumptuous in assuming you coined the term. I guess you invented the internet too.

The rise in realestate prices in Hawaii was due to many factors. The primary one being that prices on the mainland also went up. The so called politics of NO had little to do with it. So now you are saying the Hokulia lawsuits started a revolution in Hawaii politics that ultimately led to the current situation? That's really stretching things.

[timkona]

Re: Legislators in Honolulu are targeting real estate speculators

There is a heightened sense of awareness for bones among Hawaiians today as compared with 50 years ago.

There is an increased interest in our planet and the things we are doing.

There is much more red tape in bureaucracy today than 50 years ago.

All of these manifest themselves in the politics of NO. Taken together, they result in lots of intransigence.

[Adri]

Re: Legislators in Honolulu are targeting real estate speculators

There is a heightened sense of awareness for bones among Hawaiians today as compared with 50 years ago.

I know I'm drifting far from the topic, but this made me think of a story (about a heightened awareness of things Hawaiian) an old time developer used to tell about how when he was a boy, as a prank, he placed kapu sticks at the entrance to a hotel development project and the project completely halted for days as the developers tried to figure out what the kapu sticks meant and what they had to do. These days I wonder if developers would even recognize kapu sticks and if they did, if it would halt development or if they'd toss the sticks away and pretend they nevah see (unless it was accompanied by a public protest and media coverage).

Sort of closer to topic, a large number of bills get introduced each year and I believe it's a good thing that much of it doesn't go anywhere. Not all solutions can or should be legislated. The legislators are also caught between not wanting to seem anti-business and still trying to address concerns like the shortage of available housing. There is a bill completely re-doing the condo laws, though, that looks like it will pass. I'm interested in seeing the final draft of that one.