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

[timkona]

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

Zillow is another version of an Automated Valuation Model. AVM's are notorious in the valuation industry. Would you accept 1.2m for the two properties? I think not.

AVM's in Hawaii are even worse due to the sketchy, and sometimes inaccurate information that can be found in the public record data in Hawaii.

No doubt, AVM's are fun on the internet. And they prolly sell lots of popup ads. But I would not bet the farm on 'em. Pun intended.

[Paul]

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

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

You win the bet because I don't think it makes me look silly at all. I don't think I've contradicted myself by saying what I did because I think the $280,000 appraisal was still too high.

I don't hate you or any other person working in the real estate business. You are all just trying to make a living but by doing so, you've all created a monster of bubble. When it bursts it's going to be ugly. I wouldn't be thinking of buying any realestate at today's prices.

[Paul]

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?

I've never read the book myself but Kiyosaki's article brings up an interesting point. The real estate market in Hawaii was in a big depression until about 2001 when as he says it caught on fire. Before that prices where going nowhere for more than 10 years. What caused the sudden turnaround? It just CAN'T be a matter of demographics as our friends in the business like to say. The number of retirees wanting to come and live could not have increased so dramatically in just one year. That's why I believe a bubble exists created by over hyped valuations.

[Miulang]

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

I've never read the book myself but Kiyosaki's article brings up an interesting point. The real estate market in Hawaii was in a big depression until about 2001 when as he says it caught on fire. Before that prices where going nowhere for more than 10 years. What caused the sudden turnaround? It just CAN'T be a matter of demographics as our friends in the business like to say. The number of retirees wanting to come and live could not have increased so dramatically in just one year. That's why I believe a bubble exists created by over hyped valuations.

Why Hawai'i real estate prices became so inflated in the 70s and 80s is because the Japanese yen was very healthy, as was the Japanese economy. So people in Japan (the rich ones anyway) started buying up hotels and golf courses and luxury homes because it was cheaper to buy stuff in the US than it was in Japan. Then the yen and Japan's economy went bust and there were all kinds of bankruptcies in the late 80s and throughout the 90s.

In about 2001 (after 9/11) the US stock market started going haywire, and investors started pulling their money out of the stock market because they were getting scared that they would lose all their money, and hey, owning real estate was a safe bet because the value of a house could never go down, right? So a lot of Mainland investors bought real estate in Hawai'i because owning a house in Hawai'i was still a reasonable investment because Hawai'i was a desirable place to live.

Now the various county governments are talking about issuing building moratoriums and taxing nonresident owners of properties up the ying yang, so that may scare off some potential investors. But the only thing that will keep lots of investors away from Hawai'i is if the stock market gains traction again so people start putting money back into their money market and retirement funds instead of using real estate as their retirement fund.

Miulang

[Paul]

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

But the only thing that will keep lots of investors away from Hawai'i is if the stock market gains traction again so people start putting money back into their money market and retirement funds instead of using real estate as their retirement fund.

This is also a factor. Now that I see the DOW has come back above 11,000 and stayed above that level, we could start seeing this very thing happening soon. A bust in one sector leads to a boom in another but the boom doesn't keep going forever.

[kamuelakea]

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

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

Anyone who trys to imply that real estate will continue to grow at 15% is a slut and a whore. History proves them wrong.

Aloha

[timkona]

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

For South Kona in 2005, median price rose by over 100% for all properties sold.

I agree that it must stop somewhere. But the Dow is stuck in neutral at 11,000 and the fed is raising rates, which the Dow hates. Real Estate is a decent investment during inflationary times, because the real value of a mortgage essentially shrinks as a percentage of home value rise caused by inflation.

Combine that with the fact that the politics of NO is preventing many kinds of dwellings from being built in Hawaii, and immigration of retirees is just beginning. Gotta love all those old baby boomers. And all their kids. Gotta love those kids.

My prediction for the Hawaii Real Estate market to slow down is 2017.

[Miulang]

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

It's already starting to slow down. More unsold houses on the market for a longer period of time. It's definitely a buyer's market now. Prices will never get as low as they were in the 1970's, but there won't be much profit taking either. The stock market will be stronger after the midterm elections this year, and investors will move away from real estate and back into stocks, which are more liquid and historically have provided great returns over time.

Miulang

[tutusue]

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

My prediction is that real estate will, like a roller coaster, cyclically continue to rise and fall just as it has in the past! And, that over the long term, it will continue to be a great investment...depending, of course, on when one chooses to invest. Hey, I didn't graduate from Laguna Beach High School for nuthin'!

Hmmm...still trying to figure out the 'slut' and 'whore' reference to anyone who feels RE will continue to grow at 15%. I wonder if that's analogous to anyone who makes stupid remarks being a gigolo and a lech? Dunno.

[Miulang]

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

The right stock portfolio will get you more than a 15% annual return on investment right now, and it's way easier to sell stocks than it is a house!

Miulang

[tutusue]

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

The right stock portfolio will get you more than a 15% annual return on investment right now, and it's way easier to sell stocks than it is a house!

Miulang

I'll gladly take the name of any investment advisor with a great track record who can get me 15% with a minimum amount of risk! Really!

[shaveice]

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

Miulang, you know i appreciate your posts but i'm puzzled by some of your comments. for example, you said that it's definitely a buyer's market now. well, like everyone else, i've read or seen the reports on how the number of homes/condos sold is lower this past month than in previous months but i don't think that makes it much of a buyers market. in my opinion, prices are still extremely inflated. i don't have a crystal ball and i don't know how far prices will decline but i'm inclined to think that prices have a long way to go before i'd call it a buyer's market.

also, the comment that the "right" portfolio will get you more than a 15% r.o.i. is, i think, a bit misleading. it gives me the impression that you believe it to be pretty easy to get that kind of return. for what it's worth, i don't think it's that easy. naturally, i'm no expert in this area but there's no discussion on the element of risk one is willing to take to see this kind of return and more generally, i think any investment firm that can deliver a 15% return is doing pretty well.

to be fair, you may have the kind of money in the bank that makes today's home prices seem like a buyer's market and perhaps your investment portfolio consistently returns 15%; if so, my hat's off to you!

[kamuelakea]

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

Hmmm...still trying to figure out the 'slut' and 'whore' reference to anyone who feels RE will continue to grow at 15%. I wonder if that's analogous to anyone who makes stupid remarks being a gigolo and a lech? Dunno.

Have to know the context. Timkona is in the business of inflating appraisals so the the suckers can get the loans so that the banker and the real estate agent can make alot of money off of a loan that is probably going to go bad but they all don't care because they will sell the loan within days to Fannie Mae. Thats the slut and whore reference. I know I have to explain more to some people like tutusue. No worry tutu, Kamuela go slow foah da kupunaz.

Hawaii's real estate is already slowing and typical of Hawaii it will BOOM and BUST. Timkona is about 10 years late with his prediction. 2007 will begin the downward slope. Real estate corrections usually only takes 3 years to drop. Hawaii's real estate has historically (since statehood) returned just over inflation. Owning a diverse ETF like Diamonds or Spiders over the same long period would have destroyed that return.

Again, buying a home for 3000 per month when you could rent it for 1500 makes no sense as an investment, unless you believe people like Timkona who believe the world is different now, the economy is different, Hawaii is different and what happened over the past 55 years is irrelevant.

If Bird Flu hits, Hawaiis real estate will drop by 50% OVERNIGHT. Garanz.

[Miulang]

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

Miulang, you know i appreciate your posts but i'm puzzled by some of your comments. for example, you said that it's definitely a buyer's market now. well, like everyone else, i've read or seen the reports on how the number of homes/condos sold is lower this past month than in previous months but i don't think that makes it much of a buyers market. in my opinion, prices are still extremely inflated. i don't have a crystal ball and i don't know how far prices will decline but i'm inclined to think that prices have a long way to go before i'd call it a buyer's market.

also, the comment that the "right" portfolio will get you more than a 15% r.o.i. is, i think, a bit misleading. it gives me the impression that you believe it to be pretty easy to get that kind of return. for what it's worth, i don't think it's that easy. naturally, i'm no expert in this area but there's no discussion on the element of risk one is willing to take to see this kind of return and more generally, i think any investment firm that can deliver a 15% return is doing pretty well.

to be fair, you may have the kind of money in the bank that makes today's home prices seem like a buyer's market and perhaps your investment portfolio consistently returns 15%; if so, my hat's off to you!

Heheh. I didn't say the housing market prices were reasonable (they're not; they're grossly inflated), I only said that buyers who have the cash can now have their pick of what's available because real estate is no longer moving as quickly as it was even as recently as 3 months ago. Flippers are starting to realize that maybe the heyday of buying something and then reselling within months for a huge profit is past now. The reason? Interest rates are on the rise and anybody who got sucked into one of those "creative" 50-year, no interest mortgages with the balloon payment at the end is starting to sweat bullets now. Anybody who would want to "will" a mortgage to their kids is nuts. Foreclosures will also go up, which means the cost of housing will go down because banks don't want to own real estate and will unload whatever they can as quickly as they can at auction.

It's not easy to get an annualized return of 15%, but if you study the market, it IS possible. Most of my retirement money is in socially responsible investments (and Starbucks), which means I'm not optimizing my money, but hey, I have a conscience too. I have made about $8,000 on my piddly little amount since about October, which ain't too bad. I could probably have made about $12-15k investing in an aggressive portfolio in the same amount of time. Before I took out my pension from my former company's plan, it was only making about 3% annually, only a little better than a savings account in the bank.

Miulang

[Konaguy]

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

Kamuelakea, I got a question for you ? Are you in the real estate industry ?
I'm curious as it seems you have this crystal ball, saying all this chicken
little "the sky is falling" stuff. I'm not trying to begrudge your opinion, but
it seems you are extremely cynical (based upon what you've posted). It
seems your just angry how expensive housing has gotten, thus pricing
the locals out of the market. I personally see the market leveling out,
not a repeat of the early 1990s Japanese bubble pop.

just my .25 for today.