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+--- Thread: Land Prices Get Even Cheaper (/showthread.php?tid=4767)
RE: Land Prices Get Even Cheaper - pslamont - 01-17-2009
I just can't help myself... so here goes:
It's all a matter of perspective. If you are BUYING right now, the market is GREAT. I see potential and opportunity buying from those who are impatient or who bought something they couldn't afford. I think the whole bail-out concept is hooey....people got subprime loans, negative amortization loans, loans with no proof of income; they borrowed heavily against a house on the mainland to finance building in Hawaii, all so they could make an investment in something they couldn't afford and want it to be someone elses fault. You play hardball, sometimes you lose. That is how it works.
This is no different than the stock market in the 80's. Tech stuff soared, some of us bought and lost a bundle when they fell through the floor. It's risk when you buy anything for investment. No one bailed me out and said "oh, poor you... you made a bad investment and you can't afford the loss so you get a "do over"". I was smart enough not to risk what I could not afford to lose. Others went bankrupt. I say shame on them for their greed.
As for housing values.... it's the whole country, not just HPP. In San Diego county, 25% of the homes are in foreclosure. There are sections in those huge tracts built in the last five years empty now because of it. Governor Schwartznegger pushed recently through legislation that requires a bank to re-assess a home and offer a modified loan at the new lower value at a fixed rate to an owner before they may begin foreclosure! He did this because the national banking bail-out put the banks in position to absorb losses. It's all insane to me.
What does it matter the market value of a house you plan to live in for the next 20 years? You took out the loan, you make the payments. That is the contract you agreed to. You buy on credit, you have bought something you can't afford. Mortgages are the American way and we all accept it as natural, but it really is not. You pay around a million dollars for your two hundred thousand dollar house with all the interest to the banks. How smart is that? So why be surprised at a fluctuation in values?
Many people bought in east Hawaii BECAUSE they thought it was such a bargain. Did you look at the values over the last 10 years? Did you see the trend? Did you do what many did.. .build a house to rent out until you retired by refinancing your mainland home.... only to have the mainland home decrease in value AND flooding the east Hawaii housing market with rentals, causing that to drop rental values by hundreds of dollars? You took a risk. If values had doubled you wouldn't be saying "oh, I feel sorry for the poor guy who has to buy my house" ; you would celebrate your good fortune.
Every one of us who came to Hawaii from somewhere else did so because we saw an opportunity, whether it was social or economic. We made a choice, we affected the local economy in a big way and we experience the gains and losses that result. Again, the major crisis isn't HPP, or PUNA or Hawaii... it's not even the nation, it's the world. We are lucky to live in a place where agriculture is an option. You did note that the lot you bought was probably zoned agriculture and you were thrilled at the lower taxes because of that, right? Well, start an old fashioned victory garden, barter with your neighbors, make the payments you freely agreed to and stick with it. It will go up eventually... we just don't know the timeframe of eventually. We are greedy assuming everything appreciated every year. World economy isn't going that trend at the moment and we are experiencing what everyone else is... at least we are doing it in a place we often call paradise! There is no snow to freeze us out. Food is abundant if you do some work and open your eyes. There is wild pig in the mountains and fish in the sea. Fruit, coffee, vegetables... they all grow large and fast. Can't afford Honey Nut Granola Sparkly cerial? Eat oatmeal. The world doesn't owe any of us steak and eggs! The bus is free, for goodness sake. I NEVER saw that anywhere before. We are spoiled whiners. We think our retirement investments were supposed to be a sure thing.. guess again!! Never has been, never will be. We are lucky to have what we have. When in history did families not have to live with multi-generations in a home to make it as they aged? We live well....we eat well... and we whine because on paper our values aren't what we want them to be. UGH...
Okay, I have now officially ranted and at least half of you will lower your opinion of my usually generous nature. All I can say is that we are in for a difficult time, it is our own fault, and we can whine about it or make life choices to weather it. I for one am planting, raising meat, paring down the luxuries and sharing what I can. The roller coaster ride of life will swing up and swing down and the survivors will be those with open eyes, willing to do some work and not sitting around whining how the world owes them something. You think my dream house in Hawaii included getting up and letting out the sheep to graze, feeding the chickens, scraping chicken poop up, chopping banana leaves for hours to feed those animals, mowing, digging, planting, hauling... YES! I am retired from my profession, but we don't retire from life. We take what we have and we make it work.
Oh, gosh... well, it's how I feel and what I think. Color me jaded but I figure you get out what you put in and anyone who invests in a property on credit (mortgage) is taking a risk. It's about the most secure risk you will ever take and it WILL be solid over time, but in this current world of INSTANT everything, we just may have to hunker down and WAIT instead of move and change on a whim. People's circumstances change. Problems and unexpected dilemmas arise. That is all part of the risk. To assume our choices guaranteed us some level of luxury and comfort in old age is a really bad assumption. Life holds no guarantees. We wake each day and make the best of it. If we are lucky enough for things to be easy and smooth, we should be counting our blessings and good luck, not assuming it is owed to us. We are entitled to NOTHING in this life. We roll the dice and we take our chances every day.
As for PaulW's statement... "Look for the 20K HPP lot within a few weeks"... if it is within 5 blocks of the ocean, I will probably buy it! And if it is worth only $15,000 in two years, it is not anyone's fault. It will have been my choice in the guessing game of what is a good deal!
Okay, it's really late and I probably ate too much chocolate today.
I love you guys, but quit whining about real estate values. The world is on a bumpy path and we just have to get through it.
Pam
RE: Land Prices Get Even Cheaper - allensylves - 01-18-2009
Pam,
RIGHT ON!!!
Allen
Baton Rouge, LA & HPP
RE: Land Prices Get Even Cheaper - Kelena - 01-18-2009
I propose we all send Pam a box of chocolates. I'll chip in.
RE: Land Prices Get Even Cheaper - Noel M2 - 01-18-2009
Aloha Pam,
Thanks for sharing - your words put it all into perspective for me. Now is not the time to panic but to carefully think through our options (and their consequences) before acting. I need to get some of your chocolates.
Noel
http://HiloParadise.com
RE: Land Prices Get Even Cheaper - John S. Rabi - 01-18-2009
quote:I know many who did celebrate! [
Originally posted by pslamont
If values had doubled you wouldn't be saying "oh, I feel sorry for the poor guy who has to buy my house" ; you would celebrate your good fortune.
] Seriously, no risk no reward.Aloha,
John S. Rabi, GM,ARB,BFT,CM,CBR,FHS,PB,RB
808.989.1314
http://www.JohnRabi.com
Typically Tropical Properties
"The Next Level of Service!"
RE: Land Prices Get Even Cheaper - ric - 01-18-2009
Well said Pam. It's about personal responsibility. Take away the risks and rewards, let the government take care of us, and we could all live in identical gray boxes.
RE: Land Prices Get Even Cheaper - Guest - 01-18-2009
Very sage indeed Pam.
RE: Land Prices Get Even Cheaper - Hotzcatz - 01-19-2009
I haven't bothered to compare numbers yet, but have prices reached ones similar to 1997 - 2000 prices yet? I'm now thinking they will go below those prices, though, since those lows were driven by an extreme poor local economy but not a worldwide one. Previously, I had thought land prices would drop to about 7% to 12% above the '97-'00 prices and then head back up again but this depression has gone or is on it's way to going global so prices will hit new extreme lows, IMHO. I don't see any bottom in sight until jobs are back and the U.S. as well as the rest of the planet is shedding those at an ever increasing rate.
Eventually, I suspect we will be back to where mortgages were in the fifties and sixties. At least 20% down (if you have sterling credit) or 50% if you don't and a loan to value ratio of about 75%. Which basically means the bank will help you pay for about a quarter of the house price. Oh yeah, and the mortgage can't cost more than 40% of your income.
So, with a bit of reverse math, you can figure out what average mortgage prices will be soon. Figure out the average income for an area, take 40% of the after tax amount of that and that's the mortgage amount folks will be able to pay. So calculate in the interest rates and that will tell you the average house price. There is a bit of difficulty when factoring in folks moving from other places and increasing the amount they are willing to pay for a house in Hawaii, but if they have to work in the local economy to support the mortgage payments they will soon enough be selling the house again if they paid too much. Fortunately, most folks wanting a vacation house in Hawaii usually want a different type of house than those of us who live here or we'd all be fighting for the same piece of pie.
Kurt Wilson