07-25-2006, 05:25 AM
The phenomenal run-up in Puna land and home prices in 2004-2005 was, IMHO, fueled in large part by speculation. Now that the speculative frenzy has died down, land prices have been the first to correct because they are at the start of the spec pipeline. Home prices now seem to also be correcting, and homes are staying on the market far longer than last year. As there are still quite a few spec houses in the construction pipeline, there should be continuing restraint on home price increases for a while.
Notice I said correct, not crash. The underlying demographics of retiring baby boomers (like me) and relative affordability of Puna vs. the rest of Hawaii and some parts of the mainland should keep things from dropping off a cliff. The exceptionally long amount of time it takes to complete a house on the Big Island could keep the downward pressure on home prices going a while longer. (Does it take a year or longer to build a house anywhere else in the USA? Or anywhere in the world?)
At any rate, we might be in a window of affordability for a while before "normal" market factors push things higher. I am an avid amateur observer, so maybe some of the real estate pros can give more informed opinions.
Aloha,
Jerry
Notice I said correct, not crash. The underlying demographics of retiring baby boomers (like me) and relative affordability of Puna vs. the rest of Hawaii and some parts of the mainland should keep things from dropping off a cliff. The exceptionally long amount of time it takes to complete a house on the Big Island could keep the downward pressure on home prices going a while longer. (Does it take a year or longer to build a house anywhere else in the USA? Or anywhere in the world?)
At any rate, we might be in a window of affordability for a while before "normal" market factors push things higher. I am an avid amateur observer, so maybe some of the real estate pros can give more informed opinions.
Aloha,
Jerry