Decline in Real Estate

[Easygoing]

Newspapers today say, real estate has declined in 28 states. I wonder if Hawaii is one of the 28?
.

[John S. Rabi]

Why is such a bad sentiment against people who invest in real estate? Why don't people call "speculators" the ones who invest in stamps, or wine, or pork belly? Investment is risk and risk takers should be applauded. Those who don't risk risk the most.

Aloha,
John S. Rabi, ABR,CM,CRB,FHS,PB,RB
http://www.JohnRabi.com
Typically Tropical Properties
75-5870 Walua Road, Suite 101
Kailua-Kona, HI 96740
(808)327-3185

Edited by - John S. Rabi on 11/03/2006 07:43:13

[mikewj]

As an aside, sometimes real estate investment benefits the state/county more than the investor, and so indirectly helps those who do not invest in property, by increasing tax revenue. As an example, I bought property (raw land) in HPP a few years ago. I am just getting ready to build now. However, in the meantime the lot value has been re assessed upward to more than three times what I bought the land for, and with this my taxes have also increased. I also pay for road maintenance although as a 'mainlander' I don't use the roads currently. BUT, all this said, I bought because I love BI and Puna, and as Will Rogers said "Buy land, they ain't making any more of it".

Aloha,

[mella l]

HAHAHAH actually on Hawaii they are making more of it every day! Well can't use it for a while but it is still bubling up.

Speaking of taxes here in CA where the gas is $3 plus the state keeps ranting about the price of gas while they laugh all the way to the bank. $1 gas = 45center per gallon state tax $3 per gallone of gas = $1.35 per gallon to the state. They really aren't serious about the price of gas.

They need and get the money, and it is up to us to check that it is being spent correctly and vote accordingly. I don't know what to tell you but these things are on my mind! Oh well a deep subject.

mella l

[Punamom]

I just look at the higher tax as paying a little for alot of equity to use if I ever need a kidney or something LOL haha
The taxes in HI are SO cheap (especially with the homeowners exemption) How can anyone complain? Doesn't anyone want the benefits of an increase in their net worth?
property taxes for comparable properties in some states were a few thousand more than I pay in HI. try paying that and living on a fixed income.It was a real crisis for older folks.
I am so happy our property values have increased I am now wondering if I should tap into my equity before values go down and I loss it.
I would not blame an investor for trying to get whatever he can its the ding dongs that pay the price you need to worry about.

[JerryCarr]

There is a difference between a speculator and an investor IMHO. An investor is in it for the long haul and a speculator is out to make a quick buck and move on. I think the sentiment against speculation expressed here is valid in the sense that speculation drives prices up beyond what normal market supply and demand for the commodity would otherwise support.

Speculation in BI real estate has the undesirable effects of pricing younger families out of the market and making some people's dream of being able to live here impossible. Despite the initial efforts of the county to shield resident property owners through lower rates and owner-occupant exemptions, higher values will more than likely eventually filter through all that. The folks who bought their home as a place to live and not as an investment will more than likely find themselves paying significantly higher property taxes at some point if home values continue to escalate. Also, the effect on property taxes has a way of filtering down to renters, whose landlords do not get the breaks owner-occupants do. So please tell me again how speculation is good for the average home owner who plans to stay put and not leverage his home like it was a credit card.

Aloha,
Jerry



Edited by - JerryCarr on 08/16/2006 16:40:34

[John S. Rabi]

Sorry Jerry, but why do you think the investor is in it for the long haul and what is considered "long haul?" There is a long term capital gain tax and a short term capital gain tax on investments. My company represents many investors and we have never ever considered even just one a "speculator." We try to find undervalued properties for our clients to get a good return on their investments, being short term or long term. Anyone investing should have an in advance established Entry Point and an Exit Point.

Aloha,
John S. Rabi, ABR,CM,CRB,FHS,PB,RB
http://www.JohnRabi.com
Typically Tropical Properties
75-5870 Walua Road, Suite 101
Kailua-Kona, HI 96740
(808)327-3185

Edited by - John S. Rabi on 08/16/2006 17:03:58

[JerryCarr]

The finer points of what comprises speculation vs. investment are not as important as the results that come about, regardless of what one calls it. I will admit that the difference may be hard to define in any given case, but even some real estate professionals on this forum have referred to a lot of the recent construction in Puna as "spec" houses.

John, can you deny that a lot of life-long BI residents have been priced out of the market? Do you really think that rents won't go up as a result of price and real estate tax escalation? I am sorry if I sound shrill about this, but it is a very real problem. Young families, even with two incomes, find it much harder to afford a home of their own now than just three years ago. I would like to see some statistics on BI rents, which I suspect have increased markedly. And no, I am not a hard left-winger. I worked in the corporate world for decades and ran a 401k investment plan for the last 10 years of that span. I just hate to see hard-working honest people priced out of their dream.

And yes, I do see a home as the biggest investment that most people will make in their lives. That is just a fact, and there are times when it is appropriate to tap into that asset. People should just not get to thinking they can finance continuous consumer spending that way, or they may get into trouble.

Done ranting for now. Cheers,
Jerry



Edited by - JerryCarr on 08/16/2006 18:06:57

[Lee G]

Jerry,
Of course the problem of being priced out of the home owner market is not unique to Hawaii. Being a Los Angeles native I could not afford a home there and while our local real estate marked has sky rocketed over the last few years it has happened on the Mainland too and in some areas leaps and bounds over what we experienced here. I closely watched the Phoenix market the last 10 years thinking I was going to move there after my stint overseas was done and now homes are more expensive there then here go figure. It is a problem all over and the solution is easy build it yourself I did.

[Rob Tucker]

In my world the term “speculation” has implications that, while very, very legal, show a negative aspect.

Aside from inheritance or crime there are basically two ways to deal with wealth. Feel free to think of others I may have missed.

One is to create wealth - as in design, manufacture, farm, build or otherwise produce something of value for the human community.

The other is to manipulate wealth - as in buy, hold, sell. Manipulation is actually the most highly rewarded activity in capitalism. Stock markets, housing, stamp collecting, whatever.

I find it a bit depressing that the least productive method is the most rewarded. But that is the way it is and that may partly explain people’s instinctive disdain for “speculators”.

Whether an "investor" does so creatively (actually do something) or passively (do as little as possible) is where
the fine line lies.