Decline in Real Estate

[Keith]

furniture as an indicator, maybe. We had an auction going out of business sale for five days at a local upscale furniture store Austons. We became friendly with the auctioneer and I won't tell you how much that cost. Their business has kept them busy traveling the US mostly the eastern sea states for 10 years doing 1-2 auctions per week. Not enought buyers at those margins, $9,000 rugs selling at auction at $1,200.

Keith

[bystander]

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I am a meber of the Council of Certified Real Estate Brokerage Managers and we just had a one day class about understanding today's real estate market.

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Whatever the RE people have to say, no matter how smart some people think they are, is biased.

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Had you been at the class bystander than you would have known that it was not conducted by RE people. How about shoting at dentists now?

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Yes but that council you belong to would never bring people to the class who's views differ from the oranization would they? These people were probably selected because of their bullish views on RE. More bias in action.

[jdirgo]

LOL, John Rabi, you just can't win against someone who sees fraud and deception everywhere. bystander just can't see that we, as real estate professionals, don't really care which way the market goes. Goes up, that's fine, goes down and the prices make home ownership more affordable for the average person and therefore, our market for buyers increases. Either way, we still have business. We don't have a vested interest in house or land prices increasing. But conspiracy theorists will always find a way to think that we do.

John Dirgo, RA, ABR, e-PRO
Island Trust Properties, LLC
808-987-9243 cell
http://www.hawaiirealproperty.com

[bystander]

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LOL, John Rabi, you just can't win against someone who sees fraud and deception everywhere. bystander just can't see that we, as real estate professionals, don't really care which way the market goes. Goes up, that's fine, goes down and the prices make home ownership more affordable for the average person and therefore, our market for buyers increases. Either way, we still have business. We don't have a vested interest in house or land prices increasing. But conspiracy theorists will always find a way to think that we do.

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You may not care but I know Rabi does. He promised to stay out of this thread many times but yet has to get the last word in when he reads a post that is bearish on RE. I actually think you are more honest than he but that you don't want to say anything negative either. I read that post you deleted. In it you seemed agree that the future of RE didn't look so rosy.


I'm not posting because I see fraud and deception everywhere but because I want to expose the bias behind certain people's posts.

When I watch CNBC and RE is the topic, the RE people are always downplaying or denying the decline in prices. Why would they do this if they don't have a financial interest in keeping prices high?

So tell me this: if property values keep going down will you and your RE cohorts be making more or less money?



Edited by - bystander on 11/16/2006 11:34:31

[Kapohocat]

Johns,

Did you hear the conspiracy theory about Kennedy and real estate agents...?

Just kidding!

I believe John Dirgo is exactly right - more buyers at lower prices, less buyers at higher prices... is that an example of "median" buyers?

[jdirgo]

Would I rather sell twenty $250,000 homes or five $600,000 ones? Gee, that's a no brainer. In comparison to many places, we're still cheap. Lots of people can afford $250,000 homes. Not many can afford $600,000 ones, so I can sell the heck out the $250,000 ones.

I have clients right now that priced their Napa home right and had multiple offers within 2 weeks. They are moving here and basically paying cash for a home and they are not looking for homes here on the low end of the market. Why, because compared to where they came from, this is still a bargain.

As a company, we're putting together Home Ownership Seminars for the local families, because we believe that people living here should own their own homes. The other islands have priced so many people out of the ability to own their own homes. In the long run, I think it will happen here too. And I would hate to see that happen.

John Dirgo, RA, ABR, e-PRO
Island Trust Properties, LLC
808-987-9243 cell
http://www.hawaiirealproperty.com

[bystander]

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Would I rather sell twenty $250,000 homes or five $600,000 ones? Gee, that's a no brainer. In comparison to many places, we're still cheap. Lots of people can afford $250,000 homes. Not many can afford $600,000 ones, so I can sell the heck out the $250,000 ones.

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But how will your bottom line fare? You may sell more homes at lower prices but won't that cut into your margins? Declining prices would have the effect of scaring off buyers no matter what the price level. What about all the property you bought as investments?

What you are talking about is the bottom. AFter prices have declined to the bottom they can only go up but the bottom may not be reached for some time.

If what you say is true, you should be cheering about the recent decline in prices and hoping for even lower prices but you aren't are you?

This is what I think will happen. The bubble won't burst all at once but will deflate like a tire with a slow leak for years to come. Every year will bring slightly lower prices than the last until we reach the bottom. Buyers will buy thinking the bottom has been reached but prices will keep going exruciatingly lower year after year. After that I expect another boom period. I could be wrong about all this. I'm not so self-assured about my opionions as some of us are.

[John S. Rabi]

Well, you guys are right, I can't win against the bystander conspiracy theory. Isn't it great that now I am even labeled not honest by someone I never even met?! Well, bystander, I can tell you something, "CRB" is management designation and the class I was referring to was for managers and not sales people. The class was conducted by Mr. Brewbaker who is the Chief Economist of Bank of Hawaii. Yeah, he is part of the conspiracy too, huh?

"So tell me this: if property values keep going down will you and your RE cohorts be making more or less money?" I have seen both soft and heated markets more than once since I am in the business. Neither one had a major effect on my income. In fact, even though we are told by bystander experts that the real estate market is tanking, my company already had more gross income in 10 months this year than all last year. Good companies excell regardless of the market conditions.

"This is what I think will happen. The bubble won't burst all at once but will deflate like a tire with a slow leak for years to come. Every year will bring slightly lower prices than the last until we reach the bottom. Buyers will buy thinking the bottom has been reached but prices will keep going exruciatingly lower year after year." Yep, I am sure it's correct. Prices will reach zero! Sellers actually will end up giving away their properties free and some even will throw in incentives too!

Sorry guys, IMHO, this thread really is getting to be a free entertainment!


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 11/16/2006 13:11:58

Edited by - John S. Rabi on 11/16/2006 13:17:36

[JerryCarr]

Gee, I started a political thread that had less arguments and vitriol than this one!! I have an amateur and academic interest in the ecomomics of real estate, and I have opinions, but I just can't seem to get as excited about it as some folks.

I still think we are going through a correction and not a crash, and that the basic demographics and comparative ecomomics will continue to make Hawaii attractive to many mainlanders. Homes in the Bay Area, New York, Los Angeles, and quite a few other areas could lose 25% of their value and the BI would still look very cheap to someone wanting to retire to a nicer place.

John D., I applaud your group for offering locals help in attaining ownership. Your timing is critical, because I expect prices to start going up before too long. Try to help as many as you can, and if you can make some commissions while you're at it, so much the better.

Cheers,
Jerry

[Tahunatics]

I have repeatedly try to inform my neighbors here about the biggest threat to our economy, and the future price of real estate, but for some reason it goes ignored. I have a Bachelor of Science Degree in Alternative Energy and have studied this for about 30 years. The cost of oil, the cost of energy will impact every bit of the economy and Hawaii is most vulnerable being the MOST dependent of all 50 states on oil. We're at a point where extraction of oil is going to become much, much more expensive. The problem is 'Peak Oil' or 'Hubbert's Peak', the peak of the bell curve of global oil production, and the experts agree it actually happened last December 2005. Every month since last December global oil production has decreased and we are about to have serious issues with demand surpassing supply over the next few years.

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