Housing Bubble in Puna?

[Jared I]

I was just looking at the historical data on land sales in Puna. Does anyone sense a housing bubble in Puna? An avg land price of 7k in 2002 to 40k in 2005, it is a big jump historically. What happened in to the eastside of the BI during the Japanese Bust in the 90s? Does anyone remember the effect of the SoCal economy had on the BI home prices between 1992 and 1997 (California residents selling homes at cut rate prices)? Does anyone have an idea of how many homes are rentals, investment properties, unoccupied and for sale currently in Puna? Would anyone have a guess on mortgage financing (percentage of ARMs, IOs and cashout refinancing) since 2004?

I know these questions are a lot to ask? I am just trying to research everything before I buy.

Thanks

Jared

[JerryCarr]

I think a lot of property in Puna was quite underpriced as recently as 2003, and it remains a bargain compared to less attractive places like the Northeast, Chicago, and parts of California. There does seem to be a correction of sorts going on, though, probably in reaction to a buying frenzy in 2005. A realtor friend told me last August that people were getting off planes and buying almost in a panic for fear they would not be able to afford anything if they waited much longer. That of course bid prices up even higher. Things seem to be settling down now, and a lot of speculative houses started by contractors at the height of the frenzy will be coming on the market soon, probably keeping a lid on prices. Land prices in my area (HPP) have actually dropped lately, and homes are staying on the market much longer than a year ago. Things have a way of balancing out, but I don't think we will see those 2002 prices any time soon.

[Brad W]

I'm no realtor, and I haven't studied any hard data, but this is what I think I know.

We purchased in Hawaiian Beaches fourteen months ago, and I have the feeling we got in just prior to last price run-up. The real estate atmosphere was entirely different then than now. Bidding wars were the norm. If you found something you really wanted, it was considered a good idea to offer slightly more than the listed price. And, asking for a bunch of contingencies was not really the way to go. I talked with more than one person in the industry who said they were scratching their heads on comps because things were moving so quickly. It was nuts.

Sellers watched what was going on and seemed to ratchet up prices accordingly, dah. Some houses with prices set at levels from that period seem to be sitting vacant today. I've called on three longsitters in the past couple of months, and been told on them all the price was negotiable. No-one said that when we were shopping. I personally wish I had waited, but then, who knew? No market of any kind which was driven by frenzy buying has ever sustained.

[jdirgo]

The market was seriously crazy until about October of 2005. Then a huge number of properties started coming on the market, including all those spec homes that started construction a year or so before. The market has stabilized and prices have settled down to more reasonable levels. I feel like there's still a number of buyers out there but they have a whole lot more to choose from now. Which is a good situation for buyers - less so good for sellers. If you'd like more precise statistics for a specific area or type of home, just let me know.

John Dirgo, RA, ABR, e-PRO
Island Trust Properties, LLC
808-987-9243 cell

[Jared I]

John:

Since volume is generally ahead of price reductions or gains, can you give stats on volume month-to-month from the heated peak to today for the Puna area? Also could give a general idea on home financing? I am assuming that out of state buyer cashed out equity or sold their homes on the mainland to pay cash for their houses/lots here? With the prices advancing so quickly how did the locals finance their homes? Did the wages vs. home price force many here to use ARM or IO, like their cousins on the mainland? Would you have a guess at percentages?

Has anyone ever read http://thehousingbubbleblog.com/ ? How do you think the bubbly housing markets on the mainland, especially in California affect the islands?

I have alway been a bit of a contrarian, I get scared when the masses start tumbling in one direction. I was out of the stock market in late 99, and into gold. We sold our house late last year and are staying pretty liquid, although I am starting to reduce my gold holding and moving abit into commodities. Being new here it is a little hard to piece together some of the historical economic data.

[Rob Tucker]

Geez, Punaweb managed to make it a few years without the word "bubble" appearing. Nothing personal Jared but could you find some other term to use? I know someone will take offense at my comments... Jared believe me this is not aimed at you. I was smugly pleased that we could all go along so far on this forum without yapping about money.

I know that money is and will be the #1 topic of conversation on the mainland and parts of the islands. Some of us would like to hold off as long as we can the endless speculation on what might happen next. For most of Puna these are our homes, not speculative investments. The speculative investor is the single largest risk to destroying the character of Puna IMHO.

I may regret making this posting but I could not help myself.

Aloha



Chairman, Punaweb Committee, MSPA

[Royall]

I agree with you Rob. It sound just like the Kona side forum. I think half the discussion is always about the "bubble". I would like to think we have better things to talk about than “what if” finances. Everyone has an opinion about it with out being an expert and all it does is take up space here where most don’t give a hoot.

Royall

What goes around comes around!

[Carey]

Jared,
It really sounds like you are just beginning your search, and trying to justify a purchase. For historical sales data on Hawaii County, go to the county website & check the sales data on the parcels you are looking for (TMK # or address search).
Resl estate has always been a highly speculative investment. Over time, yields have historically just under 7%. Where any area is in a speculative market, is pure speculation. Remember that the market is driven by so many variables. You have mentioned some, but weather, geologic changes and public perceptions also are at play in this market. The best advice is to ask yourself what you are looking for & what you can/wnat to spend, and see if there is anything on the market that matches.
Aloha, Carey

[punafish]

Take heart Jared, the intention isn't to get on your case. As Royall already said, some of us really got tired of the bubble talk on the Kona side forum. Personally I have been spending more and more time on this forum to get away from not just the money talk, but the ego-driven postings of people (apparently) trying to show everyone how smart they were...arguing about stuff that can't be proven until it happens. It's hard to believe but the discussions used to get really heated, downright uncivil. About what? About who was going to be proven right about whether we were in a bubble - a really silly thing to get upset over if you ask me. As of this writing, the bubble hasn't burst, but the chicken-littles are no doubt waiting for it to happen so they can tell everyone "I told you so!"
With that said, I truly understand your concern about buying an overpriced property. I think Carey's advice is right on.
One last comment and I'll sign off: I am so impressed at how civil this forum has been (with one isolated exception who has since been banned from our little cyber club), and it's been accomplished with minimal censoring by our moderator. Kudos to Rob and to everyone on this forum.
Okay, no more bubble talk from me!

Tim

[Kahunascott]

I gotta’ tell ya’ we bought in April of 2005 and paid more then if we had purchased in 2004 when we started our research. It was frenzy but I’m glad we bought when we did. We bought a beautiful home in HB and have just arrived on the 15th. Things have leveled off but we bought our house for our home and not for speculation.
We paid cash, taxes are low, no furnace or air conditioners, 2 retirees with pensions, my wife will work part time and just I have to work full time…….go figure. Moving from metro NYC I think we got a great deal. What a difference from commuting in to NYC every day….it won’t be missed. Thanks for the great advice over the last two years, you all were a big help. Especially John Rabi, your Italian dinner is only a few weeks away.
Mahalo..Kahunascott
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