Hawaii Realtors Take Issue With Assessment Of Local Market By National Analysts

Although fall-out from the sub-prime mortgage debacle has affected Hawaii’s real estate industry, nothing comparable to the devastation experienced in many Mainland markets has occurred. Nor is "one of the biggest price falls" for major metropolitan areas, as recently predicted by Moody’s, seen on the horizon.

Harvey Shapiro, research economist for the Honolulu Board of Realtors, has called such predictions "overly pessimistic," citing the unique nature of the Hawaii market which responds to a mix of influences unlike that of any other major U. S. real estate market. He pointed out that national analysts have been wrong about the Hawaii market in the past.

"You have to take into consideration that Honolulu has been coming off a market with the highest price points in its history," Shapiro said. "In 2007, single family and condo median resale prices peaked at $685,000 and $335,000, respectively. In 2008, the median prices paid for Oahu properties were $624,000 for single family homes and $325,000 for condominiums, representing a decrease of 3.0 percent for single family homes from 2007 and no change for condominiums. In 2008 Honolulu’s total number of resales was 6,674...compare this to 1995 when we hit bottom with fewer than 4,000 sales. Fewer sales should not be construed as ‘the bottom coming out of the market.’” A key factor in keeping the Hawaii real estate market moving is consumer confidence. Hawaii Association of Realtors 2008 Realtor of the Year Stephanie Doughty shares the opinion with colleagues in the industry that, although the recent dire forecasts by national analysts miss the mark for Hawaii, they have nevertheless influenced buyers and sellers who tend to accept such reports simply because they have made it into the national media. The highly publiMoody’s assessment of the Honolulu market influenced at least one high end-buyer to withdraw an offer, according to the listing Realtor.

"When the real estate industry is going through a challenging period, as it will be until the financial institutions get back on track, those of us in the business have to continue to be proactive in keeping the public informed about conditions in the local market. As National Association of Realtors Chief Economist Lawrence Yun has often reminded us, ‘All real estate is local.’ "We need to keep reminding people – particularly prospective buyers who are still sitting on the fence –that interest rates are at an all time low, there’s a lot of product and excellent values out there, and, if they are ready to buy or sell, now is the time to get in touch with an experienced Realtor and/or responsible lender. Another misconception is that the financial institutions are holding back on making loans...there may be some isolated cases of this, but many of my colleagues have confirmed that mortgage loans have been available to clients who were qualified buyers. The last thing we want to do is discourage potential buyers, who could miss the opportunity of a lifetime. Home owners who are not pressed to sell at this time will simply stay in their homes until the dust clears.

"Those of us with a lifetime in Hawaii real estate, 35 years in my case, have seen all the ups and downs and cycles of the real estate business. The Oahu market, which is my focus, has always rebounded. There have always been people out there looking to buy and finding ways to do it...even in the bad times of the savings and loan crisis, double digit interest rates, the loss of military personnel, the

Japanese bubble and the collapse of their own economy. I can recall half a dozen periods when the pundits were telling us the sky was falling, but the Hawaii market has always recovered with real estate values ending up at a higher level than where they were before. Then we hear people say, "Gee, I wish I had gotten into the market back then." Although local lenders have tightened mortgage loan requirements, and the

“We need to keep reminding people – particularly prospective buyers who are still sitting on the fence –that interest rates are at an all time low, there’s a lot of product and excellent values out there, and, if they are ready to buy or sell, now is the time to get in touch with an experienced Realtor and/or responsible lender. ”

Stephanie Doughty

Realtor, HomeQuest Hawaii Association of Relators 2008 Realtor of the Year

number of foreclosures and short sales has increased, median sales prices for resales of single family and condominium homes on Oahu have remained relatively stable for the past three years. One of the important components of Oahu’s unique buyer mix is the military. Seven military installations with a constant influx of military personnel are a source of buyers and sellers who can qualify for VA loans, one of the most liberal and reliable forms of mortgage financing available today. Asian second home buyers and investors continue to purchase upscale homes and condos; that activity has slowed but not disappeared.

Sachi Braden, owner and Principal Broker of Sachi Hawaii Pacific Century

Properties, has focused on the Asian market, primarily her native Japan, for 20 years. She believes that Asian buyers will continue to be an important factor in keeping the Hawaii real estate industry moving forward.

"The Japanese love affair with Hawaii has never ended," Braden said. "We have known each other for so long...since early immigration more than a century ago. Today’s Japanese buyers feel very comfortable visiting and buying second homes and vacation homes here...far more than in the rest of U.S. The cultural understanding is important to them. So they will continue to come...and for many other reasons as well...such as the fact that there are 10 to 15 flights a day between Japan and Hawaii. They find our prices low in comparison to other markets, and many are coming with cash.

"We would be selling more to the Japanese second home buyers if we could supply them with what they want. Oceanfront properties are in demand and there is not much high end inventory in East Oahu available right now. They are very particular about the condominium apartments they want to invest in...they want new, large, ocean view, and close to downtown but not in downtown.

"There is also a lot of potential among the other Asian countries...China, Taiwan, Korea, Singapore, and the Philippines. Nationals from all of these countries also visit resorts in Southeast Asia and to some extent buy there. But when you take into consideration our ideal weather, clean air, azure ocean, good sanitary conditions, safety and political stability, casual lifestyle, plus city conveniences... there’s really no place that measures up to Hawaii."

“I love this business and hate to see it damaged by an organization whose research has not taken into consideration the unique nature of the Hawaii real estate market.”