Hawaii real estate market more stable than mainland

The Star Bulletin had an interesting article yesterday that said Hawaii won't have a real estate meltdown like the mainland has been having for 2 years now.

My summary - Even though sales are slowing, the median and average prices are likely to remain flat though year's end. Some of the best neighborhoods are actually increasing.

Three Hawaii real estate experts - Bank of Hawaii Chief Economist Paul Brewbaker, Prudential Locations Chief Executive Bill Chee and Mike Sklarz - shared their thoughts during "Real Perspective 2008: The State of Hawaii Real Estate."

We have a very low foreclosure rate, as people here tend to be very financially conseravative, and also severe building permit restrictions have kept inventory low and demand strong. Our city and state government have severely restricted building permits, so there's a lot less housing available here in Oahu.

Sklarz added that while there is potential for growth from international markets, such as China, it is not likely to offset the losses for several years.

I would add that Canadians are still flocking to Hawaii as their dollar has increased in value by about 30%, giving them amazing buying power compared to a few years ago.

Multiple offers on Oahu real estate - the opposite way

Usually when you hear of multiple offers, it means that a house is in high demand and buyers are competing. But with buyers now firmly in command of the Oahu real estate market, multiple offers can mean the opposite.

If a buyer is considering a few different homes, he can write offers on multiple properties at the same time, and let the sellers know that they have competition. Sellers did it to buyers for a long time, and now the tables are turned on them.

This gives buyers an ever greater advantage in negotiating, since sellers have added pressure to accept the offer they get rather than counter offer and risk losing the buyer to the other seller. While inventory in Oahu isn't too high ( in fact it's lower than it was 2 years ago) there are still plenty of homes for buyers to choose from. The problem sometimes is that buyers get fixated on one house, so they don't really want to offer on more than one.

If you can find two houses that appeal to you, then you're going to have great leverage over sellers. You don't have any fear of being rejected by one because you think the other might accept. You also don't have to write equally low offers on both. If you prefer one over the other house, then write a better offer on the house you prefer, so that if the other seller accepts your offer you feel really good about buying it.

This week I viewed several condos with a client of mine and found that there were several available in each building. This is an ideal situation for a buyer, who can choose between nearly identical properties. Some have better views, other have better interiors, but they are close enough that we could write 3 offers at once. It's more paperwork, but hey it's a great way to get a good deal.

Oahu real estate prices come back to earth - and land in Kailua

This week I was viewing this large home in Kailua, just 2 blocks from the beach. It's 2718 sqft in a great neigborhood, Koolaupoku, and listed at just $750k. In Hawaii, that's cheap. The house needs some renovation, as it hasn't been updated since 1991, but it has a nice large lot of 7500 sqft, and the roof seems to be very recent.

Just a couple years ago, $750k couldn't get you anything in Kailua except a small piece of junk, and nice homes this size in excellent condition were selling for about $1.5million. The market has fallen, buyers are in command, and sellers are all motivated. In fact every seller I spoke to this week told me that specifically.

This house is going to need some work but if it was in excellent condition, it would probably be worth around $1million even in today's market. For just $750k you can have a big house one block from America's best beach, and probably turn a profit in a couple years.