I've lived through 2 real estate bubbles: the Japanese Bubble of the 90's and the 2008 mortgage bubble, but are we in another one now? In March, Oahu’s Housing Prices shattered records with a new median sales price of $950,000
Closed sales of homes and condos saw double-digit growth of 19.1% and 52.7%, compared to March 2020. Single family home prices rose 17.3% year-over-year a 3.5% increase in one month.
But is it a bubble? I really don't think so. In the 1990's, we had Japanese speculators buying up property with almost no knowledge of the market, and no intent to hold long term. They were investors throwing money around, buying at stupid prices with hopes of making crazy money.
In 2007, we had investors buying properties with no money down, interest only, no credit, and speculating on prices continuing to rise forever. I remember one guy said to me, "Real estate prices always rise." That's when I knew the bubble was about to burst, so I sold all my properties as fast as I could.
But today it's different. We have owner occupants with huge down payments, many with all cash, buying properties they want to live in forever. It's not a bubble, it's a shift. A shift of people leaving crazy California and coming to paradise. It's a tech shift of people working from home, others retiring. It's a global shift, and I don't see a bubble anywhere except in the US debt, which is a different topic, but somewhat related.
Government debt means inflation, and inflation means real estate prices rise.
With low inventory and high demand, the number of single-family homes and condos sold over the asking price nearly tripled compared to March 2020. During the first quarter of 2021, single-family homes sold over asking price made up 50% of the sales compared to just 19% in quarter one last year, while condos sold above the list price accounted for 29% of the sales compared to 10% in the previous year’s first quarter.
It's not a bubble. It's an opportunity.