For many it sounds like a dream, owning a home in Hawaii, but the cycle of the Hawaii real estate market can drive people crazy. If you've been watching the Hawaii real estate market long enough, you know about the "Japanese bubble" and the foreclosure market of the 90's. Go back even farther and you can see the impact of the two world wars.

While no one can know the future of the market in Hawaii's real estate, looking at the past can teach us many lessons.  I frequently run into homeowners who have been in the same house for 30+ years who understand this. They tell me about buying the house for $50,000 in 1968.

Those same owners are now sitting on properties worth $800,000 or more. As I meet owners around Hawaii Kai, I'm often amazed at how long they have been in that same house, and the ridiculous amount of equity they have gained by sticking it out in the up and down Hawaii real estate market. It's mind boggling how much money they COULD HAVE made, had they bought more than one property.

But look, if you had bought real estate in Hawaii around 1985, you probably would have lost money by selling in the 90's. Even if you had bought after 1990, you probably would have lost money had you sold before 2000. Unlike California and other markets, Hawaii's real estate market was still struggling in 1999. That year there were dozens of foreclosures in every Hawaiian city.

In the 80's and 90's a famous Japanese investor, Mr. Kawamoto, bought and sold dozens of homes all over Hawaii, turning them into run down rental dumps. On many of them he lost a lot of money. A LOT. We are talking multiple millions after all the losses were added up. The problem? He tried to time the market.

In 1999 A friend of mine bought a condemned foreclosure in Kailua for about $250k. It was a mess, with termites eating every piece of wood you could see. Then he put hundreds of hours of work into it and turned it into a beautiful little place with new just about everything. Last year he sold it for $825k. That's right, a profit of nearly $500k.

It's amazing, and I think there is a great lesson here for us in all these stories. You'll most likely make money in Hawaii real estate if you wait long enough. It might take you 20 yrs, but you're probably going to make a lot of money if you are patient and DON'T try to time the market.

Timing the market can be a dangerous and difficult task. People have lost their entire fortunes by trying it. But many who have just bought and held have made literally millions.

Will the Hawaii market go up this year? Next year? In five years? Nobody knows. One thing I do know: Hawaii is an island state with a very limited amount of land. Someday we may run out of space to build, and then what?  Someday my house will be worth $10million.  You think that's stilly, but my house is already worth about 20 times what it sold for in 1950.