Hawaii home-buyer's mortgage math

[honobob]

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Originally Posted by Texas Proud But... in RE you use leverage most of the time.... so the real money 'invested' is a lot less than what you could put in the stock market...

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Originally Posted by saluki9 Well, at least you aren't data mining! Using the highest performing index (and one of the riskiest) and comparing it (after a bull market no less) to RE isn't exactly a strong argument.

Thanks guys.

4% Appreciation my *ss!

[honobob]

Since Schiller doesn't report on paired sales in Hawaii I thought this information posted in another thread was interesting. What is even more interesting is the attitude of the OP towards the Hawaiian market. The subject property enjoyed 10% yearly appreciation and was listed at 10% over his sales price in a year that saw +13.9% YOY appreciation but yet this is touted as "the turn of the tide" and sold at "a discount of over 10%". I'm thinking the glass is more than full.


FACL’s “paired sales” pricing indexes track gains or losses on individual homes that sold vs. watching changes in an overall median or average of all homes sold. (Read latest report HERE!) It’s monthly snapshots are based on the first three weeks of activity in a given month and are later updated to full-month reports. After California in January came …
Florida, -13.87%
Nevada, -11.83%
Arizona, -11.06%
Louisiana -6.72%
Rhode Island, -5.95%
Maryland, -5.70%
Minnesota, -5.34%
Ohio, -4.99%
Illinois, -4.83%
And the best state? Hawaii at +8.38%.
As for metro areas, FACL put LA/OC’s 15.43% annual rate of January decline near the bottom of the heap …
Riverside-San Bernardino, -18.24%
LA/OC, -15.43%
San Diego, -14.05%
Cape Coral-Fort Myers, Fla. -13.26%
Oakland, -13.07%
Phoenix, -12.97%
Las Vegas, -12.95%
Miami, -12.34%
Orlando, -12.16%
Tampa-St. Pete, -12.13%
And the best town? Honolulu at +13.9%. Anybody for a Hawaiian-like real estate vacation?



4% Appreciation my *ss

[clifp]

Quote:

Originally Posted by saluki9 Well, at least you aren't data mining! Using the highest performing index (and one of the riskiest) and comparing it (after a bull market no less) to RE isn't exactly a strong argument.

Guilty as charged. But that is exactly one Honobob is doing also, look at his next post

Quote:

And the best state? Hawaii at +8.38%. And the best town? Honolulu at +13.9%. Anybody for a Hawaiian-like real estate vacation?

Why not set the clock back to 1991 and compare 7 year Hawaii RE prices? I didn't live here back in then but I pretty sure that over that period Real Estate was a flat or down in Hawaii.

As Texas Proud said you get to use leverage in real estate typically 4x (20% down) or even 9x (10% down). Which makes it even better in a raising RE market but as millions are now learning your 10 or 20% down is now completely wiped along with your credit score... It is possible to lose all your money in the stock market and your credit score, but it is really difficult.


I am not sure what Honobob point is. I think he is saying that real estate is always a great long term investment, if you pick the right location. Which is no different than saying the stock market is always a great long term investment if you pick the right stock/fund.

Frankly it should be no surprise that Hawaii has been a great Real Estate market in the last few years, the state has had one of the lowest unemployment rates over the last 5 years (<3%). Oh and did I mention the weather is great...

[honobob]

Quote:

Originally Posted by clifp Why not set the clock back to 1991 and compare 7 year Hawaii RE prices? I didn't live here back in then but I pretty sure that over that period Real Estate was a flat or down in Hawaii. Which makes it even better in a raising RE market but as millions are now learning your 10 or 20% down is now completely wiped along with your credit score... I am not sure what Honobob point is. I think he is saying that real estate is always a great long term investment, if you pick the right location. Which is no different than saying the stock market is always a great long term investment if you pick the right stock/fund. Obviously an almost double is nice in 6 years (although after commission fees etc it is probably closer to 80% increase in total appreciation)

First, appreciation IS NOT discounted by commission fees, etc.

Second, I only posted the FACL's "paired sales" because they purport to claim that homes in Honolulu sold for 13.9% more than last year while the OP was claiming mass disaster on the island of Oahu where people were forced to discount 10% to make a sale after 7 years of 10% appreciation!

Third, you are correct that my point is that long term appreciation of real estate can be much more than the rate of inflation. I owned in Honolulu through the 90's and my appreciation rate is still 9-10%. If I'd been a dirty market timer I could have bought and sold and possibly made more but I am comfortable with 9% because it's way easier to just buy and hold and less risky.

And D. my point is that alot of educated people here who claim some understanding of the real estate market think that all property appreciates at the rate of inflation and reverts to the mean (they never did say how they derived that figure) and make major investment decisions based on that erroneous information. I'm not trying to say they're dumb, just encouraging them to do the math. Is that so wrong?

Stocks vs. real estate? I suggest it's alot easier to pick a property over a stock to get the same or way better return and way less risky. If my stock goes bust I got nothing. My property will always be there.

4% Appreciation my *ss

[honobob]

Today is a good day to buy real estate in Maui.


Maui condo prices rise 15% - Pacific Business News (Honolulu):

[tryan]

Quote:

Today is a good day to buy real estate in Honolulu!

... and keep your day job. You'll need it to subsidize your tenants housing.

[Brat]

I'm glad you posted this tread. My brother has been toying with buying a condo in HI for his retirement home. It is helpful to hear what is, or is not, happening in HI real estate.

[ladelfina]

I used to think honobob was serious. Deluded, but serious. Now I realize he must be engaging in a strange form of performance art.

hb..
Actually it is banks that lent money they couldn't afford to lend.

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these are the same people complaining that 2003 prices were rediculous in 2003. What makes them seem like such a deal now? Perspective?

The word is "ridiculous". I wouldn't be so pedantic if the word weren't so relevant. The prices were "rediculous" then. They are now "a deal" (or let's say 'affordable') only to those who have the massive income stream to support these properties at a price that's 2-3x their annual income.

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Home sales on Oahu were off 28.5% from January, and were down 40.1% year-over-year.

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Maui home sales ... were down 26.9% year-over-year.

Hawaii Real Estate Market Trends

There's nothing that says HI won't see 2003 prices, or 2001 prices, or 1994 prices.

[Nords]

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Originally Posted by ladelfina I used to think honobob was serious. Deluded, but serious. Now I realize he must be engaging in a strange form of performance art.

And in that vein, folks, let's please stop feeding the troll...

[honobob]

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Originally Posted by ladelfina Actually it is banks that lent money they couldn't afford to lend. Chicken or egg. I axpect cummitment to obligatshun maid. Hawaii Real Estate Market Trends

On a bright note, the median price for condos rose 3.4% to $335,000, tying the record high set last July. Year-over-year, the median price was up 4.7%.

CaChing!!!! Over $50 grand in the equity bank! No need feeding, I'm fine.

Half full/half empty? Equity Envy? The lazy Green for 2008?

[laurence]

Meanwhile median household income for the Honolulu area is still only $60k, eventually the math catches up. It takes more than speculators and slum lords to keep propping this up. But let's take the 9% growth forever number, and a "typical" current property value of $600k. A dozen years from now that will be over 1.75 million bucks, about an 11k a month mortgage, excluding taxes. Let's be generous and say somebody could swing 50% of gross on this (again, excluding taxes) and that would lead us to a household income of over a quarter mil required. Either that, or the Condo-tel/timeshare industry is going to really take off....

[honobob]

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Originally Posted by laurencewill Meanwhile median household income for the Honolulu area is still only $60k, eventually the math catches up. It takes more than speculators and slum lords to keep propping this up. But let's take the 9% growth forever number, and a "typical" current property value of $600k. A dozen years from now that will be over 1.75 million bucks, about an 11k a month mortgage, excluding taxes. Let's be generous and say somebody could swing 50% of gross on this (again, excluding taxes) and that would lead us to a household income of over a quarter mil required. Either that, or the Condo-tel/timeshare industry is going to really take off....

laurencewill, how long is eventually? I can document the 9% growth over 30 years and suspect it goes back at least to the late 40's. Median income in 1978, $18,000 would be a guess and at 4% increases you'd be about $60K today. So riding my WayBack machine to 1978...."Well Sherman, do you really think this crappy $35,000 one bedroom condo will be worth over $400,000 in thirty years? At 50% of gross people would need to make $200,000 in 2008! Yeah and that disco movie guy John Travolta will be an Acadamy Award nominated actor piloting commercial jets across the country. Ha Ha Haaa Haaa Oh, and Hilton will be selling timeshares on Waikiki Beach!"

I'm not the first person in the forum to point out that Hawaii is not dependent on local wages. Name a person of wealth and there's a good chance they've got a place here, Oprah, George Harrison, Carol Burnett, The Donald, Etc. Who do you think are pricing out the "locals"?

[honobob]

Quote:

Originally Posted by honobob laurencewill, how long is eventually? I can document the 9% growth over 30 years and suspect it goes back at least to the late 40's. Median income in 1978, $18,000 would be a guess and at 4% increases you'd be about $60K today. So riding my WayBack machine to 1978...."Well Sherman, do you really think this crappy $35,000 one bedroom condo will be worth over $400,000 in thirty years? At 50% of gross people would need to make $135,000 in 2008! Yeah and that disco movie guy John Travolta will be an Acadamy Award nominated actor piloting commercial jets across the country. Ha Ha Haaa Haaa Oh, and Hilton will be selling timeshares on Waikiki Beach!" I'm not the first person in the forum to point out that Hawaii is not dependent on local wages. Name a person of wealth and there's a good chance they've got a place here, Oprah, George Harrison, Carol Burnett, The Donald, Etc. Who do you think are pricing out the "locals"?

Won't let me edit to fix math.

[laurence]

Quote:

Originally Posted by honobob laurencewill, how long is eventually? I can document the 9% growth over 30 years and suspect it goes back at least to the late 40's. Median income in 1978, $18,000 would be a guess and at 4% increases you'd be about $60K today. So riding my WayBack machine to 1978...."Well Sherman, do you really think this crappy $35,000 one bedroom condo will be worth over $400,000 in thirty years? At 50% of gross people would need to make $200,000 in 2008! Yeah and that disco movie guy John Travolta will be an Acadamy Award nominated actor piloting commercial jets across the country. Ha Ha Haaa Haaa Oh, and Hilton will be selling timeshares on Waikiki Beach!" I'm not the first person in the forum to point out that Hawaii is not dependent on local wages. Name a person of wealth and there's a good chance they've got a place here, Oprah, George Harrison, Carol Burnett, The Donald, Etc. Who do you think are pricing out the "locals"?

I didn't know celebrities were in the market for crappy 1 bedroom condos! What's the old phrase? Past performance is no predictor of future returns? If you are just going to filter on "super luxury beach front villas on/near diamondhead" well, that's not really a market anyone here is looking to invest in anyway.

[clifp]

I have looked at the development a several years ago 2 bdr were going for 400K and I thought it was overpriced. The nice thing about Real Estate is you can ask any price you want for property the trick is finding somebody to pay it.

My house in St. Louis Heights 3 time larger is on a rim lot, with a spectacular Diamond head view. (I can even see those units) and it it was appraised about between 800-900K and it was built at the same time.

[honobob]

Quote:

Originally Posted by clifp I have looked at the development a several years ago 2 bdr were going for 400K and I thought it was overpriced. The nice thing about Real Estate is you can ask any price you want for property the trick is finding somebody to pay it. My house in St. Louis Heights 3 time larger is on a rim lot, with a spectacular Diamond head view. (I can even see those units) and it it was appraised about between 800-900K and it was built at the same time.

clifp You have the wrong development. These are all one bedrooms. You might be thinking of the large apartment conversion across the street that was sold as condos about eight to ten years ago. Nice townhouses that started about $200K, quickly went to $400K, I looked at them a few years ago at $600K. Haven't seen one one the market for awhile. The La Pietra townhouses over a bit are selling for $1-2 million but they are definitely nicer and larger.

The location so close to the park, the beach and Waikiki is what really supports these values. As gas prices and traffic gets worse I think there's only upside to close in locations. What's it cost you to get up that mountain? Although down is almost free I guess. Plus with the crackdown on illegal vacation rentals I'm anticipating greater demand for those properties that can do short term rentals and this one allows vacation rentals.

I hear you about asking prices. I made an offer on a Waikiki property last Thanksgiving and thought they used my market offer to get another sale but they never sold and it came up on the market again in the last week and I made another offer, provided comps and offered slightly over market because it's in a building that I own another unit. They dropped a whopping $2,000 on an over $400,000 asking price!! I said I'd pay any market value they can support but they are trying to collect next years appreciation in advance. My Realtor said they had another offer so I didn't even bother to counter but that deal didn't get made either. They either really don't want to sell or are plain greedy.

[Nords]

Folks, please don't feed the troll.

[honobob]

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Originally Posted by Nords Folks, please don't feed the troll.

Nords............What is your problem?

I thought I was on your ignore list. Why are you chasing me down? Is there something here that is not a fact? Just because I caught you in a blatant lie in an earlier post because you thought you were the all knowing of Oahu. Go HOME!! Enjoy your life! You have no purpose here.


HAVE A NICE LIFE!

[laurence]

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Originally Posted by Nords Folks, please don't feed the troll.

What he said. +1

[honobob]

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Originally Posted by laurencewill What he said. +1

Because?