Hawaii home-buyer's mortgage math

[Texas Proud]

Quote:

Originally Posted by calmloki Different ends of the market: I got a call from my bank after doing the deposit - they adjusted my deposit because two of the hundreds were counterfeit. First counterfeit bills i'm aware of recieving. I co-mingle the cash, so the bills could have been from several different people - can't prove they were from the new tenant i suspect they were from. We bought a bill checking pen and took it down to the bank - no help, turns out these bills had been "washed", that is, someone stripped the ink from a $1 and reprinted it as a $100.

Remember.... they might not have known it was counterfeit either... but since you were the one who deposited the cash you got stuck... I know of someone who passed a fake $20... was just embarrassed as heck that they gave it to someone they knew...

[Texas Proud]

MAN..... now I know why I live in Houston.... I am bidding on a 3500 sq ft house... first bid was $170K.. and probably will get it for maybe $180K...

I can not see paying $340K for a ONE bedroom condo with a high monthly fee... nor renting one from someone...

[Notmuchlonger]

Quote:

Originally Posted by Texas Proud MAN..... now I know why I live in Houston.... I am bidding on a 3500 sq ft house... first bid was $170K.. and probably will get it for maybe $180K... I can not see paying $340K for a ONE bedroom condo with a high monthly fee... nor renting one from someone...

I just got back from League City last month. Walked through a few houses that were beautiful and for respectable prices in good neighborhoods. Similar prices to what you describe. Where I live in CA the same exact houses would be around 600 if you were lucky. Maybe more since I do not even bother to look at my local area housing prices anymore.

[clifp]

Obviously an almost double is nice in 6 years (although after commission fees etc it is probably closer to 80% increase in total appreciation) The number from 1991 to Jan 1998 don't look nearly as good in Honolulu.

Frankly the appreciation pale next to stock returns even using index funds. For instance on the same day that you bought Condo in Honolulu you could have bought Vanguard emerging market index fund for $8.02 it now worth $39.53 including modest dividends and capital gains it would be more than 400% increase.

The assessed value of my house in Honolulu dropped 18% this last year, is up at lot from when bought the first 1/2 half yes but it down slightly from when I purchased the 2nd half from my ex-girlfriend a couple of years ago.

[Texas Proud]

Quote:

Originally Posted by clifp Obviously an almost double is nice in 6 years (although after commission fees etc it is probably closer to 80% increase in total appreciation) The number from 1991 to Jan 1998 don't look nearly as good in Honolulu. Frankly the appreciation pale next to stock returns even using index funds. For instance on the same day that you bought Condo in Honolulu you could have bought Vanguard emerging market index fund for $8.02 it now worth $39.53 including modest dividends and capital gains it would be more than 400% increase. The assessed value of my house in Honolulu dropped 18% this last year, is up at lot from when bought the first 1/2 half yes but it down slightly from when I purchased the 2nd half from my ex-girlfriend a couple of years ago.

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... but to me, I can not afford to invest in a bunch of RE around these places as the 'risk' just does not make it for the return...

For me, you have the risk of not renting, or renting to a deadbeat... since you do not live there you have to hire someone.. Also, concentration risk... if I owned just one house in Hawaii, and did not have a mortgage... it would be half my investments..... no thanks...

And RE in Houston just does NOT go up fast at all... yes, you do get spurts at times, but then it might be 'flat' for awhile before another growth spurt.. they just keep building more and more houses..

So I am happy for the people who buy RE and become rich... it is just not in my universe...

[saluki9]

Quote:

Originally Posted by clifp Frankly the appreciation pale next to stock returns even using index funds. For instance on the same day that you bought Condo in Honolulu you could have bought Vanguard emerging market index fund for $8.02 it now worth $39.53 including modest dividends and capital gains it would be more than 400% increase.

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.

[honobob]

Quote:

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...

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.

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...

[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.

[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):

[HFWR]

I'm looking under my sofa cushions for the $100k down payment as we speak...

[Notmuchlonger]

Quote:

Originally Posted by HFWR I'm looking under my sofa cushions for the $100k down payment as we speak...

What you mean they dont give out those no money down no job no collateral loans anymore?!

[honobob]

Quote:

Originally Posted by HFWR I'm looking under my sofa cushions for the $100k down payment as we speak...

Oh, come on! Didn't you read the OP? Open House Mortgage Man!! Or just go 3.5% FHA or 0% VA. Hey, some of you guys have lost more than that $100,000 since 1/1/2007. If you'd bought then you'd still have your $100,000 and a nice little $69,000 appreciation sweetener.Like manna from Heaven.

Nice to have the TV remote back but I wouldn't dig too deep into the couch if you have teenagers!

Mahalo

[JB]

Quote:

Originally Posted by honobob Today is a good day to buy real estate in Maui. Maui condo prices rise 15% - Pacific Business News (Honolulu):

But aren't you supposed to buy before the rise?


Here is a link to the data from the Real Estate Board

Q1 2008 compared to 2007
Single Family Home Sales Volume: -33%
Single Family Home Average Price: -13%
Single Family Home Median Price: -4%

Year End 2007 compared to 2006
Single Family Home Sales Volume: +5%
Single Family Home Average Price: -1%
Single Family Home Median Price: -9%

[honobob]

Quote:

Originally Posted by JB But aren't you supposed to buy before the rise? Here is a link to the data from the Real Estate Board Q1 2008 compared to 2007 Single Family Home Sales Volume: -33% Single Family Home Average Price: -13% Single Family Home Median Price: -4% Year End 2007 compared to 2006 Single Family Home Sales Volume: +5% Single Family Home Average Price: -1% Single Family Home Median Price: -9%

What point is there in comparing apples to oranges? Maui CONDO prices rise 15%. Why are you using Single Family Home info?

Buy before the rise? At those prices jump on when you can and enjoy the 9%+ ride. People that wait too long end up as tenants posting on Craigslist rants and raves believing prices are going to return to 2003 prices and they'll snap them up then because they'll be such a deal. Waitaminnit.....these are the same people complaining that 2003 prices were rediculous in 2003. What makes them seem like such a deal now? Perspective?

[JB]

Quote:

Originally Posted by honobob What point is there in comparing apples to oranges? Maui CONDO prices rise 15%. Why are you using Single Family Home info?

Isn't it obvious? You said that now is a good time to buy real estate on Maui but you left out some important data. Also note that median single family home values are slightly below Q1 2005 levels and are still declining.

Quote:

Originally Posted by honobob Buy before the rise? At those prices jump on when you can and enjoy the 9%+ ride. People that wait too long end up as tenants posting on Craigslist rants and raves believing prices are going to return to 2003 prices and they'll snap them up then because they'll be such a deal. Waitaminnit.....these are the same people complaining that 2003 prices were rediculous in 2003. What makes them seem like such a deal now? Perspective?

Isn't it better that renters stay put if they think that prices are too high relative to their income? Don't forget that it's the folks that bought houses thinking that real estate can only go up that helped trigger the current economic mess.

[honobob]

It's slowly dawned on me that we've won the real estate lottery!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! !

Buyaticket/buymybook/buyaticket/buymybook/buyaticket/buymybook

[Nords]

JB, I think you're being trolled. I'm sorry I even put up this thread...