When Bad News Is Good News For Honolulu!
September 23rd, 2008 categories: The Market
Honolulu city lights from my house.
One of the big drags on National real estate is that many markets are over built with new construction. Call me simplistic, but if a market is has too many new homes for sale, then isn’t it good that the building of new homes is slowing? Isn’t it true that in order for a market to recover, building has to slow for a while? Then the recent “steep decline in new-home construction” as reported by the Wall Street Journal is good, isn’t it? In fact for over built markets, a slow down is integral to the recovery.
“A steep decline in new-home construction last month to a 17-year low suggests that the hoped-for stabilization of the housing market — key to boosting the U.S. economy — is still a ways off.
Construction of new homes dropped by 6.2% in August to a seasonally adjusted 895,000 annual rate, the Commerce Department said. Construction of multifamily units fell sharply. Single-family home construction fell by a smaller amount but remained at very low levels.”
CLICK HERE TO READ THE ENTIRE WSJ ARTICLE
How does this apply to core Honolulu real estate? Condominiums in Honolulu are somewhat over built due to the recent completion of Capitol Place, Keola Lai and the 909 Kapiolani condominiums. The Honolulu Board of Realtors ended this August with 2,743 active condo listings; if 500 of those units will sell the market will tighten and begin favoring sellers. As for houses, the Honolulu Board of Realtors ended August with 2,119 active listings available for purchase. Sell 200 of those homes and you will see the market swing in favor of sellers.
Bringing it full circle, if National new home building is down and core Honolulu has no room for any significant addition of single-family residences, why is Honolulu impacted by this information? It has to do with consumer attitudes, we have had so much bad news in the main-stream media over the last year, that each bit of bad news piles up on the previous stuff driving buyer’s further on the fence. Remember, Honolulu real estate markets can turn on a dime, so if you don’t yet own or are thinking about buying, this may be a particularly good time for you to make a move.
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