Economic Seers See Honolulu Bottom
December 10th, 2009 categories: For Buyers, For Sellers
This morning, I attended a breakfast sponsored by the Honolulu Chapter of the NAIOP (The National Association of Industrial and Office Properties) the speakers were two of Hawaii’s preeminent economists Byron Ganges and Paul Brewbaker. I found their views on 2010 hopeful and refreshing. Mr. Ganges spoke on the macro-global economy and Brewbaker addressed the local fiscal situation. Here is the redacted version of the essence of their presentations (note that I am paraphrasing and these are not direct quotes).
1. 2009 is the first year since the 1930’s that the global economy has negative growth (the recession was very bad).
2. The national housing market is stabilizing.
3. Even though we are in recovery, it will be a weak one.
4. Consumer confidence will remain low and weak.
5. Households are de-leveraging (paying off their debt).
6. Savings rates should remain high.
7. State and local government’s budgetary problems will be a drag on the economy.
8. The yen will remain strong (good for Hawaii, bad for Japanese exports).
9. The Hawaii tourism market has bottomed and will slowly improve over the next few years.
10. The construction industry has not yet bottomed, however, it should start firming up at the end of 2010.
1. Oahu has an unemployment rate of 6% place it as one of the lowest in the nation.
2. In order for tourism to fully recover, Hawaii will need to see airlines offer more flights to Hawaii.
3. The Hawaii economy bottomed in September 2009.
4. Home sales lead prices by 3 years. In other words, sales will increase, but we may not see price appreciation for 3 years.
5. Home prices over-shot on the low side. Interpretation, prices went lower than they should have.
6. Honolulu home and condo prices bottomed in May 2009.
7. Hawaii’s next tourism market will be the “ultra-long haul” market. These are travelers that will come from places like Korea and Europe.
8. Many economists believe the recent recession will be a double dipper or a “W” curve, Paul does not believe this will happen.
9. He was not concerned about commercial real estate mortgage defaults because as a percentage of the amount of our total financing, the commercial real estate mortgage market has remained constant. Furthermore, financial tools put in place in the late 1980’s and early 1990’s will help the country work through any potential problems.
How do all of these prognostications translate to the Honolulu real estate market? Here is my take.
1. Prices are at a bottom and if you are planning on buying, the next few months will be good time to do so.
2. If you own a property and want to see significant appreciation, you may have to wait 2 to 3 years.
3. The market will be specific, meaning, some segments of the market may start to favor sellers and they should see better prices at 2010 progresses. Other portions of the market will remain flat with no movement up or down in prices until after 2010.
If you would like to discuss your real estate needs, feel free to call me at 808-737-2093 or toll free at 877-737-2093. You can email me at keahi@lava.net.
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