Comments on: How to Price your Hawaii Listing

By: Ernon

Ernon — Sat, 21 Mar 2009 19:36:34 +0000

Do you guys have a recommendation section, i’d like to suggest some stuff

By: David

David — Tue, 30 Dec 2008 18:37:04 +0000

For the record, the “David” of the immediately preceeding comment is not the same “David” (me) of the prior comments to this thread. I strongly disagree with the other David. Giving more whiskey to the drunks does nothing but delay the inevitible sobering. Houses became grossly overpriced compared to their historical value, as people viewed tham as “investments” instead of housing. The bubble must be allowed to deflate, not prolonged. If you start giving out garanteed 1% loans, then you will have to do it forewver, since once inflation kicks into high gear (coming soon), and real rates have to skyrocket, everyone who buys at a sustained inflated price because of 1% financing is even more underwater if they try to sell. We need to stop the “free money” loose lending standards, not perpetuate them. Everyone does not need to “own” (haha) an over-priced home to live a meaningful life.

By: David

David — Mon, 29 Dec 2008 23:44:00 +0000

The fastest way to clear the excess inventory would have been to use the billions in bailout money to give first time homebuyers a guaranteed loan on any home at 1% interest. This is what the feds are loaning the banks money at so why not give it to buyers. Alternately let anyone transfer an existing mortage to a new buyer with government backing. (Making all loans assumable – no fees.) This could dramatically increase sales. Hopefully someone here knows how to reach Obama’s family in Hawaii and propose something like this that will help everyone.

By: David

David — Thu, 18 Dec 2008 00:26:07 +0000

BigD, you are spot on. I had a conversation with an agent on Kauai yesterday, who was describing a “$500K property” in which the seller (in an effort to genuinely try and get it sold) had recently reduced the price to $400K. The agent commented that the property will probably sell at $300K.
However, this same agent predicting the selling price as $300K was nonetheless calling it a “$500K property”. To him, current selling prices are just temporary, and the previous inflated “values” are still the real values. Okie dokie.

By: BigD

BigD — Tue, 16 Dec 2008 09:43:31 +0000

Matt,

You’re analysis of the market is accurate for the Big Island, where I have been searching for appropriately priced residential homes for sale for the past 3 months. I have spent time on the Big Island on three separate occasions over the past two years. Several commentors posted in response to your initial opinion have accurately concluded that the true market value of most if not all properties is actually what buyers paid in 2002-2003. So the 1500 s.f. house that sold for $350 K 5 years ago is now priced at $ 625 K, and sellers are wondering why there are few bonafide offers being tendered. I have seen only two or three properties appropriately priced at the 2003 market value over the past 90 days, and they are all still listed active for sale. Buyers like myself have little incentive to even pay adjusted market value (2003 value) or more unless they really need to buy in a timely fashion, since most buyers I assume are purchasing a second/vacation home, and can certainly rent a condo or home for the few weeks or months that they will actually spend living there each year. Since home prices will be declining for the next 1-2 years, only sellers that truly need to sell will likely be pricing their homes accurately, or considering offers at 50 – 75 % of their ‘fantasy’ asking price. I suspect that as reality sets in and the global economic slide personally impacts realtors, sellers, and lenders, the market will adjust downwards significantly in 2009 and 2010. Previously affluent potential buyers who are still cash rich and/or able to assume more debt are becoming more scarce, and until all of the parties to the sale really appreciate this,the real estate market will remain challenging to everyone involved.

By: David

David — Sat, 13 Dec 2008 22:56:06 +0000

BC, maybe you’re right. Maybe few, if any, would-be sellers in the over $750K and $500K price range “have” or even “want” to sell at this time, and the vast majority are simply trolling the beautiful buyer-free waters that is the north shore of Kauai, enjoying the sunshine and fresh air. Does not matter if they do not catch a sale. There’s no bait on the hook, anyway.

There’s no better explanation for the complete lack of activity, although it does not bode well for realtors on Kauai.

By: BC

BC — Sat, 13 Dec 2008 18:52:25 +0000

Conversely, if sellers don’t need to lower their asking prices then we can assume they are in no hurry. Relax, Hawaiian time and pace. As I have pointed out previously, if you don’t really need to sell then wait. Besides someone I think at this site made the point of ‘land banking’ … hedge against dollar inflation. They are printing money so eventually real property may be a better investment and sellers may get their price albeit in Hawaiian time scale. Previously I was thinking we would be out of the recession by 2010. I think now that this is an optimistic projection. Tack on a couple of years or three or four … Hawaiian time … no rush. Remember we pretty much crushed the financial system so it’s really not something the government will easily fix. When bubbles pop and we are left with nothing. Take the Rip Van Winkle approach to real estate … oh, but that was a 20 year lull.

By: David

David — Sat, 13 Dec 2008 03:37:18 +0000

Matt, I just did a quick (in)sanity check on your search engine. For Northshore Kauai (all neighborhoods) there are 175 homes for sale with a list price of $750K or more; 3 are contingent. There are 70 condos listed for $750K or more; none contingent. There are 112 vacant lots listed for $500K or more; none (zero, zip) contingent. Apparently, few are taking your (very solid) advice on how to price their listings correctly, and instead are using the “what I paid in 2005, plus 30%” pricing method.

cmills, how many of these “listors” (they are not actually selling anything, so we should can’t call them “sellers”) on Kauai are listing at 2003 prices? That’s right. That’s why there are no sales. Bring on the banks, already!

By: cmills

cmills — Fri, 12 Dec 2008 22:42:27 +0000

Go to the statistics provided on this webpage, http://uhero-kauai.prognoz.com/ and look at the median and average sales prices for condos.
You will see the classic bubble graph. From first quarter 1994 to fourth quarter of 2002 (nine years), the median prices stayed relatively steady, rising slightly at a compounded increase of 4.4% per annum. Then they exploded up until the second quarter of 2008 at an annual rate of nearly 19%.
If you assume 4.4% increases from 1994 to today, then 15 years later today’s median price for condos on Kauai should be $269,000 or prices that condos sold for in 2003.
For the same time period the average sales price rose similarly at 4.47%, then exploded at just over 18% per annum to the second quarter of 2008. Using 4.47% increases, the average sales price should be $312,750.
So when you price a condo, your comparables should be from early in the year 2003.

By: Brad

Brad — Sun, 07 Dec 2008 07:18:19 +0000

Dear Matt,
Thanks so much for the information you’re providing! I was on the Big Island recently, and was trying (and failing) to figure out the real estate market there — assuming that it’s something like what’s going on in Kauai, you’ve said a lot to make sense of things.