INSIGHTS ON PBS HAWAII: Is Hawaii in a Real Estate Bubble?

INSIGHTS ON PBS HAWAII: Is Hawaii in a Real Estate Bubble?


>>DARYL: COMING UP NEXT ON INSIGHTS ON PBS HAWAII IS HAWAII IN A REAL ESTATE BUBBLE? [INTRO MUSIC]>>DARYL: ALOHA AND WELCOME TO
INSIGHTS ON PBS HAWAII. I’M DARYL HUFF, WITH HAWAII
NEWS NOW. FOR MANY HAWAI’I FAMILIES,
THE DREAM OF OWNING A HOME SEEMS MORE AND MORE REMOTE.
WITH MAINLAND TRANSPLANTS ARE OFTEN STUNNED BY THE COST OF
HOUSING WHEN THEY COME TO PARADISE.
MEANWHILE, WEALTHY FOREIGN BUYERS SEEM UNCONCERNED ABOUT
PRICES AS THEY SEEK A SAFE PLACE TO INVEST IN THE WORLD’S
FRAGILE ECONOMY. THIS YEAR, WE’VE SEEN SOARING
PRICES AND A SHARP INCREASE IN SALES.
IS THIS EVIDENCE WE’RE IN A REAL ESTATE BUBBLE OR THE
NATURAL RESULT OF LOW INVENTORY, HIGH COST TO
DEVELOP AND HIGH DEMAND. WHERE WILL HAWAII’S REAL
ESTATE MARKET BE GOING NEXT. WE ALWAYS LIKE TO HEAR FROM
VIEWS LIKE YOU SO SHARE WITH US YOUR QUESTIONS AND
COMMENTS BY CALLING 9731000 ON OAHU OR 800-24847
IF YOU’RE ON A NEIGHBOR ISLAND. YOU CAN ALSO
WATCH INSIGHTS STREAMED LIVE ON PBS HAWAI’I.
CLICK ON THE TITLE OR FIND US ON TWITTER AT PBS HAWAI’I.
TO OUR GUESTS. STEPHANY SOFOS IS A GRADUATE
OF THE UNIVERSITY OF HAWAII AT MANOA MAJORING IN HISTORY AND
MINORED IN ECONOMICS. REAL ESTATE BROKER APPRAISER.
AUTHOR OF THE BOOK UNTOLD STORIES OF REAL ESTATE DIVA.
HISTORY OF THE HAWAI’I THROUGH REAL ESTATE AGENT
WORKING IN THE BUSINESS FOR PAST 40 YEARS.
SUMNER LA CROIX IS A PROFESSOR IN THE DEPARTMENT
OF ECONOMICS AND UNIVERSITY OF HAWAII AT MANOA, RESEARCH
FELLOW AT UHERO. HE IDENTIFIES SEVERAL FACTORS
THAT CONTRIBUTE TO THE HIGH HOUSING PRICE.
SCOTT HIGASHI IS EXECUTIVE VICE-PRESIDENT FOR LOCATIONS
FORMERLY KNOWN AS PRUDENTIAL LOCATION.
OVERSEES MORE THAN 300 AGENTINGS IN SIX OFFICES
STATEWIDE THROUGHOUT THE YEAR.
LOCATION RESEARCH DEPARTMENT TRACKS SALES ACTIVITY FOR
MORE THAN 350 HAWAI’I NEIGHBORHOODS.
AND JON WHITTINGTON IS PRESIDENT OF COMPASS HOME
LOANS, A DIRECT MORTGAGE BANKING COMPANY BASED IN
HAWAI’I. PRIOR TO LAUNCHING COMPASS IN
LATE 2014, HE WAS PRESIDENT OF AMERICAN SAVINGS BANK’S HOME
LOANS DIVISION WHERE HE WORKED SINCE 2000 WERE 9.
THE CAREER MORTGAGE BANKER, HE SPENT THE BULK OF HIS
CAREER WITH THE COUNTRY WIDE HOME LOANS PRIME CONSUMER
MARKETS DIVISION. LET’S JUST START OFF TO MAKE
THINGS CLEAR. SUMNER LA CROIX, WHO WHAT IS
A BUBBLE WHEN PEOPLE TALK ABOUT A REAL ESTATE BUBBLE.
WHAT DOES THAT MEAN?>>WHEN PEOPLE TALK ABOUT A
BUBBLE, THEY’RE TALKING ABOUT A LARGE SUSTAINED INCREASE
ASSET PRICE. PUSHES THE ASSET PRICE FAR
ABOVE ITS FUNDAMENTAL VALUE. THE REASON PEOPLE ARGUE ABOUT
BUBBLES WHETHER OR NOT THEY EXIST IS WHAT EXACTLY IS THE
FUNDAMENTAL A.M. VALUE OF AN ASSET.
SOME WOULD SAY MARKET VALUE IS THE VALUE.
OTHERS WOULD SAY, IT’S GOING TO COME BACK DOWN.
FORCES OF THE MARKET SENTIMENT.
>>DARYL: WHEN WE TALK ABOUT A BUBBLE, ALWAYS FEAR THE
POSSIBILITY OF BURSTING. ISN’T THAT REALLY KIND OF THE
DEFINITION TOO?>>MOST OF THE TIME, WHEN
AFTER THE FACT, IDENTIFIED A BUBBLE.
BURSTING. PEOPLE START TO BUY TULIPS.
THEN ALL OF A SUDDEN, THE PRICES OF TULIPS START TO GO
UP. THINK THEY’RE GOOD
INVESTMENTS. PRICES GO UP FURTHER ONE DAY,
THE MERRIE GO ROUND STOPS AND THE PRICES OF TULIPS FALL BACK
DOWN TO RELATIVELY LOW LEVELS.
>>DARYL: SCOTT HIGASHI FROM LOCATIONS.
IN YOUR CAREER, HAVE YOU SEEN BUBBLES AND WHAT DOES IT FEEL
LIKE WHEN YOU’RE IN ONE. I THINK WE SAW WAS ECONOMIC
DOWN TURN. SAW THIS DRAMATIC REDUCTION
IN THE NUMBER OF SALES AND THEN VALUES DROPPED.
BUT WAS INTERESTING ABOUT HAWAI’I IN THAT CYCLE, IS
HAWAI’I’S VALUES DEPARTMENT DROP IN THE SAME PERCENTAGE
THAT YOU SAW IN OTHER PARTS OF THE COUNTRY.
SO I MEAN, PART OF THE INSULATION IN HAWAI’I HAS TO
A LOT TO DO WITH SOME OF THE FACTORS YOU BROUGHT UP IN YOUR
INTRODUCTION. INVENTORY CONSTRAINTS,
REGULATORY ENVIRONMENT THAT MAKES IT HARD TO DEVELOP, SO
WE DID SEE A DOWN TURN IN MY SHORT CAREER REAL ESTATE.
AND IT SHOWED ALL THE SIGNS OF THE THING THAT YOU WOULD
EXPECT, PEOPLE FEELING A LACK OF CONFIDENCE, IN OWNING OR
BUYING A HOME, AND FEWER SALES.
BUT VALUES, YOU KNOW, ACTUALLY DIDN’T FALL PRESIP
TUSLY HERE ON OAHU.>>NOT HOW IT FELT.
>>A LOT OF REAL ESTATE HAS TO DO WITH CONFIDENCE AND HOW YOU
FEEL ABOUT AT THAT MARKETPLACE.
>>DARYL: JON WHITTINGTON, YOU’RE THE MORTGAGE BANKER IN
THE CROWD HERE. THERE WAS A LOT OF BLAME
PLACED ON THE MORTGAGE INDUSTRY BACK WHEN WE HAD THE
THING THAT WE ALL COULD PROBABLY ARGUE IS A BUBBLE.
2008. 2009 CRASH.
HAS THE MORTGAGES INDUSTRY CHANGED TO PREVENT THIS FROM
HAPPENING AGAIN IN.>>CHANGED DRAMATICALLY.
KIND OF THE TOKEN LEGISLATION THAT CAME BEHIND AFTER THAT
WAS THE FRANK LEGISLATION AND ESSENTIALLY, A LOT OF REASONS
LED UP TO THAT THE MORTGAGE MELTED DOWN.
AND YOU CAN FIND FAULT ALONG THE WAY.
STARTED WALL STREET, RATING AGENCIES.
SINCE THEN, WITH MORE ON CONSUMER SIDE AND PROTECTIONS
PLACED ON THE CONSUMER, AS A LEND, WE’RE, AND RIGHTLY SO,
MANY WAYS, CONSTRAINED FROM BEING ABLE TO GET THAT ELASTIC
WITH CREDIT AGAIN. YOU CAN ARGUE GOES BACK TO THE
CLINTON ADMINISTRATION TRYING TO MAKE HOMEOWNERSHIP
AS A RIGHT VERSUS A PRIVILEGE AND THE WENT BEHIND THAT.
MANIFESTED ITSELF ON THAT. TODAY WE HAD VERY, TIGHT
CREDIT BOXES, SO PEOPLE COULDN’T QUALIFY WHAT THAT
MAYBE SHOULD. STARTING TO SEE TALK OF THAT.
COMING FROM A VERY TIGHT, TIGHT BOX.
COMING BIT, PENDULUM SWINGING A LITTLE BIT OVER.
SOME MORE PEOPLE CAN QUALIFY NOW.
JUST RECENTLY, FANNIE MAE AND FREDDIE MAC, LARGEST
INVESTORS IN HOME LOANS, OPENED UP A LOWER DOWN PAYMENT
FOR HIGHER PRICE. WHICH IS A BENEFICIAL TO THE
WELL QUALIFIED BORROWERS. CREDIT WORTHY.
TALK MORE LATER ABOUT THE DECISION IT’S PEOPLE CAN MAKE
WHAT THE OPPORTUNITIES ARE. STEPHANY SOFOS, YOUR OWN
EXPERIENCE FOUR YEARS, WHAT WHATS IT LOOK EIS PROCESS LIKE
GOING THROUGH THE BUBBLE THE ONES THAT YOU RECALL.
>>WELL, FIRST OF ALL, I THINK WE ARE IN A BUBBLE.
AND I THINK IT’S GOING TO POP. WHEN IT DOES, WE DON’T KNOW.
IT COULD BE BECAUSE OF POLITICS OR COULD BE A NATURAL
DISASTER. SOMETHING IS GOING TO HAPPEN
AND IT WILL ADJUST. THIS IS ABOUT I’VE BEEN IN
ABOUT FOUR CYCLES FOUR OUR FIVE, THIS ONE IS, THIS MARKET
IS THE MOST ODD MARKET FOR ME. NEVER SEEN A MARKET LIKE THIS.
>>DARYL: YOU MEAN THIS TIME YOU’RE TALKING ABOUT?
>>THIS TIME RIGHT NOW. NEVER SEEN A MARKET LIKE THIS.
BECAUSE PRIOR TO? MARKET, THERE WERE WAVES AND IN THE 60
IT’S, YOU HAD THE CANADIANS COME N SEVENTIES, YOU HAD
SAUDIS COME IN. EIGHTIES, LATE EIGHTIES, YOU
HAD THE JAPANESE COME IN. 90’S, YOU HAD KALAI CHINESE.
EARLY 2,000S, YOU HAD THE CAUCASIANS FROM THE MAINLAND.
THIS MARKET, YOU HAVE EVERYBODY.
COMING INTO OUR MARKET INCLUDING RUSSIANS.
I’VE NEVER SEEN RUSSIANS. THEY’RE COMING IN WITH CASH.
THEY PURCHASED EVERYTHING ALL THE LUXURY MARKET IN SAN
FRANCISCO AND CALIFORNIA AND LA AND NEW YORK, AND NOW,
THEY’RE COMING TO HAWAI’I. SO I GUESS EVERYBODY IS COMING
IN TO LAND BANK.>>DARYL: DO YOU THINK THIS
BUBBLE AS YOU SEE IT ACROSS THE BOARD OR PARTICULAR PIECE
OF THE MARKET? ALL THAT DESCRIPTION YOU GAVE ME
DIDN’T SOUND LIKE INVESTMENT SO MUCH IN MIDDLE CLASS
HOUSING BUT THE HIGH END SUCH, KIND OF STUFF THAT’S GOING IN
KAKAAKO, WAIKIKI. I THINK IT’S ACROSS THE BOARD.
ACROSS THE MARKET. SEEING PEOPLE INVESTING IN
$5 MILLION LUXURY HOMES. IT’S EVERYWHERE.
>>DARYL: ARE YOU SEEING THE SAME THING?
>>NO DOUBT WE’RE SEEING DIFFERENT KINDS INVESTMENT.
I WILL, MY FRIENDS STEPHANIE, SHOULD NEVER SHORT OF
OPINION, I ACTUALLY DON’T THINK WE’RE IN A ONE AND I
DON’T SEE THAT. I THINK WHAT’S DIFFERENT
ABOUT THIS CYCLE VERSUS THE LAST ONE IS THE RATE OF
APPRECIATION IS SOMEWHAT MODERATED.
I JUST FEEL LIKE IF WE LOOK AT THE PAST CYCLES, IF YOU INDEX
THEM ALL AND SUMMER PROBABLY BETTER AT THE INDEXING
PROBLEM, I JUST SEE WITH THAT WE’RE PROBABLY IN YEAR SIX OF
A TEN YEAR CYCLE. IS THE WAY I WOULD LOOK AT IT.
I FEEL THERE’S STILL MORE APPRECIATION TO COME AND
STABILITY IN THE MARKET. INVENTORY LEVELS AT MODERATE
PRICE POINTS CERTAINLY AROUND THE MEDIANS FOR SINGLE FAMILY
AND FOR CONDOS AND BELOW, ARE REALLY TIGHT.
COMPETITION FOR THOSE PROPERTIES SHOW UP IN THE
AMOUNT OF BID-UPS THAT TAKE PLACE IN THOSE PRICE POINTS.
BUT I DO THINK THAT IN THE HIGHER PRICE POINTS,
CERTAINLY OVER $2 MILLION AND MAYBE EVEN $1.7 MILLION, AND
UP, THOSE ARE TIGHT MARKETS. I DON’T THINK THERE’S ENOUGH
BUYERS IN THAT MARKETPLACE TO SUPPORT THE INVENTORY ON THE
MARKET AND THAT HAS SLOWED.>>DARYL: IN THE SITUATION AS
DESCRIBED BY SCOTT, MAY NOT THINK THAT THERE’S A BUBBLE,
IT SOUNDS LIKE YOU DID HAVE TOO MUCH BUILDING AND FOR A
LIMITED MARKET AT THE HIGH END, DO YOU THINK THIS THERE
MIGHT BE A BUBBLE THERE?>>NO.
I DON’T THINK THERE’S A BUBBLE.
I THINK I HIGH END MAY HAVE HAD A SURGE IN PRICES.
TO HAVE A BUBBLE, YOU HAVE TO HAVE A MASSIVE SURGE.
SOMETHING LIKE WE SAW IN LAS VEGAS.
SEEING RUN-UPS IN THE YOUR OF 100, 150% RELATIVELY SHORT
PERIOD.>>I CAN TELL YOU I’VE LOOKED
AT, APPRAISER AND I DO A LOT OF RESIDENTIAL APPRAISAL
WORK. I DO A LOT OF APARTMENTS
BUILDINGS WORK AND ALL OF THAT.
AND THREE YEARS AGO, APARTMENT BUILDINGS, THERE
WERE SELLING FOR 150 A DOOR. UNIT.
NOW, THEY’RE $375,000 A DOOR. THAT’S INCREDIBLE.
THREE YEARS? THEN I’M SEEING PLACES LIKE DIAMOND HEAD AND
KAHALA, THEY WERE A MILLION SEVEN AND NOW THEY’RE 3.4.
IN THREE YEARS. THAT’S TOO HIGH.
GOING UP TOO HIGH.>>I LIKEEL ARGUMENT, IF WE
LOOK BACK TO PRICES WERE BACK IN 2005, 2006, THAT WAS THE
HEIGHT OF THE PREVIOUS BOOM BEFORE WE HAD THE DOWN TURN
DUE TO THE GREAT RECESSION. IF YOU ADJUST FOR INFLATION,
IF YOU ADJUST HOUSING PRICES FOR INFLATION, SINCE THEN,
BARELY GOTTEN BACK UP TO WHERE WE WERE IN 2005.
I MEAN, THERE HAVE BEEN RUN-UPS IN PRICES. ONCE YOU
TAKE INFLATION OUT, IT’S NOT THAT GREAT.
THEN WHAT WOULD EXPLAIN THIS? I DO AGREE WITH STEPHANIE THAT
OUTSIDE BUYERS HERE HAVE ALWAYS BEEN A FORCE IN THE
MARKET. THERE’S TIMES WHERE THEY
DOMINATE THE MARKET. ALSO THINK THAT INSIDE BUYERS
ARE IMPORTANT TOO. IF YOU LOOK AT HOUSING PRICES,
MANY TIMES, DETERMINED BY SWINGS IN THE LOCAL ECONOMY.
NOT JUST BY HOW MANY FOREIGN BUYERS ARE HERE.
AT THE VERY UPPER END, FOREIGN BUYERS MAKE A BIG DIFFERENCE.
>>DARYL: LET ME ASK JOHN. THE MORTGAGE BUSINESS PRETTY
CAREFULLY TRACKS WHETHER PROPERTIES ARE GETTING TOO
HIGH A VALUE FOR WHAT THE MORTGAGE WILL SUPPORT.
YOU GUYS WATCH FOR THIS. BECAUSE YOU’RE THE ONES
ULTIMATELY AT RISK. SO WHAT ARE YOU SEEING IN THAT
RESPECT? DO YOU FEEL THAT THERE’S A LOT OF PROPERTIES
THAT ARE OVER VALUED, ARE PEOPLE COMING IN AND PAYING
CASH REGARDLESS OF THE MORTGAGE?
>>I THINK CAREFUL. WE SEE THE MARKET ONE
TRANSACTION AT A TIME. EVERY TRANSACTION WE DO HAS AN
APPRAISAL. TIED TO IT.
WE CAN SIT THERE AND SAY, WHERE ARE WE, WHERE IS IT.
THE BID-UPS, KIND OF MEDIAN MARK E. WE SEE THAT TOO.
AND THE BORROWERS THAT ARE BUYING AT MARKET, APPRAISER
SUPPORTING THE VALUE EVEN AT THE BID-UP PRICE.
IF THERE WILL A DIFFERENCE BETWEEN THE BITTER PRICE AND
WHAT THE SALES APPRAISAL, APPRAISAL VALUE IS, IT’S KIND
OF MARGINAL. SO PEOPLE ARE STILL ABLE TO
GET INTO THOSE HOMES. THE DIFFERENCE IS IF YOU’RE
GOING TO BUY PAY HIGHER THAN WHAT THE APPRAISAL IS, COME UP
WITH THE DIFFERENCE IN CASH. THAT’S A LOT OF CASH.
YOU’RE GOING TO HAVE PROBLEM DOING THAT WE’RE NOT SEEING A
LOT OF THAT. CASH BUYERS YOU MENTIONED,
THEY’RE NOT AS NO, MA’AM INDEPENDENT THEY WERE 2 OR 3
YEARS AGO. NOT AS PROMINENT 2 OR 3 YEARS
AGO. WE HAD CASH.
NOW IT’S 20 TO 25% RANGE.>>DARYL: SCOTT HIGASHI FROM
LOCATIONS, QUESTION FROM SAM IN KAUAI.
HOW FAR CAN PRICES STILL GO UP IF WAGES STAY STAGNANT? IS
THIS A FAIR APPRAISAL OF THE ECONOMY? AWKWARD TO A LOT OF
PEOPLE THAT WE’RE HEARING THAT WAGES HAVE NOT RISEN AT
A PACE, YET WE’RE SEEING THE HOUSING PRICES GO UP.
WHAT IS THE EXPERIENCE OF BUYERS OUT THERE OF THAT
SITUATION?>>IT’S HARD. I THINK ONE OF
THE THINGS THAT WE’RE FACING IS WAGES MAY BE HAVEN’T GROWN
OR HAVEN’T KEPT PAYSON THE SAME PACE AS PRICES.
THERE’S NOT MORE LAND TO BUILD MORE HOMES AND THE CHOICES
DEVELOPERS HAVE TO MAKE WHEN WE’RE BUILDING NEW HOMES IS
CONTENDING WITH THE REGULATORY ENVIRONMENT,
HIGHER CONSTRUCTION COSTS, WHICH ARE GOING TO DRIVE THEIR
PRICE OF HOMES HIGHER AND THEN AS YOU HAVE PEOPLE WITH LOW
INTEREST RATES COMPETING FOR HOMES, SO JOHN MENTIONED,
BID-UPS FOR EXAMPLE IN AIEA, PEARL CITY, MILILANI
MAKAKILO, SEEING UP TO 25% OF THE HOMES ARE GOING FOR MORE
THAN ASKING. DOESN’T COUNT THE HOMES THAT
ACTUALLY WENT AT ASKING. IN SOME CASE, NOT ONLY PRICES
MEETING THE MARKET DEMAND, BUT EXCEEDING THOSE PRICE AND
THE DILEMMA IS I DON’T THINK WE CAN BUILD HOUSES FAST
ENOUGH TO ABSORB THAT. IT IS A DILEMMA.
I WOULD AGREE WITH THE INDIVIDUAL CALLING WITH THE
QUESTION THAT I DON’T KNOW THAT WAGE GROWTH AND HOME
PRICES ARE KEEPING PACE WITH EACH OTHER IN HAWAI’I.
>>DARYL: SUMNER LA CROIX, WHAT DO THE NUMBERS SHOW.
>>MEDIAN WAGE, PERSON THAT 50% OF THE PEOPLE ARE BLOW.
50% ABOVE. IN THE WAGE EARNING
DISTRIBUTION. WAGES HAVEN’T CHANGED MUCH
SINCE THE WAIHEE OR REAGAN ADMINISTRATION.
PRETTY MUCH FLAT. IT’S PERSONAL INCOME.
BEING INNED SUBSTANTIALLY LAST COUPLE OF YEARS.
THERE WAS ABOUT 4% RISE IN REAL PERSONAL INCOME.
IN 2014. ABOUT 5% RISE IN 2015.
WAGES HAVE BEEN FINE, OTHER SOURCES OF INCOME HAVE
CONTRIBUTED TO PEOPLE’S ABILITY TO FINANCE A HOME.
>>DARYL: SO MAYBE THIS A QUESTION FOR.
>>STEPHANIE: ANY. YOU TALKED ABOUT THE OFF
OFFSHORE MONEY COMING INND BEING SPREAD OUT AROUND THE
MARKET. WE HEAR PHENOMENAL ABOUT
INDIVIDUAL BUYERS BIDDING UP PROPERTIES.
WOULD THAT STILL BE A BUBBLE TO YOU IF WHAT’S DRIVING IT IS
THIS DEMAND FROM ACTUAL PEOPLE WHO LIVE HERE TOO?
>>I THINK, YEAH. I THINK IN A IT’S, THERE IS A
BUBBLE. 5% INCREASE OF SOMEONE’S
INCOME, WHEN YOUR HOUSING ARE RISING 30% IS STILL A BIG
GAMBLE. AND THE REAL ESTATE MARKET,
THE REASON WHY EVERYTHING IS GOING UP, IS THERE IS DEMAND
BECAUSE THERE’S TWO REASONS. THE LOCAL PEOPLE WANT THEIR
PIECE OF PARADISE. AND INVESTORS WANT THEIR
PIECE OF PARADISE, PLUS THEY WANT TO INVEST IN A SAFE
ENVIRONMENT. INVESTOR CAME TO ME AND SAID,
I WANT TO KEEP MY INVESTMENT WHERE THE GREATEST MILITARY
IS LOCATED SO THAT I WILL KNOW THAT MY INVESTMENT WILL BE
PROTECTED. TO MY FACE.
THOUGHT, WOW, THAT’S INTERESTING.
>>QUESTION.>>DARYL: HOW MUCH HAS THE HUGE
MILITARY PRESENCE AFFECT HOUSING COSTS?
>>HUGE. HUGE.
>>DARYL: DOES EVERYBODY HERE AGREE ABOUT THAT? DO WE HAVE
A LARGE ENOUGH POPULATION TO AFFECT THE WHOLE MARKET.
>>YOU HAVE A LOT OF MILITARY WHO HAVE THEIR MILITARY
ALLOWANCE SO THEY CAN GO IN AND RENT AT MUCH HIGHER LEVEL
THATTEN A LOCAL PERSON CAN. SO THAT DRIVES UP THE HIGHER,
YOU HAVE HIGHER RENT WHICH IS HIGHER INCOME OF RETURN.
INVESTMENT. WHICH MEANS HIGHER PRICES.
SO PEOPLE WILL GO OUT AND BUY A BIGGER HOUSE, RENOVATE IT,
AND THIS RENT TO SOMEBODY WHO CAN PAY FOR THAT HIGHER RENT.
>>DARYL: THIS IS AN INTERESTING QUESTION.
I THINK THAT ONE OF THE THINGS THAT WE WOULD LIKE TO EXPLORE
HERE IS THE EFFECTIVE A BUBBLE ON ACTUAL DECISION-MAKING
PROCESS THAT GOES ON IN, SAY, A LOCAL BUYER.
THE QUESTION, WHAT SHOULD A HOME BUYER DO IF SHE OR HE IS
LOOKING TO BUY. LET ME START WITH SCOTT
HIGASHI. STILL TIME TO BUY OR SHOULD
PEOPLE BE NERVOUS?>>I DON’T THINK PEOPLE SHOULD
BE NERVOUS. I THINK IT’S TIME TO BUY.
AFFORDABILITY IN HAWAI’I HAS A LOT DO WITH INTEREST RATES.
INTEREST RATE ENVIRONMENT HAS BEEN FAVORABLE.
FOLKS HAVE GOTTEN USED TO THIS AS A NEW NORMAL.
WHEN YOU SEE INTEREST RATES, PEOPLE INTEREST RATES GO UP,
PEOPLE FLOOD THE MARKET THINKING WE’VE GOT TO HURRY.
FIRST THING, A LOT OF FOLKS ARE SO AFRAID OF THE PROCESS,
DON’T GET PREQUALIFIED AND FIND OUT WHO THEY CAN AFFORD.
A LOT OF TIMES THAT SURPRISES.
THEY OVER ESTIMATE THE AMOUNT THEY NEED FOR A DOWN PAYMENT.
PART OF THE PROCESS SO EXPLORE THAT AFFORDABILITY FIRST AND
THEN THE WORLD ACTUALLY OPENS UP.
IT’S NOT TRUE THAT THERE IS NOTHING AVAILABLE FOR IN
EVERY PRICE POINT TO BUY THAT THAT’S SIMPLY NOT THE CASE.
I THINK ONE. THINGS, ONE OF THE BARRIERS IS THE FEAR OF
THE PROCESS AND THEN THINKING THE READ THE PAPER.
IT’S SO SENSE EA EXPENSIVE. I DON’T KNOW HOW WE’RE GOING
DO THAT. I LOT OF PEOPLE ARE PAYING
RENT AT EQUIVALENT LEVEL OF AT WHAT A MORTGAGE WOULD COST
THEM PER MONTH. BECAUSE OF THAT, BARRIERS OR
FEAR OR PERCEPTION DON’T TAKE THE FIRST STEP.
GREAT TIME DO THAT.>>DARYL: WHITTINGTONING
CALLED FROM TOM FROM WAIKIKI. WHAT ROLE CAST A MORTGAGE
INDUSTRY PAY IN RAISING THE COST OF HOUSING.
YOU’VE HAD THIS PRETTY CONSISTENTLY LOW INTEREST
RATES NOW FOR A WHILE. AND HE’S DESCRIBING WHERE
PEOPLE MAY BE COMING TO THE TABLE NOW, GOING, MAYBE THIS
IS REAL. I MEAN, WHAT DO YOU ANY? DO
YOU THINK THAT THESE COSTS THAT ARE GOING UP MIGHT BE
BECAUSE INTEREST RATES ARE SO LOW? WHAT HAPPENS IF
SUDDENLY, INTEREST RATES PICK UP?
>>ABSOLUTELY. WITH LOW INTEREST RATES.
THAT EXPANDS AFFORDABILITY. BECAUSE YOUR PAYMENTS ARE
LOWER. THEREFORE, YOU CAN MAKE LESS
MONEY TO BE ABLE TO AFFORD IT. AND INTEREST RATES DO GO UP,
AFFORDABILITY GETS COMPRESSED A LITTLE BIT.
DEFINITELY INTEREST RATES HAVE AN IMPACT ON HAWAI’I
HOUSING. ANECDOTAL.
HAWAI’I SEEMS TO FIND A WAY. HONOLULU SEEMS TO FIND A WAY.
WHETHER IT’S THE TYPICAL THING THAT WE SEE, NOT
NECESSARILY DEBT TO INCOME RATIO.
IT’S MORE OF THE DOWN PAYMENT SIDE OF IT.
TYPICALLY, YOU CAN GET 0% DOWN.
GET 3% DOWN AND NOT BE A VETERAN.
AND A THE LOT MANY HE PAHOA HE DOESN’T KNOW THAT.
YOU-IT LOT OF PEOPLE DON’T KNOW THAT.
YOU MAY HUI UP WITH FAMILY MEMBER OR PARENTS AND DO
SOMETHING. AND SINCE, FINDING IN HAWAII
FINDING A WAY, WE’RE GIVING AWAY QUALITY OF LIFE THOUGH.
>>COULD BE. IF THAT’S YOUR DEFINITION OF
QUALITY OF LIFE. I’M NO HERE TO ARGUE
DEFINITION. BUT SOME PEOPLE REALLY, ENJOY
HAVING MULTIGENERATIONAL LIVING IN THEIR HOMES.
WHERE WITH WHEN I WENT TO AWAY TO COLLEGE, MY DAD TURNED MY
ROOM INTO A DEN.>>REMEMBERING THAT SUPPLY
HERE IS RELATIVELY FIXED. WE JUST HAVE NOT ADDED VERY
MUCH TO THE SUPPLY OF HOUSING IN THE HAWAI’I OVER IT’S LAST
TEN, 12 YEARS. HO’OPILI, JUST ALLOWED US TO
GO THROUGH, THAT’S LPN BEEN IN THE PLANNING PROCESS FOR OVER
TEN YEARS. KOA RIDGE HAS BEEN AROUND FOR
A LONG TIME IN THE PLANNING PROCESS.
THOSE ARE THE ONLY ADDITIONSND KOA RIDGE STILL
HASN’T BEEN APPROVED. HO’OPILI 12,000 HOMES
SUPPOSED TO COME IN OVER THE NEXT 20 YEARS.
ONLY BIG HOUSING DEVELOPMENT SUPPOSED TO COME IN.
MAYBE 500 PLUS HOMES PER YEAR. THAT WILL HELP ALLEVIATE SOME
OF THE DEMAND THAT’S COMING ABOUT FOR EXTRA HOUSING.
CONTINUED POPULATION GROWTH, ECONOMY TENDS TO KIND OF SLOW
BUT OKAY GROWTH, AS YOU HEAR PREDICTS, WE’RE GOING TO SEE
MORE PEOPLE COMING HERE. NOT TO HAVE HOMES PUT THEM IN.
BID UP PRICES. EXTRA DEMAND BIDS UP PRICES.
>>DARYL: YOU HAVE A FAN OUT THERE, STEPHANY SOFOS RIGHT
ON THE MONEY. LET ME ASK.
PRETTY MUCH ALONE. WHY DO YOU FEEL IT’S IMPORTANT
TO RAISE THIS ALARM? SAYING WE’RE IN A BUBBLE, IS AN
LARGING THING TO A LOT OF PEOPLE.
WHY DO YOU FEEL IT’S IMPORTANT TO SAY IT.
>>BECAUSE YOU NEED TO BE AWARE OF WHAT’S GOING ON.
AND GO INTO YOUR INVESTMENT WITH OPEN EYES.
I TELL PEOPLE THAT IF, I’M DOING SOME TRANSACTIONS RIGHT
NOW. I TELL PEOPLE, YOU’RE GOING IF
YOU CAN AFFORD IT, BUY IT. BECAUSE HISTORICALLY,
HAWAI’I PROPERTY HAS ALWAYS GONE UP.
IT GOES DOWN SOMETIMES IN RECESSION, BUT THE RECESSIONS
HAVE BEEN MUCH MORE MILD THAN ON MAINLAND.
WHEN THE GREAT RECESSION WENT DOWN, PLACES WENT DOWN FROM 10
TO 70%. IN HAWAI’I, IT WENT DOWN 10 TO
30%. SO IT’S A GOOD INVESTMENT
HERE. AND IF YOU CAN BUY AND HOLD,
DO IT. IF IT’S AFFORDABLE.
YOU’RE GOING TO BE LIKE THERE AND STRUGGLING EVERY DAY TO
TRY AND MAKE THAT MORTGAGE PAYMENT, AND YOU’RE CRYING
AND YOU’RE WORRIED THAT YOU’RE GOING TO MAKE THAT,
DON’T DO IT. IF YOU CAN DO IT, AND YOU, IT
CAN BE A REASONABLE EXPENSE FOR YOU, IN TEN YEARS, IT WILL
BE A GREAT INVESTMENT. IT MIGHT NOT BE A GREAT
INVESTMENT FOR THE FIRST TWO OR THREE YEARS, IN TEN YEARS,
IT WILL BE.>>DARYL: GUT WRENCHING
EXPERIENCE TO BE UNDERWATER ON A MORTGAGE.
>>NOT THAT MANY, EXCUSE ME. NOT THAT MANY PEOPLE IN
HAWAI’I HAVE THAT SITUATION. WE DID HAVE FORECLOSURES
HERE, ABOUT YOU NOT CATASTROPHICICALLY LIKE LAS
VEGAS, ARIZONA, SAN ANTONIO, AND PARTS OF CALIFORNIA.
SO WE BECAUSE AGAIN, WHAT SUMNER SAID, PEOPLE WILL COME
HERE AND THERE IS A GREAT DESIRE FOR LOCAL PEOPLE TO
WANT TO HAVE THEIR PIECE OF PARADISE AND PEOPLE COMING IN
HERE WANT THEIR PIECE OF PARADISE.
THAT WILL CONTINUE TO DRIVE THE PRICES OR KEEPS
STABILITY. MAYBE THE PRICES WILL
STABILIZE AND GO DOWN WITH THE RECESSION.
BUT IT WILL KEEP EVERYTHING STABLE.
>>I LIKE TO, IF YOU DENT MIND. TALKED ABOUT LAS VEGAS,
CALIFORNIA. INLAND I AM
INLAND EMPIRE. SAND STATES.
UNTIL HAWAI’I, WE’RE BASED IN HONOLULU.
OWNER MARKET IN HONOLULU WAS MAYBE OFF 10% AT THE TROUGH.
WHERE WE SAW THE BIG IMPACT WAS IN THE RESORT RESIDENTIAL
RESORT AREAS. KIHEI, WAILEA, KONA, POIPU.
>>KO OLINA. RIGHT.
WE HAD A LOT OF MAINLAND BUYERS.
EARLIER CAME IN AND BUY IT, LEVIED UP HOMES THIS
CALIFORNIA. MOST IMPACTED IN HAWAI’I.
SO I THINK IT’S IMPORTANT WHEN WE HONOR THAT HAPPENED THERE,
LEISURE MAINLAND MARKET, STAYED PRETTY STRONG THROUGH
THE, EVEN THROUGH THE WORST. AGREE WITH THAT.
I WANT TO AGREE WITH SOME EA SOMETHING STEPHANIE SAID.
INTERESTING THING ABOUT HOMEOWNERSHIP IS YOU PURCHASE
THE HOME, AND YOU FIX YOUR PAYMENTS, AND I THINK WHEN
PEOPLE THINK ABOUT THE THREAT OF A BUBBLE, OR THE DANGER OF
THOSE THINGS, IT’S REALLY IN THE EVENT OF SELLING.
SO YOU BUY A HOME AND LIVE IN IT, YOUR PAYMENTS STAY THE
SAME. DEBT OVER TIME IS GOING TOWN
AND VALUES DO GO UP IN HAWAI’I.
HISTORICALLY, VALUES MOVE UP. MAYBE NOT YEAR ONE OR TWO.
OVER TIME. IT’S HARD TO FIND A TEN YEAR
PERIOD OF OWNERSHIP WHERE SOMEONE WAS UPSET WITH THE
DECISION TO BUY A HOME. AND LIVE IN IT.
>>SO I THINK HOMEOWNERSHIP STILL THE RIGHT PATH.
>>IF YOU WERE THINKING ABOUT BUYING A HOME, TRY TWO
DIFFERENTLY SCENARIOS. ONE IS WORLD ECONOMY WEEK
WEAKENS. DOLLAR APPRECIATES.
DRIVING FOREIGN BUYERS AWAY. LEAVE THE MARKET.
DOWNWARD PRESSURE IN PRICE. U IS US ENTERS MINOR
RECESSION. VIEWER VISITS.
ECONOMY RELATIVELY STRONG. VISITORS FROM CALIFORNIA.
BETTER INCOMES TO PEOPLE TOURIST JOBS.
FIND THAT SOME OF THE STOCK MARKET WEAKNESS IN CHINA.
MEANS THAT PEOPLE WANT TO GET SOME OF THEIR MONEY OUT.
GOOD PLACE TO PARK YOUR MONEY. SOMEWHERE IN THE U.S.
U.S. REAL ESTATE INVESTMENT IS RELATIVELY SAFE.
GOVERNMENT DOESN’T COME AND CONFISCATE YOUR STUFF.
CHINESE ECONOMY UNDERNEATH THAT RELATIVELY STRONG.
MAY STILL FIND EVEN THOUGH THE STOCK MARKET, SMALL PART OF
CHINESE ECONOMIC SCENE IS NOT DOING HAVE WELL.
LOTS OF WEALTH BEING GENERATED AND PEOPLE WANT TO
START COMING HERE TO CONTINUE TO MARK MONEY HERE.
IF THE EXCHANGE RATES NOT SO ADVANTAGEOUS.
YOU CAN COME UP WITH DIFFERENT SCENARIO WHERE HAWAII ON
WORLD ECONOMY IS GOING. THINKING ABOUT IF YOU’RE
GOING TO BUY. RECESSION IS ALWAYS GOING TO
HAPPEN. ONLY QUESTION IS WHEN.
>>DARYL: YOU’RE TALKING ABOUT, AGAIN, SAME THING
STEPHANIE BROUGHT UP. OFFSHORE MONEY COMING IN.
WHO CAN DO ANYTHING ABOUT THAT.
I HAD A PANEL HERE LAST WEEK ABOUT KAKAAKO AND ONE OF THE
PEOPLE SAID, GO OUT 8:00 AT NIGHT AND LOOK AT ONE OF THOSE
HIGHRISES. SUPPOSED TO BE WORK FORTH
HOUSING. MIDDLE CLASS HOUSING.
YOU’RE GOING TO SEE THAT 40% OF THE LIGHTS ARE DARK.
I MEAN, IS IT TRUE THAT WE HAVE SO MUCH OF THAT OFFSHORE MONEY
IN HERE. THEY’LL SAY, THIS IS AN LLC.
LOCALLY REGISTERED COMPANY. LOCAL BUYERS.
WHAT DO YOU GUYS THINK IS REALLY, IS THERE A LOT OF
PEOPLE FROM OFFSHORE BUYING INTO OUR REAL ESTATE?.
I THINK STATISTICALLY. WHEN YOU LOOK AT 2014, ON THE
RESIDENTIAL SIDE, ANYWAY, FROM WHAT WE COULD TELL, IT’S
ABOUT 11 OR IS IT% OF THE MARKET.
12% OF THE MARK E. 2005, 25% OF THE MARKET. OFFSHORE FROM
CALIFORNIA, CONTINENTAL U.S. AND ASIA OR OTHER PLACE.
COMPLEXION OF THE MARKET HAS CHANGED.
WHILE FOLKS MAY HAVE BOUGHT AND HELD FROM AT THAT TIME, I
DON’T SEE THAT MORE RECENT MARKET IS NOT BEING AS
INFLUENCED BY THAT OUTSIDE MOON MONEY.
NOT IN ALL POCKETS. WHETHER THAT MEANS, I THINK
THEY’RE PRESENT. OFFSHORE MONEY IS PRESENT.
IT’S NECESSARY. BY THE WAY.
I THINK PART OF THE BUILDINGS THAT YOU SEE COMING UP IN THE
URBAN CORE REQUIRE NEW MARKETS TO OPEN.
>>DARYL: LET ME ASK YOU.>>AGREE TO DISAGREE WITH YOU.
>>ABSOLUTELY. GO AHEAD.
I CAN SEE YOU LEANING THAT WAY.
>>NO. I THINK THAT FOREIGN
NATIONALS ARE HERE AND THEY’RE BY BUYING LEFT AND
RIGHT. I THINK THAT THAT’S WHAT
DRIVING A LOT OF YOUR MARKET.>>WHERE THEY’RE FROM N I DO
SEE A LOT OF THEM GOING INTO HAWAI’I LLC’S AND SO IT LOOK
LIKE IT’S A.>>DARYL: LIMITED LIABILITY
CORPORATION. FORMED IN HAWAI’I.
(. RIGHT.
CORPORATION. AND TO BRING THEIR MONEY
OUTSIDE OF THEIR COUNTRIES, WITH THEIR GOVERNMENTS,
THEY’RE HAVING TO ESTABLISH A BUSINESS AND WHETHER IT’S A
RENTAL BUSINESS, OR WHATEVER THEY’RE DOING, ESTABLISHING,
BRINGING IT IN OVER HERE. I DID A LOT OF APPRAISAL AS THE
AND THERE’S A LOT OF FOREIGN NATIONAL NAMES THAT I SEE THAT
ARE NOT LOCAL PEOPLE. THEY’RE IN EVERY MARKET.
>>DARYL: LET ME ASK. SUMNER LA CROIX.
IS THERE ANY SCIENTIFIC TRACK OF THIS NUMBER AND IS THERE A
RED FLAG THAT GOES UP AT SOME NUMBER.
>>DBEDT HAS A NICE STUDY THEY’VE BEEN RECENTLY OF
FOREIGN BUYERS IN THE MARKET. NO.
I THINK ANOTHER PHENOMENA WE’RE SEEING IN SPILL OVEROF
TOURISTS INTO THE MARKET. WE’RE SEEING THAT WE HAVEN’T
BUILT A LOT OF HOTELS IN RECENT YEARS.
VISITOR DAYS HAS BEEN INCREASING.
FILLING OVER INTO THE NEIGHBORHOODS.
PUSH WILLING UP PRICES. THERE ISN’T A REALLY GOOD
STUDY OF THAT DONE YET.>>J 1 OHN 0 : I REMIND OUR
AUDIENCE TONIGHT WE’RE EXPLORING WHETHER HAWAI’I IS
IN A REAL ESTATE BUBBLE AND OTHER TRENDS IN THE
RESIDENTIAL SALES MARK E. WE’D LIKE TO HEAR FROM YOU.
973-1000 OR 800-238-4847 CALLING FROM A NEIGHBOR
ISLAND AND I HAVE ALREADY GOTTEN A TON OF CALLS.
SO LET ME KIND OF GO THROUGH THESE.
>>BECAUSE WE’RE SO IS CHARMING.
>>DARYL: YOU GUYS ARE BRINGING THEM OUT.
I TELL YOU. WHAT SHOULD A FAMILY DO THAT
MAKES A NEEDIAN INCOME IN HAWAI’I.
CAN THEY AFFORD A HOME? DO THEY NEED POOL THEIR MONEY
WITH OTHER FAMILY MEMBERS? YOU MENTIONED THIS
PHENOMENON. REALLY, WHEN HE TALK ABOUT THE
MEDIAN INCOME, IS THERE SOMETHING TO BUY?
>>ABSOLUTELY. I THINK NO MATTER WHERE YOU
ARE, SOMETHING FOR YOU. I WOULD SAY, MEDIAN INCOME,
YOU CAN GET BY 0% DOWN AS LONG AS YOU’RE IN AREAS THAT ARE
AVAILABLE FOR USDA. GUARANTEED RURAL HOUSING.
AND 0 DOWN. LOAN IS GUARANTEED.
SO THE LENDER IS SAFE. IN THAT REGARD.
AND ACTUALLY REALLY CAREFUL TO MAKE SHE’SER YOU DON’T HAVE
TOO MUCH DEBT AGAINST YOUR HOME.
THAT’S AARON YEAH THAT SOMEONE CAN DO.
I’M JUST KIND COMES TO MIND. IF YOU, HONORABLY DISCHARGED
VETERAN. YOU’VE GOT VA AVAILABLE TO
YOU. ALSO ZERO% DOWN GUARANTEED.
THEN YOU’VE GOT LIKE 3 AND QUARTER PERCENT DOWN ON FHA.
MANY WAYS TO GET THERE. I THINK SCOTT HIT THE HEAD ON
THE NAIL EARLIER. TALK TO A LENDER.
GET PREQUALIFIED. GET PREAPPROVED.
PULL YOUR CREDIT. LOOK AT INCOME AND ASSETS.
TELL YOU WHERE YOU CAN GO AND HAD THEN CONNECT YOU WITH A
REAL ESTATE AGENT AND THEN GO OUT AND FIND THE PROPERTY.
>>I WAS GOING TO SAY, YOU HAVE A PANEL ON KAKAAKO.
IN THAT CORRIDOR, THERE’S A BUILDING COMING UP THAT
ACTUALLY WILL BE FOR PEOPLE WHO ARE MAKING 100% OF THE
AREA MEDIAN INCOME IN SOME CASES LESS.
TWO HIGHRISES COMING UP IN THE NEAR FUTURE ARE DESIGNED FOR
FOLKS IN THE 80% OF THE AMI AND UP TO 120.
DOES IT SOLVE THE WHOLE PROBLEM AND IS IT GOING TO
STILL BE COMPETITIVE? ABSOLUTELY.
BUT I DO THINK THAT THERE’S GOING TO BE OPTIONS.
>>DARYL: SOME OF MEDIAN INCOME, NOT GOING TO BE ABLE
TO BUY A SINGLE FAMILY HOUSE, ANYWHERE IN THE URBAN AREA.
>>POSSIBLY NOT. I THINK THAT’S WHERE THE
CHOICES COME IN. ABSOLUTELY TRUE.
THE REALITY OF OUR MARKET IS CERTAIN NEIGHBORHOODS ARE
HIGHER PRICED. AND MAKE IT DIFFICULT.
NO DOUBT ABOUT THAT.>>I DID SEE A KAIMUKI HOUSE
WHICH WAS 800 SQUARE FEET. FOR $560,000.
>>2 BEDROOM,.>>2 BEDROOM ONE BATH ON 2,000
SQUARE FEET. YOU KNOW, SO IT WAS A STARTER
HOME.>>I THINK I SAW THE LINE FOR
THAT HOUSE PEOPLE RUNNING DOWN THE STREET,.
>>ANOTHER THING WE’RE STARTING TO SEE IS FAMILIES
THAT ARE SQUEEZED INTO A HOME. LOTS OF PEOPLE LIVING IN THAT
HOUSE. THINKING ABOUT LET’S ADD THE
SECOND STORY. THIRD STORY.
IF IT’S ALLOWED.>>WHOLE OTHER ISSUE.
CONSTRUCTION COSTS ARE SO HIGH RIGHT NOW.
BARRIER. QUICK QUESTION.
I DON’T KNOW THAT WE HAVE A LOT OF LEASEHOLD PLACES ANY MORE.
QUESTION STILL KIND OF HAUNTS SOME OF THE PROPERTIES.
LEASEHOLD. IT’S A LOT CHEAPER.
SCOTT HIGASHI, IS LEASEHOLD SAFE TO BUY?
>>IT DEPENDS ON THE REGISTER OF THE LEASE.
GENERALLY SPEAKING, LENGTH OF THE LEASE.
>>THEY’RE NOT THAT MANY LEFT BECAUSE A LOT OF THEM HAVE
EITHER PURCHASED THE FEE OR PERIOD OF CONVERSION HAS BEEN
ALLOTTED.>>YOU HAVE TO KNOW WHAT
YOU’RE BAYING. YOU HAVE TO KNOW WHAT YOU’RE
BAY BYING. COUPLE OF QUESTIONS ABOUT
PEOPLE TRYING TO, I THINK REED THE MARKET A LITTLE BIT.
QUESTION. ARE PEOPLE BUYING HOMES THEY
CAN’T AFFORD LIKE IN 2005, 2007, SCOTT WHITTINGTON,
YOU’RE THE MORTGAGE GUY. ARE PEOPLE BUYING HOUSE THEY
CAN’T AFFORD.>>
UNFORTUNATELY — FORTUNATEL Y, NO.
BECAUSEFUL THEY’RE GETTING A MORTGAGE, I CAN’T SEE GETTING
A MORTGAGE. NOT A MORTGAGE GUY.
ONES THAT GET MORTGAGES,.>>IF YOU CAN GET A MORTGAGE,
CAN YOU AFFORD IT. WE’RE TALKING ABOUT DODD
FRANK A LITTLE EARLIER. VERY RESTRICTATIVE.
WE HAVE TO CALL BUILD AND REPAY.
YOU CANNOT DO THE LOANS. EVEN IF THEY HAVE GREAT
COMMISSION OR BONUS INCOME, STILL LOOKING AT THAT INCOME
OVER TIME, AND CAN THEY AFFORD THAT MORTGAGE.
IF THEY CANNOT, ACTUALLY WE GET IN TROUBLE WITH OUR
REGULATORS. SO THERE IS A BIGGER PICTURE
THAN THIS. SO THINGS GET OVERHE CAN
TENDED BECAUSE MAYBE YOUR JOB CHANGED THE DAY AFTER YOU
CLOSED YOUR LOAN. WE CAN’T HAVE FORESIGHT ON.
VALIDATE EVERYTHING, THE DAY BEFORE LOAN FUNDING, WE’RE
VALIDATING THEIR EMPLOYMENT TO MAKE SURE THEY’RE THERE.
>>IN HAWAI’I, MARKET, WHICH IS ALWAYS BEEN CYCLICAL,
WE’RE ALWAYS TRYING TO READ THE CARS.
LOOK FOR THE CANARY IN THE COAL MINE THAT IS GOING TO
TELL YOU THE BOOM IS OVER AND DROP IS ABOUT TO START.
ROY FROM WAIKIKI. WHAT WILL HAPPEN IF A LOT OF
HOME SELLERS START TO CASH OUT AND SELL? WHAT DO YOU THINK?
>>I’M NOT QUITE SURE WHY THAT WOULD HAPPEN.
I THINK IF PEOPLE — THERE’S A BIG DEMAND HERE.
THE REASON WHY THERE’S A BIG DEMAND TO BE HERE IS BECAUSE
THIS IS GREAT PLACE TO LIVE. THERE’S REALLY GOOD AMENITIES
HERE. RAIN GOOD WEATHER TO THE HOST
HAWAIIAN CULTURE, TO THE WATER.
TO THE NATURAL BEAUTY OF THE PLACE.
THOSE OF US WHO LIVE HERE SOMETIMES GET CAUGHT UP IN THE
TRAFFIC. IF YOU’RE LIVING IN WEST OAHU
AND COMMUTING INTO DOWNTOWN. UNDERSTANDABLE WHY YOU GET
CAUGHT UP IN THE TRAFFIC. STILL A VERY HIGH AMENITY
PLACE. PEOPLE DECIDE THEY WANT TO
CASH OUT AND PRICES START TO FALL A BIT, OTHERS WILL
FOLLOW. AND DECIDE TO COME TO HAWAI’I.
>>WHAT ABOUT THE REAL ESTATE FLIPPERS? ARE THEY AT RISK
AT ALL? SCOTT HIGASHI?>>YEAH.
I DON’T THINK THERE IS A FLIP MARKET.
I JUST DON’T RECOMMEND THAT. YOU KNOW, I THINK THE ADVENT
OF THESE GREAT TV SHOWS THAT GIVE THESE FANSFUL IDEAS, BUY
A PLACE, FIX IT UP AND FLIP IT. I DON’T THINK OUR, MARKET
BEHAVES THAT WAY.>>I’VE SEEN A LOT OF
FLIPPERS. I DON’T KNOW IF THEY’RE GOOD.
BUT THEY’RE DOING IT AND SOME OF THEM HAVE MADE MONEY.
SOME OF THEM HAVEN’T. BUT FLIPPERS WILL GET BURNED
IN THE END. BECAUSE VERY, IT’S TOO
EXPENSIVE AND BUT THEY’RE BUYING IT FOR 500.
PUTTING 150. FLIPPING IT RIGHT NOW.
KAILUA IS INCREDIBLE. KAILUA COCONUT GROVE WAS
ALWAYS CONSIDERED THE DREGS AREA.
AND SMALL, IT WAS SMALL LOTS WITH SINGLE FAMILY
CONSTRUCTION. AND LAST YEAR, IT HIT A
THOUSAND DOLLARS A SQUARE FOOT.
THAT’S KAKAAKO PRICES. THAT’S DIAMOND HEAD PRICES.
I WAS LIKE, OH, MY GOD. HOW FAR IS THIS GOING TO GO?
THAT’S JUST IT’S INCREDIBLE AND THERE ARE A LOT OF
FLIPPERS IN KAILUA RIGHT NOW.>>DARYL: THE QUESTIONS ARE
COMING IN. ALONG THOSE LINES.
ABOUT NEIGHBORHOODS THAT HAVE TRADITIONALLY HAD AFFORDABLE
HOUSES, KAUAI, BIG ISLAND, AND PEOPLE ARE ASKING, WHAT IS
GOING TO HAPPEN TO OUR COMMUNITIES? RISING PRICE
GOING TO START CHANGING THE NATURE OF OUR COMMUNITIES?
SCOTT?>>ABSOLUTELY.
I MEAN, I THINK THAT WHEN YOU HAVE THAT KIND OF
ENVIRONMENT, IT WILL CHANGE THE NATURE OF THE PRICES.
IT’S UNAVOIDABLE. THE HARD PART ABOUT THE
NEIGHBOR ISLANDS HAVE WHEN THE ECONOMIC DOWN TURN OCCUR,
IT WAS MUCH HARDER ON THE NEIGHBOR ISLAND COMMUNITIES.
STILL NOT SEEING WHERE THOSE PRICES ARE RECOVERED IN FULL.
ON LIKE OAHU WHERE THEY CONTINUE TO ACCELERATE.
NEIGHBOR ISLAND MARKETS DO BEHAVIOR VERY DIFFERENTLY AND
WILL IS A LOT OF OUTSIDE INFLUENCE IN PARTICULAR THE
RESORT MARKETS. TRADITIONALLY RESIDENTIAL
MARKET, I CLEARLY FLIP IN THE PHENOMENAL FLIPPING CAN
ABSOLUTELY AFFECT VALUES.>>DARYL: INTERESTING
QUESTION. IT WAS HUGE PROBLEM.
IT WAS A QUESTION ABOUT, I COULD SEE A FIXED INCOME
PERSON ASKING THIS QUESTION. THEY’RE SEEING THAT THE
NEIGHBORHOODS PRICING UP AND THEIR PROPERTY TAXES GOING
UP. TO POINT WHERE THEY MAY BE PAY
PAYING MORE, HAWAI’I IS LOW PROPERTY PRICE.
STATE. IT’S STILL SCARY FOR THEM.
JON WHITTINGTON. ARE WE SEEING PEOPLE GET IN
TROUBLE BECAUSE OF THE PROPERTY TAXES?
>>NO. NOT SO MUCH.
HAWAI’I HAS THE RELATIVELY LOW PROPERTY TAX COMPARED TO
OTHER PLACE ON THE MAINLAND. I CAN HEAR CITY COUNCIL
SAYING, WE CAN’T RAISE PROPERTY TAXES.
>>WE GET TAXED IN EVERY OTHER WAY.
>>WE’RE LIKE NUMBER ONE WHEN YOU PUT ALL THE TAXES THAT WE
PAY AND G.E.T. THAT’S 5% RIGHT OFF OF EVERY
DOLLAR YOU EARN. AND YOUR RENT AND ON YOUR, ON
EVERY SERVICE YOU USE. I MEAN, WE ARE THE HIGHEST
TAXED STATE IN THE NATION. AND WHEN YOU SAY REAL PROPERTY
TAXES ARE LOW, THAT’S NOT A REAL ISSUE.
THAT’S A NONISSUE BECAUSE IF THAT TAX KEEPS GOING UP,
THAT’S GOING TO BE GO RIGHT TO THE RENTERS AND RENTERS ARE
GOING TO BE DISPLACED. WE HAVE TO BALANCE.
WE CAN’T BE TAXING US EVERY WHICH WAY.
WE’VE GOT TO CALM DOWN ON TAXES.
>>DARYL: YOU’RE MAKING ME, I GOT TO READ THIS QUESTION.
STEPHANIE SOFOS CONSIDER RUNNING FOR MAYOR? OKAY.
>>I WOULD PROBABLY GO POSTAL. IF THAT WOULD HAPPEN.
>>CONGRATULATIONS.>>DARYL: THIS IS A I HAVE TO
KEEP CONTROLLING IT. BECAUSE WE’RE MOVING RIGHT
ALONG HERE. AGAIN, I ASKED ABOUT THE
CANARY IN THE COAL MINE. WHAT SHOULD PEOPLE BE
WATCHING OUT FOR? WHAT IS THE STATISTICAL
PSYCHOLOGICAL, WHAT IS THE THING THAT COULD TRIGGER THE
NEXT TRENDING DOWN? SUMNER?>>KIND OF DECLINE IN TOURISM.
CERTAINLY, IF WE WERE LOOKING OUT THERE, THE THIS 30%
DECLINE IN THE VALUE OF THE JAPANESE YEN.
OF THE NEW ZEALAND DOLLAR, AUSTRALIAN DOLLAR, CANADIAN
DOLLAR, ALL PHENOMENAL MADE IT MUCH MORE EXPENSIVE TO
VISIT HERE. NUMBERS HAVE BEEN ROBUST FOR
TOURISM. DOESN’T MEAN WITHIN DAY,
PEOPLE ARE GOING TO WAKE UP AND SAY, LET’S GO TO MEXICO.
IF THEY’RE LOOKING FOR A VACATION, FIND THINGS LIKE
MEXICO VACATION IS MUCH CHEAPER.
CUBE STARTS TO MOVE FORWARD IN THE TOURISM INDUSTRY, WE MAY
START TO FIND MORE COMPETITION THERE TOO.
THERE COULD BE A RECESSION COMING ABOUT.
>>DARYL: SUDDEN SHOCKS.>>HURRICANE RIPPING THROUGH
HERE.>>CANARY IN THE COAL MINE.
INVENTORIES BIG INDICATOR WHERE WE ARE IN A CYCLE.
WE’RE LIKE 3 MONTHS RIGHT KNEW, ININVENTORY.
THAT WHAT DOES THAT MEAN IF NO MORE HOMES CAME ON THE MARKET
TODAY, THE AMOUNT OF VELOCITY IN THE MARKET OF PEOPLE
BUYING, 3 MONTHS, AFTER 3 MONTHS, YOU WOULD HAVE NO
INVENTORY LEFT.>>BASICALLY HAVE ABLE HOMES
GOOD ENOUGH FOR 3 MONTHS AT THE RATE THE MARKET IS GOING
NOW. AMOUNT OF TIME THE HOMES ARE
SPENDING ON THE MARKET ON AVERAGE,-MARKET ON AVERAGE,
STILL ABOUT 40 DAYS. WE’VE SEEN TIMES IN HAWAII
WHERE THAT COULD BE MONTHS. MANY MONTHS.
SO I THINK RIGHT NOW, WE’RE NOT SEEING — I THINK
CONSUMER CONFIDENCE AT LEAST FROM WHAT WE SEE, WE DO A LOT
OF FIRST TIME HOME BUYERS THAT TREPIDATION.
AND THINK FOLKS DON’T, ARE CONFIDENT THAT THEY’RE GOING
TO HAVE A JOB OR DON’T HAVE GOOD EMPLOYMENT OUTLOOK.
DON’T FEEL CONFIDENT. DON’T BUY A HOUSE.
THINK IF THAT CREEPS INTO THE ECONOMY, I THINK THAT’S GOING
TO BE TOUGH. THAT’S WHEN YOU START TO SEE
VALUES DROP. THINGS TAKE LONGER TO SELL.
SELLERS HAVE TO BACK OFF A LITTLE BIT AND DON’T GET
AGGRESSIVE. LISTING THEIR HOMES.
WHEN SELLERS PUT THEIR HOME ON THE MARKET, KNOW THE
NEIGHBORHOOD IS GOING MORE AND SELLER GETS MORE AND NEXT
SELLER GETS MORE, MOVES PRICE UP.
PART OF IT IS LACK OF INVENTORY.
YOU WOULD HAVE A NEIGHBORHOOD YOU WOULDN’T THOUGHT, HOW DO
THEY GET THESE PRICES. IF IT’S THE ONLY HOME ON THE
MARKET AND PEOPLE REALLY WANT IT, MORE THAN ONE PERSON WANTS
IT, SUPPLY AND DEMAND SAYS, THEY’RE GOING TO BID THAT UP.
>>I DO KNOW THE LENGTH OF TIME WAS 30 TO 45 DAYS A YEAR AGO.
NOW, IT’S 90 DAYS. 3 MONTHS.
SO THERE IS A, IT’S STARTING TO STRETCH OUT.
SO THAT SHOWS YOU THAT THE MARKET IS SLOWING DOWN.
>>RIGHT BALANCE POINT. NOT QUITE A SELLER’S MARKET.
NOT A BUYER’S MARKET YET.>>60 TO 90 DAYS.
I THINK THIS IS ACTUALLY A BETTER MARKET THAN IT WAS A
YEAR AGO BECAUSE IT WAS MORE OF A FRENZY A YEAR AGO.
IT SEEMED TO HAVE PEEKED IN 2004 AND I STARTED TO SEE THE
TREND GOING DOWN IN JUNE OF 2015.
SO NOW, THINGS ARE STARTING TO STRETCH OUT A LITTLE BIT MORE
AND BUYERS ARE WAITING A WILL LONGER AND SELLERS ARE
BECOMING MORE REALISTIC. SO I’M STARTING TO SEE PRICE
REDUCTIONS. ACROSS THE BOARD.
I SEE PEOPLE WILLING TO NEGOTIATE.
BEFORE, NO ONE WOULD NEGOTIATE WITH YOU.
THEY WOULD JUST SAY, THIS IS MY PRICE AND I’M GOING TO PUT
ALL OFFERS TO THE SELLERND YOU MIGHT BE LUCKY IF YOU GET US
TO ACCEPT IT. INOUYE, THEY’RE SAYING, OKAY,
HOW CAN I HELP YOU?>>DARYL: IT SEEMS LIKE YOU
WERE, DO YOU FEEL LIKE WE’RE HITTING A CREST HERE?.
I REALLY DON’T. I STILL SEE THAT WE’RE MEDIAN
HOME PRICES ARE STILL INCREASING.
>>ECONOMISTS LOOK AT HISTORY AND WE’RE LOOKING AT WHAT’S
CURRENTLY GOING ON. YOU HAVE TO REMEMBER THAT YEAR
LOOKING AT YOUR DATA THAT’S BEEN GIVEN TO YOU OVER THE
LAST 3 TO 12 MONTHS. WE SEE IT GOING FORWARD.
>>THAT’S TRUE. ALSO TAKING SOME OF OUR
PROPREDICTIONS WITH LOCAL ECONOMY.
WE SEE AGAIN, NOT GREAT GROWTH, ABOUT YOU WE SEE STILL
PRETTY SUBSTANTIAL GROWTH IN LOCAL ECONOMY.
OVER THE NEXT 2 TO 3 YEARS. THAT’S GOING TO DRIVE UP LOCAL
INCOME. I THINK WE’LL SEE LOCAL DEMAND
THAT WILL KEEP THE MEDIAN HOME PRICE RELATIVELY HIGH.
I DON’T THINK WE’RE GOING TO SEE BIG DECLINES OR BIG
INCREASES. AT THE UPPER END, THAT’S A
DIFFERENT MARKET. UPPER END, WE DEAL MUCH MORE
WITH EXCHANGE RATE CHANGES.>>WHAT’S GOING ON IN THE
CHINESE STOCK MARKET. IN CALIFORNIA, TOO, WE FIND
THAT ALL OF A SUDDEN, PEOPLE DECIDE THEY WANT TO TAKE SOCK
SOME OF THEIR STOCK MARKET WEALTH AND PARK IT IN REAL
ESTATE. HAPPENED IN 1999, 2000, AFTER
THE STOCK MARKET CRASH IN THE UNITED STATES.
>>YOU ASKED ABOUT HOW DO WE SEE IT.
AND WHAT’S GOING ON. YOU THINK WHAT’S HAPPENING
RIGHT NOW IS THERE IS SOME NERVOUSNESS IN THE UNITED
STATES ECONOMY AND THE WORLD ECONOMY AND IT COULD BE BASE
THE ON THIS ELECTION. THIS COULD BE, AND WHAT
TRIGGERS A RECESSION CAN BE ANYTHING.
NATURAL DISASTER. IT COULD BE POLITICAL.
IT COULD BE CURRENCY WAR. IT COULD BE SOME TYPE OF A
SCARE. SO I THINK THAT, YES, WE ARE
GROWING AND WE’RE KIND OF STALLING, SLOWING DOWN A BIT.
BECAUSE PEOPLE ARE JUST WAITING TO SEE WHAT GOING TO
HAPPEN, WHO IS GOING TO BE IN OFFICE.
>>HOLDING THEIR BREATH A LITTLE BIT.
>>YES. AND ALSO BEING MORE
PRACTICAL. BUT AGAIN, GOING BACK TO WHAT
EVERYONE SAID, IF YOU HAVE THE MONEY, IF YOU HAVE THE ABILITY
TO MORTGAGE, IF YOU FEEL COMFORTABLE IN YOUR MONTHLY
PAYMENT, THEN BUY. BECAUSE YOU WILL NEVER, THERE
IS NO — YOU CANNOT TIME A MARKET. NO ONE KNOWS WHEN TO
TIME A MARKET. WE’RE NOT GENIUSES ON THAT
LEVEL. WE HOPE WE ARE BUT WE HAVE TO
LOOK AT IT FOR ME, FOR YOU, WHATEVER YOU WANT TO DO, IF IT
WORKS FOR ME, THEN I’M GOING TO BUY.
>>DARYL: LET ME ASK. WE HAVE A NUMBER OF CALLERS
WHO HAVE ASKED ABOUT AFFORDABILITY.
WHAT IS AFFORDABLE. WHAT IS CORRELATION BETWEEN
THE HIGH COST OF HOUSING AND HOMELESSNESS.
RENT CONTROL. A NUMBER OF QUESTIONS.
AND THEN WHAT ABOUT THE T.O.D. TRANSIT-ORIENTED DEVELOPMENT
ALONG RAIL. AND WE ARE ON THE VERGE OF
GOVERNMENT LOOKING AT SOME OF HOUSING POLICIES AND TRYING
TO GENERATE A LOT MORE AFFORDABLE UNITS INTO THE
MARKET. IF YOU DID THAT, IN A REALLY
RAPID WAY, CAN THAT DESTABILIZE OUR MARKET? ARE
WE IN ANY DANGER OF THAT?>>FIRST OF ALL, I THINK WE
NEED TO BUILD MORE. I MEAN, THERE’S LOTS OF
CONTROVERSIES ABOUT TO WE WANT TO HAVE NEW GREEN FIELD
DEVELOPMENT. BIG CONTROVERSY.
BUILD UP THE MIDDLE, BUILDING ON AG LAND.
BUILDING ON LAND THAT HASN’T PREVIOUSLY BEEN DEVELOPED.
THAT’S WHERE THE BIG CONTROVERSIES ARE IN HAWAI’I.
IT’S MUCH LESS CONTROVERSIAL TO HAVE DEVELOPMENT,
REDEVELOPMENT ON ALREADY DEVELOPED PARCELS.
IF THE HOUSING CRISIS IS GOING TO BE AMELIORATED, NOT
SOLVED, BUT AMELIORATED FOR PEOPLE IN MIDDLE AN LOW INCOME
IT’S, WE’RE GOING TO HAVE TO BUILD MORE IN THOSE AREAS.
THINK TRANSIT-ORIENTED DEVELOPMENT IS ONE PLACE
WHERE THE STATE, IN PARTICULAR, THE STATE TO TAKE
A LOOK AT ITS PLANS AND TO THINK ABOUT HOW CAN CAN WE GET
THESE LANDS IN THE HANDS OF DEVELOPERS WHO ARE GOING TO
BUILD. WORKFORCE HOUSING. AT THE
SAME TIME, NOT WINDFALL PROFITS OUT OF THE WHOLE DEAL.
>>I’M CONCERNED ABOUT BUILDING IT AND THEY WILL
COME. THAT MANTRA THAT EVERYBODY
TALKS IT TO ME ABOUT. I’M REALLY CONCERNED ABOUT WE
NEED TO BUILD, WE NEED TO BUILD, WE NEED TO BUILD.
I WANT TO SEE INFRASTRUCTURE. I WANT TO SEE, WE’RE GOING TO,
RIGHT NOW, THE CITY IS RENOVATING THEIR SEWER
SYSTEM. BUT THEY’VE STATE THE THEY’RE
NOT INCREASING THE CAPACITY. YOU WANT TO BUILD 12,000 MORE
HOMES. WHERE YOU ARE YOU GOING TO PUT
THE POOP? SEWER LINE, STORM TRAIN DRAINS ARE THE ONLY, IN
THE STATE, ONLY ONE IN THE UNITED STATES WHERE WHEN THE
RAINS HEAVY WILL, STORM DRAINS GO INTO OUR SEWER AND
BACKS UP AND THEN WE HAVE RAW SEWAGE EVERYWHERE ON THE
BEACHES FOR 2 OR 3 DAYS. AND THAT AFFECTS US, AS PEOPLE
IN OUR WHERE WE WANT TO LIVE, AND IT AFFECTS TOURISM.
YOU’VE GOT TO BUILD INFRASTRUCTURE IF YOU WANT TO
BUILD HOUSES AND I DON’T SEE THAT HAPPENING.
>>DARYL: GOVERNOR’S HOUSING PROPOSALS, LEGISLATURE,
THERE WAS MONEY FOR INFRASTRUCTURE.
THERE WAS MONEY FOR AFFORDABLE HOUSING.
AND THERE IS THIS OPPORTUNITY AROUND RAIL STATIONS THAT
THEY’RE TALKING ABOUT. ASSUMING THAT THEY CAN TAKE
CARE OF ALL THE POOP. SCOTT HIGASHI, WHAT IMPACT DO
YOU THINK A LARGE AMOUNT OF INVENTORY OVER THE NEXT, 6, 7,
8, 9, TEN YEARS, WOULD HAVE ON THE REAL ESTATE MARKET IN
HAWAII AFFORDABLE AND MIDDLE INCOME HOUSING. I DON’T
THINK IT HAS A NEGATIVE EFFECT AT ALL.
WE’RE TRACKING THE AMOUNT MUCH INTEREST IN SOME OF THE
KAKAAKO DEVELOPMENTS THAT HAVE NOT BEEN BUILT THAT ARE
GOING TO BE EITHER WORKFORCE OR HOUSING THAT’S ACTUALLY
HAVE BEING ADMINISTERED AND OVERSEEN BY THE STATE
AGENCIES INCLUDING THE HCDA AND HHFDC, THERE IS A VERY
STRONG INDICATION THAT THESE DEMANDS FAR OUTSTRIPS
WHATEVER INVENTORY IS CURRENTLY PLANNED AND I JUST
DON’T THINK THAT IN THE AFFORDABLE, MORE AFFORDABLE
CATEGORY, WHETHER BY THE WAY, EVEN THOUGH WE’RE IN REAL
ESTATE AND LOOKING FOR PEOPLE TO BUY HOMES, THERE IS ROOM ON
T.O.D., WHATEVER, TO ACTUALLY BUILD AFFORDABLE RENTALS TOO.
SO A LOT OF HOUSING OPTION I THINK THAT EXISTS. AND THAT
CAN BE A GOOD TRANSITION FOR PEOPLE.
NOT EVERYONE WILL BUY A HOME. BUT IF WE CAN PROVIDE BETTER
RENTAL OPPORTUNITIES, BETTER NEAR RAIL STATIONS, THAT
COULD BE VERY BENEFICIAL. I DON’T THINK EITHER OF THOSE
THINGS WILL HAVE A DOWNWARD EFFECT ON THE MARKET.
THE QUESTION BECOMES, AND I THINK SUMNER AND YOU KNOW, IF
YOU LOOK AT HIGHER PRICE CONDOMINIUM, HIGHER PRICE
HOME, I JUST DOESN’T KNOW THAT THEY ABSORPTION IS THERE FOR
THAT. AND I THINK THAT IS A DANGER.
>>DARYL: COUPLE OF CALLERS NOW.
MOVING NOW TO THE WHAT SOME MAKES JUST BUILDING HOUSING
EXPENSIVE IN HAWAII. WE HAVEN’T REALLY EXPLORED
THAT YET. CALLER’S NEIGHBOR BUILD HOUSE
DOES NOT MAKE MUCH PROFIT. HIGH COSTS ARE DRIVEN UP BY
REALTORS.>>BE CAREFUL.
IT’S NOT US. IT’S THE MORTGAGE BROKERS.
>>DARYL: OKAY. I MEAN, WE TALK AND THE
GOVERNMENT TALKEDS ABOUT GETTING INVOLVE IN THE
HOUSING BUSINESS IN A MUCH BIGGER WAY.
BUT REALLY, THE WAY WE DO OUR REGULATORY STRUCTURE, ARE WE
CAPABLE OF BUILDING THINGS THAT PEOPLE CAN AFFORD
QUICKLY? LET ME THROW THAT ONE AT YOU.
>>I DON’T THINK WE NIECELY HAVE TO HAVE IT THAT IF YOU
WANT TO DO A HOUSING DEVELOPMENT, THAT IT TAKES
TEN YEARS TO GET THROUGH THE REGULATORY PROCESS.
I THINK THIS IS THE TIME OF THING THAT THE STATE AND THE
CITY OUGHT TO BE LOOKING AT TO TRY TO FIGURE OUT HOW TO
STREAMLINE THE PROCESS.>>WORK TOGETHER? WORK
TOGETHER?>>HOLD ON.
>>REGULATORY PROCESS STILL NEEDS SOME REFORM.
STILL VERY COMPLICATED. WE HAVE A DOUBLE VETO PROCESS.
IF YOU’RE TRYING TO BUILD ON SAY LAND THAT’S CURRENTLY
ZONED AGO LAND, YOU HAVE TO GET IT RECLASSIFIED BY THE
STATE AND PROJECT HAS TO BE APPROVED BY THE CITY.
AND IF HONOLULU DOESN’T APPROVE IT, THERE’S NO OTHER
PLACE TO GO TO. ON THE MAINLAND, IF SUBURB OF
NEW YORK DOESN’T APPROVE IT, YOU GO TO THE NEXT SUBSHALL.
GO TO THE NEXT. IF YOU HAVE PROJECTS THAT YOU
THINK ARE USEFUL FOR PEOPLE IN THE NEW YORK AREA, THERE’S
HUNDREDS OF JURISDICTIONS YOU CAN BUILD IN.
HERE THERE’S JUST ONE JURISDICTION AND THE STATE
GOVERNMENT HOLDS SECOND LEVEL OF APPROVAL ON THOSE
DEVELOPMENTS. BIG DEAL.
WE NEED TO BE THINKING MORE ABOUT HOW TO STREAMLINE THAT
PROCESS.>>DARYL: REALLY FUN REQUEST I
THINK. I WANT TO GET THIS IN.
FUN QUESTION. FAN CHOSE IT.
NOT REPRESENTATIVE OF LOCAL RESIDENTS.
YOU GUYS ARE ALL LOCAL RESIDENTS.
NO ONE IS DEEND GOING GENTRIFICATION.
OF LOCAL PEOPLE. I THINK IT MEANS
GENTRIFICATION. ARE WE HEAD FOR A FUNDAMENTAL
CHANGE IN THE WAY HONOLULU LOOKS.
GET USE THE TO THE IDEA THAT OLD RUSTIC NEIGHBORHOODS ARE
GOING TO GET DRASTICALLY THINGED.
>>ABSOLUTELY. PEOPLE A LOT OF LOCAL PEOPLE
ARE HAVING A DIFFICULT TIME AFFORDING WHAT THEY HAVE.
AND IT’S GOING TO COME TO A POINT THAT PEOPLE WILL HAVE TO
SELL AND LEAVE. BECAUSE MY OWN NIECE, MY OWN
NIECE, LEFT A YEAR AGO. SHE COULDN’T AFFORD TO LIVE
HERE. EVEN THOUGH I WAS A WILLING TO
HELP HER, AND HER IN-LAWS WERE WILLING TO HELP HER, THE
AMOUNT OF COSTS TO LIVE HERE, AND THE TO GET A BIGGER HOUSE,
WAS JUST TOO MUCH MONEY W SO IT’S GOING TO GET TO THAT
POINT THAT SOME PEOPLE WHO CANNOT COMPETE WITH YOUR
PEOPLE, IT GOES BACK TO JOBS. AND WHAT TYPE OF EDUCATION AND
WHAT TYPE OF QUALITY OF JOBS AND HOW MUCH MONEY, YOU CAN’T,
YOUR DAYS OF LIVING ON THE BEACH AND GETTING FISH, WHERE
ALL THE FISH ARE FISHED OUT, BECAUSE THERE’S TOO MANY
FISHERMEN AND WE NEED TO BALANCE, THERE’S NO BALANCE.
AND SO PEOPLE ARE GOING TO LEAVE.
IT IS GOING TO CHANGE. THINGS ARE GOING TO CHANGE.
AND YOU HAVE TO GET READY FOR IT.
>>DARYL: WITH THAT QUESTION, L GOES BACK TO OUR REGULATION
QUESTION. PEOPLE SAY, DON’T CHANGE.
WHAT WE HAVE. SCOTT HIGASHI, DO YOU SEE IN
YOUR SELLERS FOR EXAMPLE, MAYBE BUYERS, LOOKING FOR
NEIGHBORHOODS THAT AREN’T GOING TO EXIST?
>>I DON’T KNOW IF THEY’RE LOOKING FOR NEIGHBORHOODS
THAT AREN’T GOING TO EXIST. HOMES GROW OLD AND WE HAVE A
LOT OF NEIGHBORHOODS THAT WERE DEVELOPED 50, 60 YEARS
AGO. IN THE INSURANCE MARKET, YOU
THEY, TO PAY FOR HURRICANE INSURANCE, ON A SINGLE WALL
HOME, VERSUS A NEW MODERNIZED HOMES, SUBSTANTIAL COST
DIFFERENCE. SO IN SOME CASE, HOMEOWNERS
WELL, ACTUALLY, I’VE GOT A REPAIR THE HOME ANYWHERE.
MAYBE I SHOULD BUILD A NEW ONE.
AND EVEN THOUGH THAT SOUNDS CRITICAL, THERE ARE OTHER
FACTORS. IT’S NOT JUST A HOUSING COST.
COST OF INSURANCE THE AND INSURABLABILITY AND HOMES
START TO FALL APART. SO THERE’S A LOT OF HOMES
WHERE GENERATION OF FOLKS THAT LIVED IN, NEW BUYERS COME
IN AND SAY, GOSH, I REALLY WANT TO CHANGE THIS.
I WANT TO RENOVATE. I WANT TO MAKE IT BETTER.
AND PEOPLE WILL DO THAT. I THINK WE FORGOTTEN THAT
PEOPLE DID THAT. AT ONE POINT.
>>DARYL: THAT’S FREE ENTERPRISE.
>>IT IS.>>AN EXAMPLE IS KAHALA.
IN THE FIFTIES, PIG FARMS. AND THEN THEY CAME IN AND THEY
HAD BUILT ALL OF THE OF THE BACKFILL AND OTHER DEVELOPERS
CAME IN. THEY BUILT THESE SINGLE WALL
CONSTRUCTION HOMES. THEY SOLD FOR $18,000.
IN 1959. NOW, THEN THOSE HOMES SOLD FOR
A MILLION. THEN THEY TORE THEM ALL DOWN.
BUILDING MCMANSIONS. AND COMING IN.
WHOLE NEW DIFFERENT PLACE. I WENT IT KAHALA ELEMENTARY
SCHOOL AS A KID. I DON’T RECOGNIZE ANY OF THE
NEIGHBORHOODS.>>DARYL: THIS IS AN
INTERESTING QUESTION. I THINK THAT WE’VE SORT OF
ANSWERED IT. LET’S STATE IT STRAIGHT OUT.
WHAT DOES THE PANEL THINK ABOUT LEGISLATORS MAKING IT
ILLEGAL FOR NONAMERICANS TO BUY PROPERTY IN HAWAI’I SO WE
HAVE MORE OF A CHANCE. SECOND QUESTION IS, SEEMS
LIKE WE’RE ACCOMMODATING OUTSIDE INTERESTS, ARE WE
TRYING TO MAKE IT EASY BUCK OR TRULY HELPING FAMILIES LOCAL
FAMILIES. LET ME ASK YOU.
IS THAT FACT OUTSIDE MONEY REALLY AFFECTING THE MIDDLE
CLASS BUYER?>>WE’VE HAD OUTSIDE MONEY
HERE FOR A LONG TIME. I MEAN, WE’VE HAD U.S.
MAINLAND MONEY HERE SINCE THE 1950S AND 1960S.
IN PARTICULAR, SINCE THE JET PLANE CAME IN 1958.
THAT MONEY BEEN HERE. JAPANESE MONEY FOLLOWED.
GOOD HISTORY ALL MONIES THAT HAVE COME THROUGH HERE.
ONE THING IS CRITICAL EVEN IF WE’RE NOT GOING TO DO GREEN
FIELD DEVELOPMENT, NOT GOING TO DEVELOP MUCH ON THE NORTH
SHORE. CENTER OF THE ISLAND, WE DO
NEED TO COME UP WITH MORE DENSE DEVELOPMENT IN THE
URBAN CORRIDOR. OTHERWISE, WE’RE GOING TO
FIND THAT EXACTLY THE SCENARIO.
YOU PUT FORTH. PEOPLE ARE GOING TO SAY, I
CAN’T REALLY LIVE HERE. I HAVE TO LEAVE.
I THINK IF WE DO SOME OF THAT ADDITIONAL DENSE
DEVELOPMENT, WE’RE GOING TO FIND THAT WE’RE GOING TO FIND
THAT MORE PEOPLE ARE GOING TO BE ABLE TO AFFORD.
PERSON LIVED HERE MOST OF MY LIFE NOW.
YOU’RE ON A ISLAND. EVENTUALLY, WE’RE GOING TO
RUN OUT OF PLACE FOR PEOPLE TO LIVE.
WHAT HAPPENS?>>WE’RE GOING TO SINK.
>>SOUNDS LIKE I AGREE WITH YOU.
WE DON’T HAVE ENOUGH DEVELOPABLE LAND.
SUPPLY AND DEMAND. LEGISLATURE GOING TO OUTLAW
NONDOMESTIC BUYERS. BETTER SPEND TIME, WHERE CAN
WE FIND TRANSIT-ORIENTED DEVELOPMENT, EXPAND OUR
DEVELOPMENT OPPORTUNITIES AND THE ENTITLEMENT PROCESS.
>>USEFUL TO THINK ABOUT A CITY LIKE DENVER COMPARED TO
HONOLULU. ECONOMY PROSPERS.
YOU GET MORE INNER CITY DEVELOPMENT BUT THE SUBURBAN
RINGS START TO EXAMPLE EXPAND.
MOVE OUT INTO THE SOME OF THE FARM LAND.
RURAL AREAS. THINK YOU’RE GOING TO HAVE
MORE REDEVELOPMENT. ALL THE ROADS ARE IS GOING TO
BE A PARK LOT. THERE’S NO INFRASTRUCTURE GOT
THE LAST WORD. MAHALO FOR ALL YOU GUY FOR
BEING WITH US. NEXT WEEK WE’LL EXAMINE
STATE’S SHORTAGE OF MEDICAL DOCTORS.
900 DOCTORS SHORT. SHORTFALL EXPECTED TO GROW TO
1500 PHYSICIANS IN THE NEXT FIVE YEARS.
IT’S ACCEPTS SEVERE ON NEIGHBOR ISLANDS WHERE MANY
PATIENTS GO WITHOUT CARE OR FLY TO OAHU FOR TREATMENT.
WHAT IT TAKE TO ATTRACT AND MAINTAIN PRIMARY DOCTORS AND
SPECIALISTS ON THE NEIGHBOR ISLANDS.
NEXT TIME ON INSIGHTS ON PBS HAWAII.
I’M DARYL HUFF. A HUI HO.

Comments

  1. Post
    Author
    Kurt Nielsen

    Housing bubble???   These are economists??  Hawaii is experiencing roughly a 5% per annum growth in residential real estate values.  This can be sustained for decades as long as household income rises a measly 1% per annum.  Household incomes are rising over 2% per year in the U.S..   A 5% growth in real estate values is completely sustainable and does not indicate any sort of a bubble.   A bubble is defined as an unsustainable growth in values based upon local economic fundamentals.

  2. Post
    Author
    Phil Wulf

    Totally sustainable…as long as foreign money pours in and the Military bolsters it's rent subsidies. This market is crazy expensive esp. considering the outrageous Maintenance Fees. (for otherwise reasonably priced condos). Priority should be given to first time home buyers and families that can prove need for more room, NOT speculative investors! This is Not Wall Street! These are Main Street homes for people (who are not corporations).
    Actually, there is quite a bit of land, (if traffic, food and infrastructure were not an issue)but it is all controlled, owned, and parceled out to the corporate developers, not for people. That maybe for the best, to retain the beauty of the island. They don't call them "Land-Lords" for nuttin'.

  3. Post
    Author
    Big poppa

    the host has the weirdest mouth. Grinch looking mouth. Did he have plastic surgery on his lips? His voice sounds like he has too much upper mouth. His mouth hangs over like a dog snout. He only read pre-written questions and added nothing himself. I dont think he listened to half of anything anyone said. Just waited till they stopped talking so he could pull out a random non organic card.

  4. Post
    Author
  5. Post
    Author
    Satoshi Kobayashi

    Would love to see a revisit and discussion for Hawaii residential real estate for 2018-2019. Specifically about how the new AirBnB/short term rental laws will impact the market. Thank you!

  6. Post
    Author
  7. Post
    Author
    GetReady4LiftOff

    Watching video 2019, council & city can’t agree to chg wording to enforce anything. For 60yrs Hawaiians had b&b. what is not wanted, foreigners buying single dwellings homes to rent rooms, but owner lives out of state. 400 b&b open each month and north shore is building more vacation rentals. The state earns $8,000 per room from hotels. B&b pay taxes too and the state doesn’t care where taxes come from, and doesn’t want involved. Everybody from all countries even Russians buying up USA property.

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