I am sure you have asked yourself, “I have seen all of this negative economic news on the mainland and I wonder why hasn’t Oahu’s home prices dropped like that on the mainland? 

This is a very common question that almost everyone has been asking themselves right now.   It is either that question or they ask, how much lower are prices going to go on Oahu. (which means they don’t know what is going on in the market).

I had the chance to see Paul Brewbaker, Chief Economist and Senior Vice-President of Bank of Hawaii, speak at the regional group meeting recently and wanted to give you the information that was presented.

In summary, according to Brewbaker the reason we haven’t had the same problems here in Hawaii as in areas of the mainland, are:

1. Our economy has stayed strong with some of the lowest unemployment in the country
2. We didn’t overbuild during this last boom, consequently it didn’t leave us with an “Overhang” of properties, like what has occurred on the mainland.  The building was more restricted and controlled during the last boom.
In his Hawaii Economic Trends, January 30, 2008 issue:

“In two previous housing cycles, annual production in Hawaii peaked at 11,165 units in the year ending in fourth quarter 1980, at 10,429 units in the year ending in first quarter 1990, and at 9,802 units in the year ending in first quarter 2006, up from a cyclical low of 3, 331 units in the year ending in third quarter 1983. (A cyclical low of 4,630 units was set in the year ending in third quarter 1984. The all-time production high of around 18,000 housing units permitted was set in 1974 before current regulatory restrictions.)

3. When the private building (developers) sector slowed down construction, we were off-set by the large increase in the construction of military housing projects.  These projects didn’t add a lot of new housing, but instead replaced, old out-dated housing, thus this helped balance out the loss of economic activity in the private building sector.
4. We are also still considered affordable in comparison to San Fransisco and Orange County, which helped with the demand side of housing (Buyers).
5. In doing so, we have had the lowest number of delinquencies and defaults on mortgages in the country.

Which all leads us to where we are today.  Any thoughts?