Back to the China, and for that matter, Asia as the next hawaii real estate market boom debate.  The Honolulu Advertiser had an article headlining “New York Joins Hawaii In China Tourism Deal” 

“New York City tourism officials have reached a deal with the Chinese government to join Hawai’i and other selected American destinations with permission to promote themselves in the Communist nation. Under the agreement, the city will not be able to advertise directly to Chinese citizens, but will hire industry representatives to work with local travel agencies and other providers, …”

“New York City joins Hawai’i, San Francisco, Los Angeles and Nevada, which have already opened offices or hired representatives in China. Such individual arrangements are necessary because China has not awarded the U.S. “approved destination status,” a designation that would facilitate group travel to the U.S. and allow tourism advertising directly to the Chinese public..”

“With the number of Chinese traveling from the mainland each year expected to nearly triple to 100 million people by 2020 — and with China’s growing middle class increasingly able to afford the trip..”

“The representation in Shanghai is meant in part to help position the city for an anticipated agreement between U.S. officials and the Communist nation that would further ease Chinese travel to the United States, Fertitta said.”

Here are my thoughts and opinions on this.  China joined the WTO (World Trade Organiztion) in 2001.  What this means, essentially, is that China raised it’s hand and said to the world, we want to be a major economic player in the world market and play fairly.  By agreeing to the rules of the WTO, it allows China to begin to open up to the world with goods and services and allows companies to have more in-roads to the Chinese markets with less risk, esp. labor.  The Internet, email, fiber optics, etc. have made barriers of working with other countries far less.  China has always been protective and more inward focusing. We have begun to see the transformation of a China in change.  With the drive to become a major economic player, we will probably see less censoring and a slow movement to a more open society. (China allows citizens access to Google, but in a censored format) 

With this in mind, as this begins to happen, we will see such changes as the easing of the restrictions on tourist visas for travel to the US, which is part of the reason we see what is going on in the article mentioned (New York Joins Hawaii In China Tourism Deal).  If tourist restrictions are eased, we will see many more vacationers from China, coming to Hawaii (US in general) which brings more buyers of real estate to a very stable, secure marketplace (US).  Hawaii becomes attractive, because it is a part of the US that is closest to China and is “Paradise”.  Meaning, it is closer to China, for ease of travel, is in the US (Stable Investment), and offers an investment they can come and use while also receiving the benefits of the stability.   Add to it the Japanese market recovery and it makes for a promising outlook in the future.

So, when you read the article about Hawaii home prices appear to be leveling out and will start to appreciate slowly, combined with the fact that most of the real estate news the past year and a half has been bad news, and interest rates are still extremely low (started rising), it would appear now is a good time to buy, to position yourself for the next market cycle.  Again,…what is that saying, “Buy on bad news, sell on Good news.” 

Lets take a look at another example.  this goes back to The Next Hawaii Real Estate Boom .  If economist figure we could see a double in our median home/condo price in 10 years, we will work with conservative figures from this:

You buy a condo for $400,000 with 20% down-payment ($80,000) and mortgage the rest.  You breakeven on the cost to rent the unit (income minus Debt obligation and rental costs).  The market appreciates 50%, (not 100% as mentioned in the above post) and your unit is worth $600,000.  Your $80,000 investment gets a 250% ROI over 10 years.  That averages out to $20,000 a year, or 25%.  This is a very simplified breakdown, and doesn’t take into consideration: taxes, time value of money, IRR, etc. but, it is designed to show you the potential.   

So my thoughts are: now is the best time to buy b/c the market has pulled back, a recovery looks to be in the works, interest rates are still very low, and the future potential is rediculously good. (If you hold long term)  Any thoughts?

Please keep in mind these are my opinions about the market and you should do your own research to determine your best investing or real estate purchasing strategy.