Almost yawning news as it was expected….again.  Read economists Harvey Shapiro’s post on it.  There were a couple of very interesting comments from his post.

1. Because of the weakening dollar, it’s important to realize that Honolulu properties are inexpensive when compared to real estate in parts of the Mainland and in foreign countries, especially in Europe and Japan. This contrasts with the sticker shock that visitors had when comparing O`ahu housing prices to those back home as recently as the mid-90’s. Honolulu prices were the highest in the US and were $100k higher than the second place city, San Francisco. Now, we’re fourth or fifth from the top.

2. There needs to be a discussion of the US dollar in light of the beating its been taking.  Except for some minor fluctuations last week, the dollar has been consistently losing ground to all major currencies over the past few years. This translates into more expensive imports, including oil, and higher cost international travel.  On the other hand, the weakness in the dollar could add demand for exports from the US and, hopefully, will promote more investment from overseas.

By the way…The Fed Cut Rates As Expected

As mentioned before we are anticipating the easing of tourist visa restrictions in various countries in Asia.  Well…in the Honolulu Advertiser we see:

Hawai’i’s visitor industry is getting ready for an expected surge in tourists from South Korea once visa restrictions are eased, which could come as early as year’s end.

Hotels and other players in the visitor industry are now joining the effort launched by state tourism officials several years ago to market Hawai’i to South Korean visitors.

The power of the global economy has put Hawai’i in a great position to generate meeting and incentive business from Korea, and HVCB is seizing the opportunity,

There really isn’t a lot to cover in this article other than the POTENTIAL.

I was contacted by someone I hadn’t seen or heard from in nearly 12 years via email the other day and of course they asked how I ended up in Hawaii and how is it living out here.   I would rather not write a novel to someone trying to explain how great and different life is here, so I jumped on the Internet and started digging up pictures and video of the various things I do and enjoy. (I usually lose friends at that point since it comes of as if I am rubbing in the lifestyle that we live here) It made me realize that I have not posted a Why We Live Hawaii category post in a while.

Well, I came across this website that had some video of the Eddie Aikau Big Wave Classic held in 2004.   There is a great explanation of what “The Eddie” is and it goes into the Background of “The Eddie”.   Check out the video here.

This day was especially memorable because it was my first Eddie contest (the have the holding period for it every year but if waves don’t remain consistantly above 25 feet they don’t hold it so it only happens once every few years) and I was getting ready to fly out to North Carolina in the dead of winter and wanted some surf and sun before I went back to freezing cold weather.  I remember hearing on the news the night before that as long as the wind cooperated then the Eddie was a go for the next day and that waves were expected to be upward of 50+ feet, possibly 60. (I start losing my lunch when the surf gets above 10 ft.)

Myself and a buddy of mine left before the sun was up to make the trek to the North Shore for the Eddie.  As we made the hour long drive the radio stations were all reconfirming what we already knew, that the Eddie was on and that the surf was massive. The waves were coming across the roads during the night in some spots.

We pulled up “near” Waimea Bay about 7:15 and could not believe how far away we had to park.  We had to park more than a mile away and walk, since there were cars already parked on both sides of the road all the way down to Waimea.  Traffic is grid-locked and the waves begin to come across the road in certain spots when the waves get to be this size.  The Eddie definitely brings out a lot of people and the beach was packed along with any upper viewing vatange point from the cliffs above.

Being able to watch all the pros that are invited for the contest is an amazing sight and a special event.  The video above is a great watch, it also captures what surfer magazine deemed the worst wipe-out of the decade, which you can watch here in the first scene (Flea’s Wipe-out Video), along with some other nasty spills.

Also Bruce Iron’s winning wave had the crowd on the beach giving a standing ovation as Bruce put his hands in the air during his close-out barrel in the Waimea Shore break.  This is one thing you definitely don’t see elsewhere in the world.

Have any stories with pics you want to share?  Email them to me at scott@kahalaassociates.com

I said it before and I will say it again…..The biggest threat to affordability is Interest Rates not Home Prices.  (If you are considering buying please read this info)

This is a reminder since we see that interest rates have crept back up due to inflation concerns. 

Mortgage company Freddie Mac reported yesterday that 30-year fixed-rate mortgages averaged 6.03 percent this week after three straight weeks at 5.88 percent. Rates on 30-year mortgages were last above 6 percent the week of March 16 when they averaged 6.13 percent.

Coming to America…the land of opportunity.  As I have been saying for a while (The Beginning Stages of Things To Come & The China/Asia Real Estate Boom Debate) U.S. government is starting to ease travel restrictions for Chinese tourists to the U.S.  (Read Also More News From China)

What does this mean? 

Economists are predicting that a wave of Chinese tourist flush with cash will be arriving on U.S. shores soon. (This is the BEST article I have seen (heard/audio) that details what could be expected to come from the Chinese marketplace.  In other words, you have got to listen to this one!)

Consider this information:  In 2006, 17 million Chinese vacationed in Europe and only 300,000 vacationed in the U.S. due to travel restrictions. 

The average Chinese traveler spends on average $6,000 U.S. dollars on their trips.

Within the next 5 years, it is anticipated that Chinese visitors will make up the largest over-seas traveler to the U.S.

Image a place that is roughly midway between the mainland U.S. and Asia.  A place that is a part of the United States, which happens to be considered the most stable and powerful economy in the world (I know it looks a little shaky right now).  Now imagine a place where the weather is absolutely beautiful all year around and is considered by most in the world to be paradise.  Image the number of Chinese that would love to own a vacation property or investment property in that stable U.S. economy, in that state that is closer than the mainland U.S. and is considered paradise.

Catch my drift?

Do you want your own lake and golf course?  All you need is $45 million dollars?

Check out Le Reve, the latest premier estate property listed with our Luxury Portfolio Fine Property Collection affiliate in Georgia.

The positive military spending news just got better.  The controversial Stryker Brigade is set to stay in Hawaii permanently.

The Army in 2001 decided to base a Stryker unit in Hawai’i, and started more than $700 million in construction projects, but in 2006 a federal appeals court ruled that the service had not adequately examined alternative locations, and ordered the Army to do so.

The decision largely halted one of the biggest Army projects in the Isles since World War II.

Bases in Alaska and Colorado were considered before the Army in February said Hawai’i was the “preferred” location; yesterday’s announcement made the decision permanent.

If and when the Stryker projects go forward, previous contracts would be continued, and could run for years, the Army said.

“Obviously, with other recent newsworthy happenings here on the island, an infusion of a lot of construction projects would not be a bad thing,” Shanks said, referring to job losses like those at Aloha Airlines. “And the stability of forces, soldiers and their families living (here) contributing economically to the Islands has got to be a positive influence here.”

How about this headline The average price of Manhattan homes defied the slowing national economy and soared 41 percent in a year.

In a time when most of the national economic news is negative, this one in particular caught my eye. 

What was even more interesting was that it showed the Luxury market in New york is doing really well, however, other areas of New York are down in median price.

As I mentioned before, Oahu has already done 70% of the number of sales in the $2.0 million plus range that it did for all of last year.  Obviously a similar trend in the our market as the New York market.

I know. I know.  You are wondering why I have a title called Michigan.  Well the reason is I added a link to an article that was written on September 11, 2007 that was titled Massive Motown Forelcosure Auction to show how bad other areas of the country were compared to Hawaii.  Well, when things seem really bad (and the national news seems pretty pessimistic) there always seems to be a time when Buyers step back into the market. 

I just found an article that is published now (6 months later) regarding Michigan that shows buyers stepping back into the market.

What is my point? Two things. 

1.  When things seem really bad in the real estate market, the bad doesn’t usually last for long.  Bad for those that are stuck in difficult positions seem like it will never get better, but for others it looks like a great opportunity (even buying in Michigan)

2. Don’t ever try to time the market.  I was recently asked:

“With this market, I’m thinking of holding off on my home purchase for awhile to see what the market does. I don’t want to buy a home and have it lose value. What do you think?”

***ANSWER:
A friend of mine sold two properties in 2003 and 2004 and we missed the peak by some 10%. Did we regret it?

Not at all.

Realistically, I don’t expect to time the market perfectly, buying at rock bottom and selling at the very top.

And if I can’t time it perfectly, with  years of experience as a Realtor, an investor and someone who follows the market closely daily, most people shouldn’t expect to…unless they’re smart AND lucky.

By the time you realize the market has bottomed, the market will be on the way up already and it won’t be a Buyer’s market anymore.

If you have a specific question, email me.  I would be glad to answer it.

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?