From the Desk
of Bill Chee...
CEO, Prudential Locations
The question on everyone's mind is have we hit bottom yet? For the answer, we turn to the people who know, our analysts. The beauty about statistics is that it removes the emotional factor. By setting aside fear and panic, or undue optimism, the data reveals that what has recently happened to our local market, though unsettling, is normal, is well within typical cycle limits, and is indeed showing signs that this phase has bottomed. In short, I believe 2010 offers opportunity. Here is a summary of what we can expect in the months to come.
Odds are that interest rates will rise in 2010, bringing some urgency to act early in the year. Government tax incentives and low inventory will also boost the markets on Oahu during the first half of the year. Shortages of listing inventories, especially in the affordably priced markets, will bring competition among buyers in many neighborhoods. Although I expect overall Oahu prices to remain stable or flat, increasing velocity (activity) indicate more neighborhoods will be increasing in median price than declining.
Unprecedented low interest rates bring obvious advantages to both first-time home buyers and move up or down sellers/buyers. This combined with free money from the Government and lower prices make this a very a rare event in the market. Opportunity is knocking.
Not all sellers are advantaged in this market. Those who purchased their homes in the last 4 years may have little or no equity, depending on their neighborhood. Add a "must sell" situation such as death, divorce or job transfer out of state and, for those residents in these situations, 2010 may cause a financial hardship.
Developers may find increased activity this year and those who are offering buyers' incentives and price reductions will benefit through increased sales - at least for the first half of the year.
Neighbor Island off-shore owners will continue to be the most adversely impacted and may continue to account for the majority of the foreclosure activity in the state. A quick recovery here is clearly not in the cards for so many reasons, primarily the current national economy and its very slow recovery.