There's Never Been a Better Time . . .
November 27, 2008
Ever heard that expression, “There's never been a better time?” Well, I don't know about “never,” but now is a very good time to buy real estate in Hawaii. We have not had to endure the depth of the various housing crises felt in most parts of the mainland, but prices have definitely come down. Way down.
In some cases, particularly in the Hilo-side subdivisions, home prices have dropped to about half of what they were in the boom of '05-6. Those were the days when the streets were crawling with mainlanders buying up everything in sight, at prices sometimes substantially more than the asking price. Bidding wars were common, as the buyers kept pouring in and all those now-famous sub-prime mortgages dished out like so much money-candy.
Fortunately for those of us who live here, most of the foreclosures we see are the properties that were purchased by these speculators. They used their 100% mortgages to buy at peak prices and were ever so proud of their financial prowess. Some lenders were granting up to 125% mortgages in those days. Small wonder that the whole nasty house of cards collapsed.
So now those who waited patiently on the sidelines can come in and pick through the remnants of the party-gone-bad and get some great deals.
As it has been all along, the properties that are the hardest hit in this devaluation are those in the subdivisions where there is lots of inventory from which to choose. Most properties up there in the “highly desirable” category are still holding their value pretty well, although the difficulty of getting a mortgage now is stifling some of those sales, too. And in between “highly desirable” and the subdivision properties are many homes, a great variety, and the prices have dropped according to the usual constraints of supply and demand.
Some media reports would have you believing that there is simply no mortgage money available now. That is not entirely true. There is actually lots of it. What is true is the fact that you will need a credit score of 7.0 or better, at the very least a 10% down payment, and excellent job security. Well, that's for a slam-dunk mortgage. I'm sure that right about now, it has not escaped the attention of the lenders that “job security” has now become wishful thinking. What job is secure any more? Maybe if you work for the government, and even then you're position could be cut at any moment.
So what else is there? Your personal track record is a big item. If you're looking for a mortgage for a personal residence, it will be a lot easier than obtaining an investor loan. But investor loans are still being done and we can vouch for that through recent personal experience. The bottom line: If your mortgage broker says it won't work, find a different mortgage broker. It has been our experience that chances for a loan are better through a broker than simply going to your bank. The broker will shop a loan for you from many sources, and s/he knows just which ones are the best suited to your specific needs. It should be easy now to find mortgage brokers who do not work at the fringes of integrity, since so many of them were busted in the recent fallout.
We would like to encourage you to go back through some of the recent “Updates” and read about the many things that can make or break a move to Hawaii. Moving from Seattle to Hawaii is clearly not the same thing as moving from Seattle to Orlando. Or Scottsdale. No, it's more like moving to a foreign country, and that means learning to live in a different culture from what you are used to. This doesn't become very apparent during a week-long vacation at some resort on the beach. It becomes apparent when you settle in to your Island life. When you start to relate to your neighbors, local merchants, the Building Department personnel, the school administrators and faculty, and so on. It starts to become apparent when you navigate through Island traffic on a day-to-day basis. It becomes apparent at your local grocery stores, especially the smaller ones.
Affordable Paradise includes a whole section on the many reasons why you might just not want to live in Hawaii. It's good to feel these tropical nuances through reading about them before investing the time, money and energy in a move as dramatic as one to these Islands out here in the middle of the ocean.
Curiously, some of the little things that so attract most people to the Islands when they visit here are the very same things that drive them crazy later and inspire them to return to the mainland. So we would like to encourage you to read, listen, observe and most importantly of all, FEEL these things while you are still in your current comfort zone. It's just much easier that way!
You are also welcome to check in to the Affordable Paradise Blog and talk story about your concerns. You can read some of the many postings there and learn from the conversations of others, too. You can also go on konaweb.com and punaweb.org and either participate in the discussions or just eavesdrop for a while!
We wish you all the best, and never forget to
Please Live Aloha!
Mahalo for "listening."
Skip Thomsen & Ohana
Updated 11/28/08