Hawaii 50% Off Sale

Ready to Pop pointed out this article about Canadians buying property in Hawaii now that the Canadian dollar is strong and some homes and condos are selling for half what they were worth in 2008:

“In some areas prices have dropped 40 to 60% and it’s as bad as Phoenix.”

He gets calls and emails from Canadians daily.

“Some are waiting for a bell to ring that says we have hit absolute bottom,” he jokes. “Others have pulled the trigger because in Maui we’re having a half-off sale.”

The loonie, valued at 62 cents US almost a decade ago, hit $1.05 in April. That means a million-dollar property in Hawaii, that would have cost a Canadian about $1.6 million in 2002, is now under a million.

The best values are on the big island.

“In Maui, you need two wallets — on Hawaii you can survive on one,” Dinits says. “You can get a nice house on Hawaii today, six blocks from the ocean, for $66,000. That would be a bank owned foreclosure, or REO (Real Estate Owned) deal.”

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Li Kai Shing
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Li Kai Shing

Many good posts gone missing !

Maybe gone to Maui ?

Vansanity
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Vansanity

@patriotz:

The $100K number was arbitrary, I made it up, it was based on the $66k figure from the article. If there was properties available for under that, I'd definately give buying some consideration, probably with a few other couples just to share taxes, fees, etc… Anything over that and why bother?

Perhaps that realtor was being light in his assessment, perhaps he was giving his perspective. From what I saw in my time there, it wasn't a "sky is falling" type of environment like I saw in parts of California recently, or heard about in Vegas or Miami. Not even close.

@fixie guy:

Ok, believe whatever you want. Frankly fixie, I don't give a damn.

Anonymous
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Anonymous

"This waterfront home a few blocks away just sold for 86% more than it did in 2004:"

2004 was at least 2 years before the market top in Hawaii.

The assessment peaked at 2.944m in 2008. Current assessment is 2.1.

Original asking price in 2008 was 2.8m.

Three years on the market. Price reduction of 1.2m. Selling price of 500k below assessed value.

Is this your best argument?

Anonymouse
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Anonymouse

@fixie guy:

"Are you joking? What I’m saying is your observations from a week in Maui have zero, none, zip value against the statistical data compiled by Zillow which contradicts you. Believing otherwise is childish."

Looking forward to you pointing out the same thing when we hear about people reporting "lots of for sale signs" either on their street, or that they saw on their weekend trip to Kelowna. It's only fair. 🙂

registered
Member
registered

@79 Vansanity Says: "Again, I don’t know what your point is, or do you just want to discredit me because you don’t like what I had to say? If so, that’s childish."

Are you joking? What I'm saying is your observations from a week in Maui have zero, none, zip value against the statistical data compiled by Zillow which contradicts you. Believing otherwise is childish.

crabman
Guest

@patriotz: That's your idea of a "high-end waterfront home"?! From the listing: "Main house needs lots of work".

This waterfront home a few blocks away just sold for 86% more than it did in 2004:

http://www.zillow.com/homedetails/753365_zpid/

jesse
Member

@Devore: "I'm sure I missed something"

Not really. But for completeness I would add:

1) Owner-occupiers and "amateur" landlords will rarely account for their time, gas, and other expenses when doing ongoing maintenance and repairs. Not so with a professional shop where everything down to the screw is booked.

2) There is a risk premium to be gained by simply surviving the property long enough to sell it. That is worth something. And not everyone gets to reap this premium. Professionals understand and accept the popcorn-like risk spectrum of large capital assets and diversify their RE holdings. A small percentage of small-time landlords will get culled waiting for the payoff, others are hampered. In net there is a small premium for the risk but in net it's much smaller than what the winners enjoy.

Devore
Member
Devore

@Anonymous:

@Devore: Which part of the rebuttal is flawed? He’s talking about a rationally priced home, not Vancouver.

The part that has our renter renting forever, while the home owner eventually pays off his mortgage. I don't appreciate arguments showing superiority of home ownership that premise on a renter renting forever, as opposed saving a DP to waiting for a rational entry point into real estate.

Not very many people here would object to buying a reasonably priced house.

Best place on meth
Member
Best place on meth

@patriotz:

Interesting, a half acre near the beach in Maui for only $260K, on the market 3 years ago for $1.7 million.

That amount of land in rainy, dumpy East Van would cost 10 times as much.

And yet it still doesn't sell. What a messed up world.

Anonymouse
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Anonymouse

@patriotz:

How reliable are those Zestimates?

patriotz
Member

@Anonymous:

the good times are still rolling and high-end waterfront homes are doing just fine.

Not this one. Take a really good look at the sale price, listing history, assessment history, and Zestimates for both the house and Kihei.

Maybe the house is a dump, but someone got a 21,475 sq ft lot for $260K

Anonymous
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Anonymous

@patriotz: I think that both claims are correct. This recession has hit the middle class hard, and the typical Maui home has dropped 50%+. But for the rich, the good times are still rolling and high-end waterfront homes are doing just fine.

@Devore: Which part of the rebuttal is flawed? He's talking about a rationally priced home, not Vancouver.

Devore
Member
Devore

@jesse: Well, I know a lot of people are glad to count the benefits of increasing their house value by throwing out nasty old carpets and replacing them with hardwood, or renovating the kitchen, or doing some landscaping, but not so keen to count the costs of making it happen.

Figuring out whether you "made money" on a house is really very simple: take your sale price – purchase price profit, subtract all the transaction costs on both ends, financing costs, occupancy costs (property tax, condo fee), and all maintenance, repairs, renovations and improvements (including special assessments), add in rent equivalency (the rent you're not paying to a landlord).

(I'm sure I missed something and patriotz will point it out 😉

VanRant
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VanRant

Todays Globe and Mail. "Carney urges governments to ‘act now’ to prevent future crises"

He should be looking at his housing mess that he and "F" created which is about blow in their faces.

patriotz
Member

@Vansanity:

Nobody was claiming, either on this board or in the article referenced, that properties in high end districts in Maui were going for under $100K.

The only point I was trying to make is that your realtor acquaintance's claim that the broad market in Maui is down 20% from the peak is inconsistent with the large number of properties selling at >40% off, as well as Zillow's own statistics which of course are based on all sales.

Devore
Member
Devore

@crabman: Yeah, that's great, but both sides examples are flawed. Can we agree that there are good times to buy a house, and bad times? Can we agree that there are times when renting makes sense, and times when it does not? Renting forever is just like saying it is always a good time to buy a house. Both are false, and both are bad financial moves. (although for some people renting for long term will make sense, if they move around a lot for example, otherwise transaction costs would kill them)

jesse
Member

@Troll: "it’s a complicted mess to figure out accurately"

Actually, I don't think property management and investment is exactly rocket science, though it does obviously require experience. We have decent proxies for what makes a good investment from a total return point of view — any look at a REIT's financials should reveal what returns are justified.

People make it a "complicated mess" because they have complicated messy emotions that need justification.

Troll
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Troll

@Best place on meth: Hey you little dipshit, you've been living on this blog for a long time and you don't even understand the basics yet? Fuck, you're even dumber than I thought.

superduperbulltime
Guest
superduperbulltime

That's ok bear my condo in maui still nice for vacation Just for fun place to stay really.

Best place on meth
Member
Best place on meth

@Troll:

Ok scumbag, since I'm so daft why don't you take a crack at explaining your rental yield retort rather than just sreaming that the article is dumb, I'm dumb etc…etc…

Acting like a spoiled little motherfucker is hardly convincing.

Vansanity
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Vansanity

@fixie guy:

I'm not sure what you're arguing… that I cherry picked data? Patriotz asked me to, after he did. That I vacation in Maui often? So what? Lots of people do and yes we have the tans to prove it. That I'm anonymous… and you're… what?

Again, I don't know what your point is, or do you just want to discredit me because you don't like what I had to say? If so, that's childish.

When I said to post ads that are for condos in Maui, Kihei or Weilea, that are under $100k I'm being serious, I'd love to check them out, sincerely.

Troll
Guest
Troll

@jesse: Sure, that's a fair comment, it's a complicted mess to figure out accurately. But I stand by my assertion that the article is bunk, he's clearly biased and uses some sloppy analysis to try and make his point. I'd expect better from a business rag.

Troll
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Troll

@Best place on meth:

That would be a whopping 4% in Vancouver, a huge benefit indeed.

Gosh you're daft. Stick to commenting what you know about, ie xenophobic Chinese rants.

jesse
Member

@Troll: "only look at capital gains and overlook completely the biggest benefit of home ownership, rental equivalent yield"

Yeah total return is important and it gets jumbled even more because owners and amateur landlords are notorious for not accounting for all their costs properly, both in terms of general ongoing repairs, capital replenishment, and big ticket "long tail" risks. A rising tide hides a lot of sins!

Troll
Guest
Troll

@Anonymous:

read the article again. Here’s a hint, paragraph 5.

Still not really getting it eh? Nowhere in that example is the homeowner credited with the rental yield.