Honolulu Condo Boom (Bloomberg Story)

11 Replies

For those interested in the Honolulu market and/or more generally locations with significant supply constraints, here is a recent story from Bloomberg.

Bloomberg notes that property values (condo prices) have almost tripled since 2000 to an all-time high.  Nice chart at top of article.  @bob bowling  @Andrey Y.


Honolulu Condo Boom - Bloomberg, April 22, 2015

Originally posted by @Matthew Schroeder :

For those interested in the Honolulu market and/or more generally locations with significant supply constraints, here is a recent story from Bloomberg.

Bloomberg notes that property values (condo prices) have almost tripled since 2000 to an all-time high.  Nice chart at top of article.  @bob bowling  @Andrey Y.


Honolulu Condo Boom - Bloomberg, April 22, 2015

I think we will see growth in SFH and condo values for another 1-2 years. A lot of the reason for the condo price hike is the recent very scarce SFH supply on the island which forces folks to get into condos, further driving prices up due to low supply.

I am sitting here writing this from ground zero of Honolulu condo boom there are 4 new towers surrounding ours ( Nauru) with another few under construction and from what I heard Hughes corp is taking down the entire Ward center and building another 3 or 4 condo towers.

what I would not give to own the concrete company here... !!!

but the traffic Eh its going from bad to worse... 

I hear you, @Jay Hinrichs . I flipped #3001 in Nauru last year and was watching all the development around me with tiger eyes. That whole area is going to look completely different over the next few years. The adjacent industrial area will likely get squeezed elsewhere as well.

https://www.youtube.com/watch?v=UvmUgFnHhEk

Here's an interesting model of some of the planned towers.  The talk is for about 30 towers.Notice all the cranes at Ala Moana.  

Updated about 3 years ago

https://www.youtube.com/watch?v=4ZElr0EWvE8 This should be the correct one.

I haven't heard of anyone making a living holding "ultra luxury" apartment units, bought at (10-15% inflated) developers price. Maybe in 10-15 years yes, but at the cost of getting killed on negative cash flow the whole time. $1500-$3000/month rent seems to be the sweet spot as a ratio with purchase/carrying costs.

Originally posted by @Matthew Schroeder :

Bloomberg notes that property values (condo prices) have almost tripled since 2000 to an all-time high.  Nice chart at top of article.  @bob bowling  @Andrey Y.

That's a misleading statistic if there ever was one.  Most of the appreciation occurred in the first 7 years (2000-2007).  It took another 8 years for the last $25,000 of appreciation to occur.

Originally posted by @Brent Seehusen :
Originally posted by @Matthew Schroeder:

Bloomberg notes that property values (condo prices) have almost tripled since 2000 to an all-time high.  Nice chart at top of article.  @bob bowling  @Andrey Y.

That's a misleading statistic if there ever was one.  Most of the appreciation occurred in the first 7 years (2000-2007).  It took another 8 years for the last $25,000 of appreciation to occur.

 Thats precisely what I've been telling @Bob ad nauseum.

Originally posted by @Andrey Y. :
Originally posted by @Brent Seehusen:
Originally posted by @Matthew Schroeder:

Bloomberg notes that property values (condo prices) have almost tripled since 2000 to an all-time high.  Nice chart at top of article.  @bob bowling  @Andrey Y.

That's a misleading statistic if there ever was one.  Most of the appreciation occurred in the first 7 years (2000-2007).  It took another 8 years for the last $25,000 of appreciation to occur.

 Thats precisely what I've been telling @Bob ad nauseum.

 I can't believe you thought you'd sneak this by me just cause you know I'm a day drinker!  Just got my appraisal back on my Sept 2008 purchase property.  About $80,000 more than I thought AND 38% higher than a late 2008 price.  Still three more years to double in value like it has for the last 5 decades.  This one may be cutting it close since I did buy on the higher end of the last cycle but nothing comparable has hit the market in the last 7 years. I may have to be happy with just a few hundred thousand in equity increase. :-(

Originally posted by @Bob Bowling:
Originally posted by @Andrey Y.:
Originally posted by @Brent Seehusen:
Originally posted by @Matthew Schroeder:

Bloomberg notes that property values (condo prices) have almost tripled since 2000 to an all-time high.  Nice chart at top of article.  @bob bowling  @Andrey Y.

That's a misleading statistic if there ever was one.  Most of the appreciation occurred in the first 7 years (2000-2007).  It took another 8 years for the last $25,000 of appreciation to occur.

 Thats precisely what I've been telling @Bob ad nauseum.

 I can't believe you thought you'd sneak this by me just cause you know I'm a day drinker!  Just got my appraisal back on my Sept 2008 purchase property.  About $80,000 more than I thought AND 38% higher than a late 2008 price.  Still three more years to double in value like it has for the last 5 decades.  This one may be cutting it close since I did buy on the higher end of the last cycle but nothing comparable has hit the market in the last 7 years. I may have to be happy with just a few hundred thousand in equity increase. :-(

 I just got back from Spring Break at the Big Island and found myself drinking during the day too.  Must be something in the rum over there.

A lot of demand was pulled forward during the housing bubble, so Bob's rule probably would have held true under more normal conditions, but 10 years of appreciation was compressed into a few short years from 2003-2007.

Originally posted by @Brent Seehusen :
Originally posted by @Bob Bowling:
Originally posted by @Andrey Y.:
Originally posted by @Brent Seehusen:

 I just got back from Spring Break at the Big Island and found myself drinking during the day too.  Must be something in the rum over there.

A lot of demand was pulled forward during the housing bubble, so Bob's rule probably would have held true under more normal conditions, but 10 years of appreciation was compressed into a few short years from 2003-2007.

 Urp!  ....Excuse me.  Yep, definitely the rum...or them little umbrellies.

Happy Hour @ Cheeseburger in Paradise Beach Walk. 

I agree that the 10 year doubling usually happens in just a few years.  I've had a property double in just 2 years every decade since the seventies.  The 2008 purchase is the anomaly but I knew I was buying near the top.

 Still a discussion that is going over the heads of most flyover people.

ha, reading that Bloomberg article made me laugh :). Could of traded in Hawaii for San Francisco, especially wrt building anything here. While we don't have (yet) the burial sites, we have a unique collection of 60's hippies that (still) love communism, and hate tech, progress (no idea why they are called "progressive") and success (especially landlord and real estate success roils their blood :)  Add to that an extremely incompetent Bored of Stupidvisors which has a nack for passing local rent control legislation that gets ruled unconstitutional in superior court. Cross that with the usual (wealthy) nimbys that don't want ANY changes, and planning/building departments with layers of bureaucracy that would make Stalin proud, and you have the perfect storm of why we have a chronic housing shortage.  Sounds a lot like Hawaii.  

My strategy has been to maneuver with smaller projects, and work in up and coming neighborhoods before all the nimbys set in on it, and before it gets major national and international attention. When I invested in the Mission district 10 years ago it was ALOT easier getting things done!  No tech shuttles buses to protest.  No tenant evictions due to "tech money" to protest.  No Twitter, Zinga or Uber headquarters to protest.  No fancy new restaurants to protest (they change the "character" of da hood, man ;)  As a consequence, our "representative" supervisor has gone bat sh!t crazy and now wants a building moratorium on all new (market rate) condo projects! Plus to designate parts of the neighborhood as a historical Latino cultural zone.  (Frankly I wouldn't touch a development project in the Mission.)  But all that's OK with me.  I say, bring it.  See, I already made my money in the Mission when I brought a couple of buildings here10 years ago.  So now I'll just sit back and benefit from the nimby housing restrictions that plague our other desireable, high end neighborhoods.  Plus that Latino cultural designation is sure to make our commercial streets real precious too, freezing in amber what is there.  Already there are loads of tourist buses pouring in to visit the many murals, "authentic" Mexican cuisine, etc.  Man, I've enjoyed the unique vibe (and the modern changes too btw) of the Mission district for 20 years, and I never thought it would become so desireable and precious this fast!

I also agree with Bob that the doubling of housing values usually comes in a few years of aggressive appreciation, usually followed by a downward cycle or flatline.  But we also learn not to sweat it.  The 08-09 crash is a classic example.  What a recession we had, but SF housing prices already surpassed that last high in back 2013!  From an appreciation perspective it's like recession?  What recession?

Right now we are still continuing to soar, and I do wonder when that rubber band will get stretched too thin, and snap back a bit (1, 2 years out?)  But here is the thing, even if we go back to 2013 gains, I'm still doing extremely well.  And then in another few years, we will break records again.  And all the nimbys and "progressives", etc. will complain again.  It's like clockwork around here.

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