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Have We Reached Bottom?

January 5, 2010

It’s the question everyone asks when the topic of conversation turns to real estate.

For the Big Island, my answer:  I’m not so sure.  (Hey, I do my best to avoid “crystal ball” speculation, especially when discussing real estate located on an island with an active volcano and monthly tsunami siren warning tests!)

I do, however, keep a close eye on the economic analysis of the experts.

One of my favorites is Paul Brewbaker, who recently stated that he thinks that the Oahu market has hit its bottom. Read the article here.

Today, in the Wall Street Journal blog, there is a post called Five Key Housing Issues to Watch in 2010.  The point that concerns me most is this:

More loan resets: Analysts and pundits have been warning for years about the coming wave of option adjustable-rate mortgages that will jump to sharply higher payments beginning this year. Those loan recasts are concentrated particularly in high-cost housing markets, such as coastal California and other areas where homes became increasingly unaffordable at the height of the housing boom….

While I recognize that Hawaii lenders avoided many of the more risky loan programs, Hawaii Island has a number of non-resident investor-owners who are suffering from reversals of fortune in these more volatile markets.   I wonder what impact a new wave of resets might have on some of these vacation or second-home owners, and, as a result, on some Big Island neighborhoods.

I’ll be spending some time later today looking at 2009 numbers.  Yes, activity is up.  But, I’m going to be keeping a close eye on price trends.  Especially as 2010 progresses.  Those are the numbers that will tell the story sellers and buyers want to hear.  And, for some areas, I think it’s just a little too soon to tell.


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