Even though the recession is far from over, Hawaii has seen a bit of light at the end of the tunnel. Tourism has vastly improved, mortgage rates are near all-time lows and prices for Island real estate are relatively low. While all of this is good news, it certainly does not mean Hawaii real estate is back to normal.
In Oahu, sales of homes and condos continue to decline even in light of increased numbers of tourists. The vast majority of Hawaii's economy is tourism based but, unlike the past, tourists are not buying second homes and condos. A cornerstone of Hawaiian economy has been sales and rentals of homes and condos, but tourists seem to be opting for hotels rather than residences.
The new economy simply means that it is now less dependent on bank loans and financing options. Simply put, there is much less leverage now than a few years ago. Forecasts for Hawaiian real estate indicate prices will not see previous highs for at least ten years. And for 2011, real estate prices are forecast to drop over 9 percent this year.
On the Big Island, there was a slight bump when building permits began to increase last year. Unfortunately, the bump was over quickly when the federal home buyer credit expired. Now prices are slumping again which may eventually be good news for sales volume as prices reach more affordable levels.
Low mortgage rates and cheap foreclosed properties are now attracting buyers as lenders slash property prices to get rid of them. In Kauai, the sale of foreclosed properties accounts for almost all of the sales activity in any given month. Due to Kauai's strict building codes that were designed to limit growth, most residents are full-time rather than owners of second home.
Like other islands, Maui saw an uptick in sales volume due to the federal tax credit. Things slowed dramatically when the credit expired, however. As more foreclosures hit the market and prices continue downward, more cash buyers will jump in and sales volume will probably increase.
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