>>daryl: coming up next on insights on pbs hawaii is hawaii in a real estate bubble? [intro music] >>daryl: aloha and welcome toinsights on pbs hawaii. i'm daryl huff, with hawaiinews now. for many hawai'i families,the dream of owning a home seems more and more remote.with mainland transplants are often stunned by the cost ofhousing when they come to paradise.meanwhile, wealthy foreign
buyers seem unconcerned aboutprices as they seek a safe place to invest in the world'sfragile economy. this year, we've seen soaringprices and a sharp increase in sales.is this evidence we're in a real estate bubble or thenatural result of low inventory, high cost todevelop and high demand. where will hawaii's realestate market be going next. we always like to hear fromviews like you so share with us your questions andcomments by calling
9731000 on oahu or 800-24847if you're on a neighbor island. you can alsowatch insights streamed live on pbs hawai'i.click on the title or find us on twitter at pbs hawai'i.to our guests. stephany sofos is a graduateof the university of hawaii at manoa majoring in history andminored in economics. real estate broker appraiser.author of the book untold stories of real estate diva.history of the hawai'i through real estate agentworking in the business for
past 40 years.sumner la croix is a professor in the departmentof economics and university of hawaii at manoa, researchfellow at uhero. he identifies several factorsthat contribute to the high housing price.scott higashi is executive vice-president for locationsformerly known as prudential location.oversees more than 300 agentings in six officesstatewide throughout the year.location research department
tracks sales activity formore than 350 hawai'i neighborhoods.and jon whittington is president of compass homeloans, a direct mortgage banking company based inhawai'i. prior to launching compass inlate 2014, he was president of american savings bank's homeloans division where he worked since 2000 were 9.the career mortgage banker, he spent the bulk of hiscareer with the country wide home loans prime consumermarkets division.
let's just start off to makethings clear. sumner la croix, who what isa bubble when people talk about a real estate bubble.what does that mean? >> when people talk about abubble, they're talking about a large sustained increaseasset price. pushes the asset price farabove its fundamental value. the reason people argue aboutbubbles whether or not they exist is what exactly is thefundamental a.m. value of an asset.some would say market value is
the value.others would say, it's going to come back down.forces of the market sentiment.>>daryl: when we talk about a bubble, always fear thepossibility of bursting. isn't that really kind of thedefinition too? >> most of the time, whenafter the fact, identified a bubble.bursting. people start to buy tulips.then all of a sudden, the prices of tulips start to goup.
think they're goodinvestments. prices go up further one day,the merrie go round stops and the prices of tulips fall backdown to relatively low levels.>>daryl: scott higashi from locations.in your career, have you seen bubbles and what does it feellike when you're in one. i think we saw was economicdown turn. saw this dramatic reductionin the number of sales and then values dropped.but was interesting about
hawai'i in that cycle, ishawai'i's values department drop in the same percentagethat you saw in other parts of the country.so i mean, part of the insulation in hawai'i has toa lot to do with some of the factors you brought up in yourintroduction. inventory constraints,regulatory environment that makes it hard to develop, sowe did see a down turn in my short career real estate.and it showed all the signs of the thing that you wouldexpect, people feeling a lack
of confidence, in owning orbuying a home, and fewer sales.but values, you know, actually didn't fall presiptusly here on oahu. >> not how it felt.>> a lot of real estate has to do with confidence and how youfeel about at that marketplace.>>daryl: jon whittington, you're the mortgage banker inthe crowd here. there was a lot of blameplaced on the mortgage industry back when we had thething that we all could
probably argue is a bubble.2008. 2009 crash.has the mortgages industry changed to prevent this fromhappening again in. >> changed dramatically.kind of the token legislation that came behind after thatwas the frank legislation and essentially, a lot of reasonsled up to that the mortgage melted down.and you can find fault along the way.started wall street, rating agencies.since then, with more on
consumer side and protectionsplaced on the consumer, as a lend, we're, and rightly so,many ways, constrained from being able to get that elasticwith credit again. you can argue goes back to theclinton administration trying to make homeownershipas a right versus a privilege and the went behind that.manifested itself on that. today we had very, tightcredit boxes, so people couldn't qualify what thatmaybe should. starting to see talk of that.coming from a very tight,
tight box.coming bit, pendulum swinging a little bit over.some more people can qualify now.just recently, fannie mae and freddie mac, largestinvestors in home loans, opened up a lower down paymentfor higher price. which is a beneficial to thewell qualified borrowers. credit worthy.talk more later about the decision it's people can makewhat the opportunities are. stephany sofos, your ownexperience four years, what
whats it look eis process likegoing through the bubble the ones that you recall.>> well, first of all, i think we are in a bubble.and i think it's going to pop. when it does, we don't know.it could be because of politics or could be a naturaldisaster. something is going to happenand it will adjust. this is about i've been inabout four cycles four our five, this one is, this marketis the most odd market for me. never seen a market like this.>>daryl: you mean this time
you're talking about?>> this time right now. never seen a market like this.because prior to? market, there were waves and in the 60it's, you had the canadians come n seventies, you hadsaudis come in. eighties, late eighties, youhad the japanese come in. 90's, you had kalai chinese.early 2,000s, you had the caucasians from the mainland.this market, you have everybody.coming into our market including russians.i've never seen russians.
they're coming in with cash.they purchased everything all the luxury market in sanfrancisco and california and la and new york, and now,they're coming to hawai'i. so i guess everybody is comingin to land bank. >>daryl: do you think thisbubble as you see it across the board or particular pieceof the market? all that description you gave medidn't sound like investment so much in middle classhousing but the high end such, kind of stuff that's going inkakaako, waikiki.
i think it's across the board.across the market. seeing people investing in$5 million luxury homes. it's everywhere.>>daryl: are you seeing the same thing?>> no doubt we're seeing different kinds investment.i will, my friends stephanie, should never short ofopinion, i actually don't think we're in a one and idon't see that. i think what's differentabout this cycle versus the last one is the rate ofappreciation is somewhat
moderated.i just feel like if we look at the past cycles, if you indexthem all and summer probably better at the indexingproblem, i just see with that we're probably in year six ofa ten year cycle. is the way i would look at it.i feel there's still more appreciation to come andstability in the market. inventory levels at moderateprice points certainly around the medians for single familyand for condos and below, are really tight.competition for those
properties show up in theamount of bid-ups that take place in those price points.but i do think that in the higher price points,certainly over $2 million and maybe even $1.7 million, andup, those are tight markets. i don't think there's enoughbuyers in that marketplace to support the inventory on themarket and that has slowed. >>daryl: in the situation asdescribed by scott, may not think that there's a bubble,it sounds like you did have too much building and for alimited market at the high
end, do you think this theremight be a bubble there? >> no.i don't think there's a bubble.i think i high end may have had a surge in prices.to have a bubble, you have to have a massive surge.something like we saw in las vegas.seeing run-ups in the your of 100, 150% relatively shortperiod. >> i can tell you i've lookedat, appraiser and i do a lot of residential appraisalwork.
i do a lot of apartmentsbuildings work and all of that.and three years ago, apartment buildings, therewere selling for 150 a door. unit.now, they're $375,000 a door. that's incredible.three years? then i'm seeing places like diamond head andkahala, they were a million seven and now they're 3.4.in three years. that's too high.going up too high. >> i likeel argument, if welook back to prices were back
in 2005, 2006, that was theheight of the previous boom before we had the down turndue to the great recession. if you adjust for inflation,if you adjust housing prices for inflation, since then,barely gotten back up to where we were in 2005.i mean, there have been run-ups in prices. once youtake inflation out, it's not that great.then what would explain this? i do agree with stephanie thatoutside buyers here have always been a force in themarket.
there's times where theydominate the market. also think that inside buyersare important too. if you look at housing prices,many times, determined by swings in the local economy.not just by how many foreign buyers are here.at the very upper end, foreign buyers make a big difference.>>daryl: let me ask john. the mortgage business prettycarefully tracks whether properties are getting toohigh a value for what the mortgage will support.you guys watch for this.
because you're the onesultimately at risk. so what are you seeing in thatrespect? do you feel that there's a lot of propertiesthat are over valued, are people coming in and payingcash regardless of the mortgage?>> i think careful. we see the market onetransaction at a time. every transaction we do has anappraisal. tied to it.we can sit there and say, where are we, where is it.the bid-ups, kind of median
mark e. we see that too.and the borrowers that are buying at market, appraisersupporting the value even at the bid-up price.if there will a difference between the bitter price andwhat the sales appraisal, appraisal value is, it's kindof marginal. so people are still able toget into those homes. the difference is if you'regoing to buy pay higher than what the appraisal is, come upwith the difference in cash. that's a lot of cash.you're going to have problem
doing that we're not seeing alot of that. cash buyers you mentioned,they're not as no, ma'am independent they were 2 or 3years ago. not as prominent 2 or 3 yearsago. we had cash.now it's 20 to 25% range. >>daryl: scott higashi fromlocations, question from sam in kauai.how far can prices still go up if wages stay stagnant? isthis a fair appraisal of the economy? awkward to a lot ofpeople that we're hearing
that wages have not risen ata pace, yet we're seeing the housing prices go up.what is the experience of buyers out there of thatsituation? >> it's hard. i think one ofthe things that we're facing is wages may be haven't grownor haven't kept payson the same pace as prices.there's not more land to build more homes and the choicesdevelopers have to make when we're building new homes iscontending with the regulatory environment,higher construction costs,
which are going to drive theirprice of homes higher and then as you have people with lowinterest rates competing for homes, so john mentioned,bid-ups for example in aiea, pearl city, mililanimakakilo, seeing up to 25% of the homes are going for morethan asking. doesn't count the homes thatactually went at asking. in some case, not only pricesmeeting the market demand, but exceeding those price andthe dilemma is i don't think we can build houses fastenough to absorb that.
it is a dilemma.i would agree with the individual calling with thequestion that i don't know that wage growth and homeprices are keeping pace with each other in hawai'i.>>daryl: sumner la croix, what do the numbers show.>> median wage, person that 50% of the people are blow.50% above. in the wage earningdistribution. wages haven't changed muchsince the waihee or reagan administration.pretty much flat.
it's personal income.being inned substantially last couple of years.there was about 4% rise in real personal income.in 2014. about 5% rise in 2015.wages have been fine, other sources of income havecontributed to people's ability to finance a home.>>daryl: so maybe this a question for.>>stephanie: any. you talked about the offoffshore money coming innd being spread out around themarket.
we hear phenomenal aboutindividual buyers bidding up properties.would that still be a bubble to you if what's driving it isthis demand from actual people who live here too?>> i think, yeah. i think in a it's, there is abubble. 5% increase of someone'sincome, when your housing are rising 30% is still a biggamble. and the real estate market,the reason why everything is going up, is there is demandbecause there's two reasons.
the local people want theirpiece of paradise. and investors want theirpiece of paradise, plus they want to invest in a safeenvironment. investor came to me and said,i want to keep my investment where the greatest militaryis located so that i will know that my investment will beprotected. to my face.thought, wow, that's interesting.>> question. >>daryl: how much has the hugemilitary presence affect
housing costs?>> huge. huge.>>daryl: does everybody here agree about that? do we havea large enough population to affect the whole market.>> you have a lot of military who have their militaryallowance so they can go in and rent at much higher levelthatten a local person can. so that drives up the higher,you have higher rent which is higher income of return.investment. which means higher prices.so people will go out and buy
a bigger house, renovate it,and this rent to somebody who can pay for that higher rent.>>daryl: this is an interesting question.i think that one of the things that we would like to explorehere is the effective a bubble on actual decision-makingprocess that goes on in, say, a local buyer.the question, what should a home buyer do if she or he islooking to buy. let me start with scotthigashi. still time to buy or shouldpeople be nervous?
>>i don't think people shouldbe nervous. i think it's time to buy.affordability in hawai'i has a lot do with interest rates.interest rate environment has been favorable.folks have gotten used to this as a new normal.when you see interest rates, people interest rates go up,people flood the market thinking we've got to hurry.first thing, a lot of folks are so afraid of the process,don't get prequalified and find out who they can afford.a lot of times that
surprises.they over estimate the amount they need for a down payment.part of the process so explore that affordability first andthen the world actually opens up.it's not true that there is nothing available for inevery price point to buy that that's simply not the case.i think one. things, one of the barriers is the fear ofthe process and then thinking the read the paper.it's so sense ea expensive. i don't know how we're goingdo that.
i lot of people are payingrent at equivalent level of at what a mortgage would costthem per month. because of that, barriers orfear or perception don't take the first step.great time do that. >>daryl: whittingtoningcalled from tom from waikiki. what role cast a mortgageindustry pay in raising the cost of housing.you've had this pretty consistently low interestrates now for a while. and he's describing wherepeople may be coming to the
table now, going, maybe thisis real. i mean, what do you any? doyou think that these costs that are going up might bebecause interest rates are so low? what happens ifsuddenly, interest rates pick up?>> absolutely. with low interest rates.that expands affordability. because your payments arelower. therefore, you can make lessmoney to be able to afford it. and interest rates do go up,affordability gets
compressed a little bit.definitely interest rates have an impact on hawai'ihousing. anecdotal.hawai'i seems to find a way. honolulu seems to find a way.whether it's the typical thing that we see, notnecessarily debt to income ratio.it's more of the down payment side of it.typically, you can get 0% down.get 3% down and not be a veteran.and a the lot many he pahoa he
doesn't know that.you-it lot of people don't know that.you may hui up with family member or parents and dosomething. and since, finding in hawaiifinding a way, we're giving away quality of life though.>> could be. if that's your definition ofquality of life. i'm no here to arguedefinition. but some people really, enjoyhaving multigenerational living in their homes.where with when i went to away
to college, my dad turned myroom into a den. >> remembering that supplyhere is relatively fixed. we just have not added verymuch to the supply of housing in the hawai'i over it's lastten, 12 years. ho'opili, just allowed us togo through, that's lpn been in the planning process for overten years. koa ridge has been around fora long time in the planning process.those are the only additionsnd koa ridge stillhasn't been approved.
ho'opili 12,000 homessupposed to come in over the next 20 years.only big housing development supposed to come in.maybe 500 plus homes per year. that will help alleviate someof the demand that's coming about for extra housing.continued population growth, economy tends to kind of slowbut okay growth, as you hear predicts, we're going to seemore people coming here. not to have homes put them in.bid up prices. extra demand bids up prices.>>daryl: you have a fan out
there, stephany sofos righton the money. let me ask.pretty much alone. why do you feel it's importantto raise this alarm? saying we're in a bubble, is anlarging thing to a lot of people.why do you feel it's important to say it.>> because you need to be aware of what's going on.and go into your investment with open eyes.i tell people that if, i'm doing some transactions rightnow.
i tell people, you're going ifyou can afford it, buy it. because historically,hawai'i property has always gone up.it goes down sometimes in recession, but the recessionshave been much more mild than on mainland.when the great recession went down, places went down from 10to 70%. in hawai'i, it went down 10 to30%. so it's a good investmenthere. and if you can buy and hold,do it.
if it's affordable.you're going to be like there and struggling every day totry and make that mortgage payment, and you're cryingand you're worried that you're going to make that,don't do it. if you can do it, and you, itcan be a reasonable expense for you, in ten years, it willbe a great investment. it might not be a greatinvestment for the first two or three years, in ten years,it will be. >>daryl: gut wrenchingexperience to be underwater
on a mortgage.>> not that many, excuse me. not that many people inhawai'i have that situation. we did have foreclosureshere, about you not catastrophicically like lasvegas, arizona, san antonio, and parts of california.so we because again, what sumner said, people will comehere and there is a great desire for local people towant to have their piece of paradise and people coming inhere want their piece of paradise.that will continue to drive
the prices or keepsstability. maybe the prices willstabilize and go down with the recession.but it will keep everything stable.>> i like to, if you dent mind. talked about las vegas,california. inland i aminland empire. sand states.until hawai'i, we're based in honolulu.owner market in honolulu was maybe off 10% at the trough.where we saw the big impact
was in the resort residentialresort areas. kihei, wailea, kona, poipu.>> ko olina. right.we had a lot of mainland buyers.earlier came in and buy it, levied up homes thiscalifornia. most impacted in hawai'i.so i think it's important when we honor that happened there,leisure mainland market, stayed pretty strong throughthe, even through the worst. agree with that.i want to agree with some ea
something stephanie said.interesting thing about homeownership is you purchasethe home, and you fix your payments, and i think whenpeople think about the threat of a bubble, or the danger ofthose things, it's really in the event of selling.so you buy a home and live in it, your payments stay thesame. debt over time is going townand values do go up in hawai'i.historically, values move up. maybe not year one or two.over time.
it's hard to find a ten yearperiod of ownership where someone was upset with thedecision to buy a home. and live in it.>> so i think homeownership still the right path.>> if you were thinking about buying a home, try twodifferently scenarios. one is world economy weekweakens. dollar appreciates.driving foreign buyers away. leave the market.downward pressure in price. u is us enters minorrecession.
viewer visits.economy relatively strong. visitors from california.better incomes to people tourist jobs.find that some of the stock market weakness in china.means that people want to get some of their money out.good place to park your money. somewhere in the u.s.u.s. real estate investment is relatively safe.government doesn't come and confiscate your stuff.chinese economy underneath that relatively strong.may still find even though the
stock market, small part ofchinese economic scene is not doing have well.lots of wealth being generated and people want tostart coming here to continue to mark money here.if the exchange rates not so advantageous.you can come up with different scenario where hawaii onworld economy is going. thinking about if you'regoing to buy. recession is always going tohappen. only question is when.>>daryl: you're talking
about, again, same thingstephanie brought up. offshore money coming in.who can do anything about that.i had a panel here last week about kakaako and one of thepeople said, go out 8:00 at night and look at one of thosehighrises. supposed to be work forthhousing. middle class housing.you're going to see that 40% of the lights are dark.i mean, is it true that we have so much of that offshore moneyin here.
they'll say, this is an llc.locally registered company. local buyers.what do you guys think is really, is there a lot ofpeople from offshore buying into our real estate?.i think statistically. when you look at 2014, on theresidential side, anyway, from what we could tell, it'sabout 11 or is it% of the market.12% of the mark e. 2005, 25% of the market. offshore fromcalifornia, continental u.s. and asia or other place.complexion of the market has
changed.while folks may have bought and held from at that time, idon't see that more recent market is not being asinfluenced by that outside moon money.not in all pockets. whether that means, i thinkthey're present. offshore money is present.it's necessary. by the way.i think part of the buildings that you see coming up in theurban core require new markets to open.>>daryl: let me ask you.
>> agree to disagree with you.>> absolutely. go ahead.i can see you leaning that way.>> no. i think that foreignnationals are here and they're by buying left andright. i think that that's whatdriving a lot of your market. >> where they're from n i dosee a lot of them going into hawai'i llc's and so it looklike it's a. >>daryl: limited liabilitycorporation.
formed in hawai'i.(. right.corporation. and to bring their moneyoutside of their countries, with their governments,they're having to establish a business and whether it's arental business, or whatever they're doing, establishing,bringing it in over here. i did a lot of appraisal as theand there's a lot of foreign national names that i see thatare not local people. they're in every market.>>daryl: let me ask.
sumner la croix.is there any scientific track of this number and is there ared flag that goes up at some number.>> dbedt has a nice study they've been recently offoreign buyers in the market. no.i think another phenomena we're seeing in spill overoftourists into the market. we're seeing that we haven'tbuilt a lot of hotels in recent years.visitor days has been increasing.filling over into the
neighborhoods.push willing up prices. there isn't a really goodstudy of that done yet. >>j 1 ohn 0 : i remind ouraudience tonight we're exploring whether hawai'i isin a real estate bubble and other trends in theresidential sales mark e. we'd like to hear from you.973-1000 or 800-238-4847 calling from a neighborisland and i have already gotten a ton of calls.so let me kind of go through these.>> because we're so is
charming.>>daryl: you guys are bringing them out.i tell you. what should a family do thatmakes a needian income in hawai'i.can they afford a home? do they need pool their moneywith other family members? you mentioned thisphenomenon. really, when he talk about themedian income, is there something to buy?>> absolutely. i think no matter where youare, something for you.
i would say, median income,you can get by 0% down as long as you're in areas that areavailable for usda. guaranteed rural housing.and 0 down. loan is guaranteed.so the lender is safe. in that regard.and actually really careful to make she'ser you don't havetoo much debt against your home.that's aaron yeah that someone can do.i'm just kind comes to mind. if you, honorably dischargedveteran.
you've got va available toyou. also zero% down guaranteed.then you've got like 3 and quarter percent down on fha.many ways to get there. i think scott hit the head onthe nail earlier. talk to a lender.get prequalified. get preapproved.pull your credit. look at income and assets.tell you where you can go and had then connect you with areal estate agent and then go out and find the property.>> i was going to say, you have
a panel on kakaako.in that corridor, there's a building coming up thatactually will be for people who are making 100% of thearea median income in some cases less.two highrises coming up in the near future are designed forfolks in the 80% of the ami and up to 120.does it solve the whole problem and is it going tostill be competitive? absolutely.but i do think that there's going to be options.>>daryl: some of median
income, not going to be ableto buy a single family house, anywhere in the urban area.>> possibly not. i think that's where thechoices come in. absolutely true.the reality of our market is certain neighborhoods arehigher priced. and make it difficult.no doubt about that. >> i did see a kaimuki housewhich was 800 square feet. for $560,000.>> 2 bedroom,. >> 2 bedroom one bath on 2,000square feet.
you know, so it was a starterhome. >> i think i saw the line forthat house people running down the street,.>> another thing we're starting to see is familiesthat are squeezed into a home. lots of people living in thathouse. thinking about let's add thesecond story. third story.if it's allowed. >> whole other issue.construction costs are so high right now.barrier.
quick question.i don't know that we have a lot of leasehold places any more.question still kind of haunts some of the properties.leasehold. it's a lot cheaper.scott higashi, is leasehold safe to buy?>> it depends on the register of the lease.generally speaking, length of the lease.>> they're not that many left because a lot of them haveeither purchased the fee or period of conversion has beenallotted.
>> you have to know whatyou're baying. you have to know what you'rebay bying. couple of questions aboutpeople trying to, i think reed the market a little bit.question. are people buying homes theycan't afford like in 2005, 2007, scott whittington,you're the mortgage guy. are people buying house theycan't afford. >>unfortunately -- fortunatel y, no.becauseful they're getting a
mortgage, i can't see gettinga mortgage. not a mortgage guy.ones that get mortgages,. >> if you can get a mortgage,can you afford it. we're talking about doddfrank a little earlier. very restrictative.we have to call build and repay.you cannot do the loans. even if they have greatcommission or bonus income, still looking at that incomeover time, and can they afford that mortgage.if they cannot, actually we
get in trouble with ourregulators. so there is a bigger picturethan this. so things get overhe cantended because maybe your job changed the day after youclosed your loan. we can't have foresight on.validate everything, the day before loan funding, we'revalidating their employment to make sure they're there.>> in hawai'i, market, which is always been cyclical,we're always trying to read the cars.look for the canary in the
coal mine that is going totell you the boom is over and drop is about to start.roy from waikiki. what will happen if a lot ofhome sellers start to cash out and sell? what do you think?>> i'm not quite sure why that would happen.i think if people -- there's a big demand here.the reason why there's a big demand to be here is becausethis is great place to live. there's really good amenitieshere. rain good weather to the hosthawaiian culture, to the
water.to the natural beauty of the place.those of us who live here sometimes get caught up in thetraffic. if you're living in west oahuand commuting into downtown. understandable why you getcaught up in the traffic. still a very high amenityplace. people decide they want tocash out and prices start to fall a bit, others willfollow. and decide to come to hawai'i.>> what about the real estate
flippers? are they at riskat all? scott higashi? >> yeah.i don't think there is a flip market.i just don't recommend that. you know, i think the adventof these great tv shows that give these fansful ideas, buya place, fix it up and flip it. i don't think our, marketbehaves that way. >> i've seen a lot offlippers. i don't know if they're good.but they're doing it and some of them have made money.some of them haven't.
but flippers will get burnedin the end. because very, it's tooexpensive and but they're buying it for 500.putting 150. flipping it right now.kailua is incredible. kailua coconut grove wasalways considered the dregs area.and small, it was small lots with single familyconstruction. and last year, it hit athousand dollars a square foot.that's kakaako prices.
that's diamond head prices.i was like, oh, my god. how far is this going to go?that's just it's incredible and there are a lot offlippers in kailua right now. >>daryl: the questions arecoming in. along those lines.about neighborhoods that have traditionally had affordablehouses, kauai, big island, and people are asking, what isgoing to happen to our communities? rising pricegoing to start changing the nature of our communities?scott?
>> absolutely.i mean, i think that when you have that kind ofenvironment, it will change the nature of the prices.it's unavoidable. the hard part about theneighbor islands have when the economic down turn occur,it was much harder on the neighbor island communities.still not seeing where those prices are recovered in full.on like oahu where they continue to accelerate.neighbor island markets do behavior very differently andwill is a lot of outside
influence in particular theresort markets. traditionally residentialmarket, i clearly flip in the phenomenal flipping canabsolutely affect values. >>daryl: interestingquestion. it was huge problem.it was a question about, i could see a fixed incomeperson asking this question. they're seeing that theneighborhoods pricing up and their property taxes goingup. to point where they may be paypaying more, hawai'i is low
property price.state. it's still scary for them.jon whittington. are we seeing people get introuble because of the property taxes?>> no. not so much.hawai'i has the relatively low property tax compared toother place on the mainland. i can hear city councilsaying, we can't raise property taxes.>> we get taxed in every other way.>> we're like number one when
you put all the taxes that wepay and g.e.t. that's 5% right off of everydollar you earn. and your rent and on your, onevery service you use. i mean, we are the highesttaxed state in the nation. and when you say real propertytaxes are low, that's not a real issue.that's a nonissue because if that tax keeps going up,that's going to be go right to the renters and renters aregoing to be displaced. we have to balance.we can't be taxing us every
which way.we've got to calm down on taxes.>>daryl: you're making me, i got to read this question.stephanie sofos consider running for mayor? okay.>> i would probably go postal. if that would happen.>> congratulations. >>daryl: this is a i have tokeep controlling it. because we're moving rightalong here. again, i asked about thecanary in the coal mine. what should people bewatching out for? what is
the statisticalpsychological, what is the thing that could trigger thenext trending down? sumner? >> kind of decline in tourism.certainly, if we were looking out there, the this 30%decline in the value of the japanese yen.of the new zealand dollar, australian dollar, canadiandollar, all phenomenal made it much more expensive tovisit here. numbers have been robust fortourism. doesn't mean within day,people are going to wake up
and say, let's go to mexico.if they're looking for a vacation, find things likemexico vacation is much cheaper.cube starts to move forward in the tourism industry, we maystart to find more competition there too.there could be a recession coming about.>>daryl: sudden shocks. >> hurricane ripping throughhere. >> canary in the coal mine.inventories big indicator where we are in a cycle.we're like 3 months right
knew, ininventory.that what does that mean if no more homes came on the markettoday, the amount of velocity in the market of peoplebuying, 3 months, after 3 months, you would have noinventory left. >> basically have able homesgood enough for 3 months at the rate the market is goingnow. amount of time the homes arespending on the market on average,-market on average,still about 40 days. we've seen times in hawaiiwhere that could be months.
many months.so i think right now, we're not seeing -- i thinkconsumer confidence at least from what we see, we do a lotof first time home buyers that trepidation.and think folks don't, are confident that they're goingto have a job or don't have good employment outlook.don't feel confident. don't buy a house.think if that creeps into the economy, i think that's goingto be tough. that's when you start to seevalues drop.
things take longer to sell.sellers have to back off a little bit and don't getaggressive. listing their homes.when sellers put their home on the market, know theneighborhood is going more and seller gets more and nextseller gets more, moves price up.part of it is lack of inventory.you would have a neighborhood you wouldn't thought, how dothey get these prices. if it's the only home on themarket and people really want
it, more than one person wantsit, supply and demand says, they're going to bid that up.>> i do know the length of time was 30 to 45 days a year ago.now, it's 90 days. 3 months.so there is a, it's starting to stretch out.so that shows you that the market is slowing down.>> right balance point. not quite a seller's market.not a buyer's market yet. >> 60 to 90 days.i think this is actually a better market than it was ayear ago because it was more
of a frenzy a year ago.it seemed to have peeked in 2004 and i started to see thetrend going down in june of 2015.so now, things are starting to stretch out a little bit moreand buyers are waiting a will longer and sellers arebecoming more realistic. so i'm starting to see pricereductions. across the board.i see people willing to negotiate.before, no one would negotiate with you.they would just say, this is
my price and i'm going to putall offers to the sellernd you might be lucky if you get usto accept it. inouye, they're saying, okay,how can i help you? >>daryl: it seems like youwere, do you feel like we're hitting a crest here?.i really don't. i still see that we're medianhome prices are still increasing.>> economists look at history and we're looking at what'scurrently going on. you have to remember that yearlooking at your data that's
been given to you over thelast 3 to 12 months. we see it going forward.>> that's true. also taking some of ourpropredictions with local economy.we see again, not great growth, about you we see stillpretty substantial growth in local economy.over the next 2 to 3 years. that's going to drive up localincome. i think we'll see local demandthat will keep the median home price relatively high.i don't think we're going to
see big declines or bigincreases. at the upper end, that's adifferent market. upper end, we deal much morewith exchange rate changes. >> what's going on in thechinese stock market. in california, too, we findthat all of a sudden, people decide they want to take socksome of their stock market wealth and park it in realestate. happened in 1999, 2000, afterthe stock market crash in the united states.>> you asked about how do we
see it.and what's going on. you think what's happeningright now is there is some nervousness in the unitedstates economy and the world economy and it could be basethe on this election. this could be, and whattriggers a recession can be anything.natural disaster. it could be political.it could be currency war. it could be some type of ascare. so i think that, yes, we aregrowing and we're kind of
stalling, slowing down a bit.because people are just waiting to see what going tohappen, who is going to be in office.>> holding their breath a little bit.>> yes. and also being morepractical. but again, going back to whateveryone said, if you have the money, if you have the abilityto mortgage, if you feel comfortable in your monthlypayment, then buy. because you will never, thereis no -- you cannot time a
market. no one knows when totime a market. we're not geniuses on thatlevel. we hope we are but we have tolook at it for me, for you, whatever you want to do, if itworks for me, then i'm going to buy.>>daryl: let me ask. we have a number of callerswho have asked about affordability.what is affordable. what is correlation betweenthe high cost of housing and homelessness.rent control.
a number of questions.and then what about the t.o.d. transit-oriented developmentalong rail. and we are on the verge ofgovernment looking at some of housing policies and tryingto generate a lot more affordable units into themarket. if you did that, in a reallyrapid way, can that destabilize our market? arewe in any danger of that? >> first of all, i think weneed to build more. i mean, there's lots ofcontroversies about to we
want to have new green fielddevelopment. big controversy.build up the middle, building on ag land.building on land that hasn't previously been developed.that's where the big controversies are in hawai'i.it's much less controversial to have development,redevelopment on already developed parcels.if the housing crisis is going to be ameliorated, notsolved, but ameliorated for people in middle an low incomeit's, we're going to have to
build more in those areas.think transit-oriented development is one placewhere the state, in particular, the state to takea look at its plans and to think about how can can we getthese lands in the hands of developers who are going tobuild. workforce housing. at thesame time, not windfall profits out of the whole deal.>> i'm concerned about building it and they willcome. that mantra that everybodytalks it to me about.
i'm really concerned about weneed to build, we need to build, we need to build.i want to see infrastructure. i want to see, we're going to,right now, the city is renovating their sewersystem. but they've state the they'renot increasing the capacity. you want to build 12,000 morehomes. where you are you going to putthe poop? sewer line, storm train drains are the only, inthe state, only one in the united states where when therains heavy will, storm
drains go into our sewer andbacks up and then we have raw sewage everywhere on thebeaches for 2 or 3 days. and that affects us, as peoplein our where we want to live, and it affects tourism.you've got to build infrastructure if you want tobuild houses and i don't see that happening.>>daryl: governor's housing proposals, legislature,there was money for infrastructure.there was money for affordable housing.and there is this opportunity
around rail stations thatthey're talking about. assuming that they can takecare of all the poop. scott higashi, what impact doyou think a large amount of inventory over the next, 6, 7,8, 9, ten years, would have on the real estate market inhawaii affordable and middle income housing. i don'tthink it has a negative effect at all.we're tracking the amount much interest in some of thekakaako developments that have not been built that aregoing to be either workforce
or housing that's actuallyhave being administered and overseen by the stateagencies including the hcda and hhfdc, there is a verystrong indication that these demands far outstripswhatever inventory is currently planned and i justdon't think that in the affordable, more affordablecategory, whether by the way, even though we're in realestate and looking for people to buy homes, there is room ont.o.d., whatever, to actually build affordable rentals too.so a lot of housing option i
think that exists. and thatcan be a good transition for people.not everyone will buy a home. but if we can provide betterrental opportunities, better near rail stations, thatcould be very beneficial. i don't think either of thosethings will have a downward effect on the market.the question becomes, and i think sumner and you know, ifyou look at higher price condominium, higher pricehome, i just doesn't know that they absorption is there forthat.
and i think that is a danger.>>daryl: couple of callers now.moving now to the what some makes just building housingexpensive in hawaii. we haven't really exploredthat yet. caller's neighbor build housedoes not make much profit. high costs are driven up byrealtors. >> be careful.it's not us. it's the mortgage brokers.>>daryl: okay. i mean, we talk and thegovernment talkeds about
getting involve in thehousing business in a much bigger way.but really, the way we do our regulatory structure, are wecapable of building things that people can affordquickly? let me throw that one at you.>> i don't think we niecely have to have it that if youwant to do a housing development, that it takesten years to get through the regulatory process.i think this is the time of thing that the state and thecity ought to be looking at to
try to figure out how tostreamline the process. >> work together? worktogether? >> hold on.>> regulatory process still needs some reform.still very complicated. we have a double veto process.if you're trying to build on say land that's currentlyzoned ago land, you have to get it reclassified by thestate and project has to be approved by the city.and if honolulu doesn't approve it, there's no otherplace to go to.
on the mainland, if suburb ofnew york doesn't approve it, you go to the next subshall.go to the next. if you have projects that youthink are useful for people in the new york area, there'shundreds of jurisdictions you can build in.here there's just one jurisdiction and the stategovernment holds second level of approval on thosedevelopments. big deal.we need to be thinking more about how to streamline thatprocess.
>>daryl: really fun request ithink. i want to get this in.fun question. fan chose it.not representative of local residents.you guys are all local residents.no one is deend going gentrification.of local people. i think it meansgentrification. are we head for a fundamentalchange in the way honolulu looks.get use the to the idea that
old rustic neighborhoods aregoing to get drastically thinged.>> absolutely. people a lot of local peopleare having a difficult time affording what they have.and it's going to come to a point that people will have tosell and leave. because my own niece, my ownniece, left a year ago. she couldn't afford to livehere. even though i was a willing tohelp her, and her in-laws were willing to help her, theamount of costs to live here,
and the to get a bigger house,was just too much money w so it's going to get to thatpoint that some people who cannot compete with yourpeople, it goes back to jobs. and what type of education andwhat type of quality of jobs and how much money, you can't,your days of living on the beach and getting fish, whereall the fish are fished out, because there's too manyfishermen and we need to balance, there's no balance.and so people are going to leave.it is going to change.
things are going to change.and you have to get ready for it.>>daryl: with that question, l goes back to our regulationquestion. people say, don't change.what we have. scott higashi, do you see inyour sellers for example, maybe buyers, looking forneighborhoods that aren't going to exist?>> i don't know if they're looking for neighborhoodsthat aren't going to exist. homes grow old and we have alot of neighborhoods that
were developed 50, 60 yearsago. in the insurance market, youthey, to pay for hurricane insurance, on a single wallhome, versus a new modernized homes, substantial costdifference. so in some case, homeownerswell, actually, i've got a repair the home anywhere.maybe i should build a new one.and even though that sounds critical, there are otherfactors. it's not just a housing cost.cost of insurance the and
insurablability and homesstart to fall apart. so there's a lot of homeswhere generation of folks that lived in, new buyers comein and say, gosh, i really want to change this.i want to renovate. i want to make it better.and people will do that. i think we forgotten thatpeople did that. at one point.>>daryl: that's free enterprise.>> it is. >> an example is kahala.in the fifties, pig farms.
and then they came in and theyhad built all of the of the backfill and other developerscame in. they built these single wallconstruction homes. they sold for $18,000.in 1959. now, then those homes sold fora million. then they tore them all down.building mcmansions. and coming in.whole new different place. i went it kahala elementaryschool as a kid. i don't recognize any of theneighborhoods.
>>daryl: this is aninteresting question. i think that we've sort ofanswered it. let's state it straight out.what does the panel think about legislators making itillegal for nonamericans to buy property in hawai'i so wehave more of a chance. second question is, seemslike we're accommodating outside interests, are wetrying to make it easy buck or truly helping families localfamilies. let me ask you.is that fact outside money
really affecting the middleclass buyer? >> we've had outside moneyhere for a long time. i mean, we've had u.s.mainland money here since the 1950s and 1960s.in particular, since the jet plane came in 1958.that money been here. japanese money followed.good history all monies that have come through here.one thing is critical even if we're not going to do greenfield development, not going to develop much on the northshore.
center of the island, we doneed to come up with more dense development in theurban corridor. otherwise, we're going tofind that exactly the scenario.you put forth. people are going to say, ican't really live here. i have to leave.i think if we do some of that additional densedevelopment, we're going to find that we're going to findthat more people are going to be able to afford.person lived here most of my
life now.you're on a island. eventually, we're going torun out of place for people to live.what happens? >> we're going to sink.>> sounds like i agree with you.we don't have enough developable land.supply and demand. legislature going to outlawnondomestic buyers. better spend time, where canwe find transit-oriented development, expand ourdevelopment opportunities
and the entitlement process.>> useful to think about a city like denver compared tohonolulu. economy prospers.you get more inner city development but the suburbanrings start to example expand.move out into the some of the farm land.rural areas. think you're going to havemore redevelopment. all the roads are is going tobe a park lot. there's no infrastructure gotthe last word.
mahalo for all you guy forbeing with us. next week we'll examinestate's shortage of medical doctors.900 doctors short. shortfall expected to grow to1500 physicians in the next five years.it's accepts severe on neighbor islands where manypatients go without care or fly to oahu for treatment.what it take to attract and maintain primary doctors andspecialists on the neighbor islands.next time on insights on pbs
hawaii.i'm daryl huff. a hui ho.