Davids’ Big Island Mauna Lani Real Estate

January 13, 2009

David Swanson 2009 Predictions: “Escrow or Bust!”

Filed under: Real Estate Information — David C. Swanson @ 9:53 am

Although everyone had high hopes that the 2008 U.S. housing market would have a soft landing, increased foreclosures and a meltdown of the residential mortgage market caused the housing sector to crash-land. Even worse, the residential mortgage crisis spread to all ownership categories, including our blessed Aloha State. The year 2008 proved to be a real roller-coaster ride for the Hawai’i real estate industry.

While the credit crunch and economic uncertainty have caused investor anxiety and tighter lending standards, the end result was nearly 30% fewer Hawaii real estate transactions than the previous year. Many potential buyers saw their investments evaporate in the global financial crisis, and buying decisions came to an abrupt halt. Many were scared to move forward. “Let’s wait and see what happens,” seemed to be the typical slogan of our prospects. Almost every active Hawai’i licensed real estate agent or broker has some story to share about deals gone bust. 

Some pundits theorize that we are in a buyer’s market under the current market conditions. Is it really a good time for buyers? The answer may be that only time will tell…but, if one of your clients is a consumer who is financially and emotionally ready, certain current conditions are favorable.

Many of our prospects are looking for the best deal. Some are still waiting for the bottom of the market to hit. Resale prices have been moderately moving downward, and buyers have more leverage and more options. After what can only be described as the toughest year for the American housing market in decades, the big question remains, “When does this all begin to turn around in our Hawaiian Islands?”

Hawai’i entered a recession in recent months that will stretch well into 2009, with only a weak recovery expected in 2010, according to the latest in a series of forecasts on the state’s economic outlook. The report released by University of Hawai’i Economic Research Organization is the most recent and gloomiest of economic prognoses published this week:

Carl Bonham, UHERO executive director, had this to say, “From the analysis we’ve done, Hawai’i's already in recession. We’re predicting that things are going to remain bad through the third quarter of next year.”

Moreover, individual forecasters vary in their opinions about how deep the downturn may be. For example, Bank of Hawaii’s forecast calls for visitor arrivals to decline by 0.2 percent next year. Their forecast suggests that a significant recovery won’t begin until 2010. The outlook includes:

· Visitor arrivals will fall by 10.8 percent this year. Hawai’i had 7.27 million visitors last year; each percentage point decline this year represents roughly 73,700 arrivals.

· The biggest decline in vacationers will occur among mainland tourists. UHERO said their visits will be off by 14.2 percent this year. Japan vacationers will be off by 9.8 percent.

Does this information lead to any conclusions or predictions about whether our current active licensed real estate agents and brokers on the Big Island can make a go of it? First, it might be helpful to assess how many active licensed agents are competing for the market share. I have heard many casual rumors that there are 20% fewer active licensed agents and brokers. The truth is perhaps slightly different:

Data from DCCA, REC 2008 Final Report, www.dcca.com/rec shows that the number of new licenses issued in FY 2008 decreased 9% over the prior fiscal year. During FY 2008, 1910 new licenses were issued. Individual broker licenses decreased by 21.1%; new salesperson licenses decreased by 6.9%; and new entity licenses decreased by 9.8%.The overall number of current real estate licenses increased 9.7% by the end of FY 2008. In FY 2008, active licenses increased 2% over last year, while inactive licenses increased 31.1%. There was an 8.9% increase of active licenses of Molokai and a 3.4% increase of active licenses on Oahu. On the islands of Hawaii and Kauai, there were minimal decreases in the number of active licenses.  

Do questions keep coming up at your brokerage office weekly sales meetings as to how you plan to survive and make a living selling real estate? The MLS Sales Statistics Report for the January start shows the entire island in all categories down 82.88% in number of sales, down 93.18% sales volume, and down 74.44% median sales prices.

Are we and our buyers waiting for January 20th for President-Elect Obama’s inauguration to spring-load the economy and drive the housing market out of the downturn?  Don’t take this the wrong way. I promote and envision a new optimism for all of us with the new Presidential administration. For now, I still wake up at night wondering what it will take to change the consumer’s thinking from, “Maybe I could be a buyer someday,”  to “Now really is the right time for me to own a piece of paradise.”

I believe in the power of positive thinking, a mental attitude that expects and thus helps to create good outcomes in all endeavors. The idea is that whatever the mind expects, it finds. My wife and I were discussing a way to creatively visualize buyers opening escrows. The acronym ESCROW came to me: Excellent Service Can Restore Our Wealth.” This mantra reminds me to stay focused on personal and professional self-improvement strategies that will allow me to give the best possible service to my clients.

Will 2009 be a year of “escrow or bust” for you? Please share your comments and thoughts about how to achieve success in a recession economy.

Attitude is a little thing that makes a big difference

~Winston Churchill

5 Responses to “David Swanson 2009 Predictions: “Escrow or Bust!””

  1. P J Says:

    David,

    Positive news of any type by the media is going to turn the real estate market in Hawaii. All of the news at this time is negative, how few the sales are, prices are low,etc. These itmes are not positive stimulating information to the buying public. The public is interested in a better life style in Hawaii. The articles of today should be how wounderful it is to live in Hawaii. The temperatures is perfect, the fishing is great, the food is wonderfull, the life style is like no other. People want to live in Hawaii if it is a better place to live. Show them the way. Talk about the weather, the health benefits,the casual life style, etc. Dangle the carrot, sell the sizzle, not the steak.

  2. Julia Adkins Says:

    David, I enjoyed reading both of your posts, and the posts from a realtor at Hawaii Palm in NKohala, the two of you have something to say. I do not know if you exclusively represent the ML, but I have some suggestions in this down market. I am one of the investors who did not sit on the side lines. I bought a house in Waikoloa in Nov 2008, I used to live on the BI, and I am familiar with the market. In a down market one has to work harder and be more resourceful. In my opinion, most realtors are still asleep. Observation 1: usually buyers do not want to meet the owners, case in point, she comes to the door in a half open bathrobe, (she knew we were coming); someone else is in the shower. 2:those tall windows at all those condos for sale at the ML, need to be washed, and realtors need to get the sellers to band together and try to get those maint. fees down, even if it is temporary. 3. don’t let the sellers dog’s intimidate the perspective buyer, at one showing, while I was inside the house the dog’s were outside at the slider banging against it and snarling, one of ‘em was a huge rottweiller, and I love dog’s, it was unbelievable. The owner was outside with the dog’s and did not control them. 4. Get the sellers to clean the house esp. if it is rented. Most houses I went into I did not want to take off my shoes, hair all over the bathroom floor, yuk. In conclusion, I know most of you are really struggling, if your sellers are really “motivated” and/or desperate, then convince them they need to clean their house, pick up all the crap in the yard, and to get out of the house. Realtor’s, if you have to, roll up those sleeves and do it yourself, we are not “over the rainbow” right now.

    Julia Adkins

  3. David Swanson Says:

    julia, you have made a good point. In today’s market, a person needs to re-invent how to sell and be successful.
    Mahalo for your comment…David

  4. David Swanson Says:

    PJ…yes the public is interested in the Hawaii lifestyle. Be my guest to blog and sell your sizzle. David

  5. David Swanson Says:

    PJ,
    Yes, I do agree with your comments too. Thank you….I support your message in my new post. David

Leave a Reply