“If I could get you a home for the same price as in July of 2004, would you be interested?”
What do we mean by 2004 prices? The median price of single family homes has changed very little since 2005. For simplicity, let’s say $600,000. Interest rates have dropped 2 points in the last 30 days or so. That is the same as a 20% drop in purchase price. That means you can now buy that $600,000 home for the equivalent of $480,000. The last time the single family home median price was $480,000 was in July of 2004.
So pick up the phone, and call me today at 808-728-1230 and let me know that you would like to get a home for the same price as in July of 2004, and we will get the process started….It has been nearly five years since we have had such buying opportunities…..I look forward to speaking with you soon…..Aloha, Jon.
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January 11th, 2009 at 3:07 pm
Aloha, Jon…. great perspective!! On the Big Island, we’ve seen price decreases in some areas and in some neighborhoods where the actual LIST price is the equivalent of sold prices we saw in 2004 and in some cases, 2003. According to your calculations, above, with today’s interest rates some Big Island buyers might be paying the equivalent of 2002 prices! WOW. Thanks for the insight, and if any of the phone calls you receive are clients wanting to buy on the Big Island, I’d be happy to send you a 30% referral fee!! Warm aloha and Happy New Year, Katie Minkus, R(B).
January 11th, 2009 at 11:29 pm
Thanks for the kind words and I will call you anyone I speak with has an interest in the Big Island….Mahalo and Aloha, Jon.
January 12th, 2009 at 10:42 am
Jon,
Since the current bubble was well under way in 2004 (it started in 2002), I would suggest that you should advise your clients to price their properties in 2009 based on mid 2003 prices. Looking at statistics from Kauai ( http://uhero-kauai.prognoz.com/ ), median condo prices on Kauai should be less than $300,000 per unit based on historical trends. Prices started increasing at unsustainable rates of 10% or more per annum from 2001 thru 2007 (average annual increase was 21%). From 1994 thru 2001 the average annual increase was 2.27%. Even if you use double that rate of increase and compound an average annual increase of 4.5% from 1994 to 2009, the mean condo price should be around $270,000.
As the author of this article points out re the Phoenix home market, http://seekingalpha.com/article/18667-housing-what-does-return-to-mean-really-mean , there will always be a return to mean. The question is, what is the mean?
Obviously it all boils to down to supply and demand. Given the very low demand (169 condo units sold in all of 2008 on Kauai and nearly 500 are available today), unless sellers in Hawaii get serious, they will be holding onto their properties for many, many years.
Good luck,
Charlie
January 15th, 2009 at 11:48 pm
Good points…….Sellers with unrealistic expectations are going to have a tough year in 2009.