All things are pointing for the Po’ipu condo market to spring to life. Let me recap and set the stage a bit…Up until the beginning of last year, we experienced a cycle of growth in both resort condo prices and vacation rental income like no other time period before. While rental income has never covered more than the basic costs of ownership like taxes, utilitities and maintenance fees, there has always been an expectation that in high season one should make enough from rentals to help pay a mortgage if you had one so price and income have always been loosely tied together. With a hot real estate market ramping up for some 8 to 10 years, rental income followed but as the general economy cooled down, travel was one of the first sectors to cool down. As the ratios between sales price, expenses and rental income continued to widen we began to see buyer resistance and sales began to drop off as well. Then, of course, we all know what happened at the end of 2008 and we have been adjusting and correcting ever since (those are kinder words for “cleaning up the mess) The current situation is this: After a long rollercoaster ride and the freefall that was 2009, things have started to look a lot more “normal” and this past Christmas I started to get calls from past clients and when on island many drop by my to chat. The conversation has been pretty consistent. There is a “feeling” the market has gotten to a place where it’s time to keep an eye out for a good buy. Those calls and drop ins have gotten much more frequent these days. The condo market of todayhas adjusted substantially. our Multiple Listing Service literally sprouts with price reductions and we have started to see a few closings in practically every project in Po’ipu. This fresh sales data has effectively reset the values at levels that might surprise you as much as it has me! I am finding some very sweet looking listings out there right now. (If you call me, I will share) Why is this important to pay attention to, one might ask? History tells us that a bit of sales activity in a declining market tends to “stem the ebbing tide” so to speak. It stops the free fall and establishes the bottom of the market just like the lack of activity establishs the peaking market after a run upwards. I believe we have found the “sweet spot” and with interest rates low and money available for solid, creditworthy borrowers once again, we are seeing this bottom inventory begin to be absorbed.
All I can say is: PAY ATTENTION! This is looking a lot like a bottom trough y’all, and you don’t want to be singing those “coulda-shoulda-woulda” blues first sung by that popular group from the early 80’s and 90’s called “hopeful buyers from years past” next year at this time…but then again I am one of those who just tends to believe in real estate as an investment strategy….how ’bout you?