Hawaii Real Estate Bubble

[Kayekaye]

Originally Posted by KohalaTransplant

My experience growing up in roughly the same era was the exact opposite, very few of the mom's worked.

Anecdotes are not really that useful in analyzing something like this.

That is why places like BLS and DoL collect tons of data:
https://www.dol.gov/agencies/wb/data...-youngestchild

It looks like the things are somewhere in the middle of those extremes.
Definitely way more moms in the work force today (in the 70% range) compared to in the 50% ish range in the 70s and 80s.
But, its not like every family was single income back then either

I wonder if it’s regional too. Even though some moms were working they didn’t bring in an equal wage. I was an oddity working married woman in the 70s and 80s, but I had my kids late.

[pj737]

Originally Posted by Arktikos

US home price up 5X, Oahu 8X.

Median single family house value (Honolulu) in 1985 was $158,600

Median single family house value (US average) in 1985 was $84,300

Current median single family house in Honolulu is $1,000,000 plus or minus.

Current median single family house in mainland is $460,000, give or take.

Mainland prices are up 5.5X from 1985

Honolulu prices are up 6.3X from 1985

This is tracking fairly closely. Considering we are unique in that we can't expand across more land here you would expect the median value delta to be much higher.

The big driver in higher housing cost is regulatory. Every year that goes by the government makes it more difficult to build a home. Safety/health/well-being, fire, earthquake, hurricane/storm, flooding, rising oceans, environmental requirements all drive costs up significantly. Every year there is new legislation added. It takes much longer to design and build a home today than in the past. Nimbyism is HUGE at increasing housing costs and that will only get worse over time. More recently, the era of massive tariffs has also driven material costs up markedly. Further increasing domestic production of building material will only drive costs up more. Reduction in immigration is driving costs up as cheap labor disappears with each passing day. Unions and apprenticeship programs are increasing costs dramatically. Insurance costs due to workmanship claims has been far outpacing inflation. And most importantly, people don't want to work in construction anymore. Each subsequent generation is lazier and physical work-averse than the prior generation. This is expected as reducing physical labor is synonymous with evolution. Therefore the skilled construction labor pool shrinks every year. This will drive up the cost for all skilled laborers in the future as demand will far outstrip supply of these workers. Technology is also not assisting home building. Yet it is driving the cost of many things down. Just not housing. Robots that can plumb or wire a home are possibly 50+ years out. The current 3D printed homes while cool are hilariously expensive and will never scale, at least for several decades at best. Robots just aren't good at working in new environments every time they start a job. It's a centralized technology and housing clearly is not. Remember the pre-fab, container home fad that was supposed to revolutionize home construction... Possibly the biggest expectation fail ever.

If people think housing is expensive now, give it another 10-15 years.

[Freckles212]

The following article may be of interest to some. https://www.civilbeat.org/2023/06/it...n-you-thought/ It comes from research at the University of Hawaii and not only reinforces the affordability problem, but shows how is it worse than many thought.

[pj737]

Originally Posted by Freckles212

The following article may be of interest to some. https://www.civilbeat.org/2023/06/it...n-you-thought/ It comes from research at the University of Hawaii and not only reinforces the affordability problem, but shows how is it worse than many thought.

Between 2000 and 2022, the median single-family home price increased by 260%, UHERO reported. That understated price appreciation since 2000 by 40% relative to the Repeat Sales Index, UHERO reported. Stated another way, UHERO said, “the median sales price shows a single-family home is currently 3.6 times as expensive as in 2000. The Repeat Sales Index shows prices are 4.7 times as expensive

Problem with the internet is that the information you can find is almost always grossly misleading and presented this way to gain more visibility via shock value.

There are no single family homes selling for 4.7X year 2000 prices assuming this is a true "repeat sale" of the same home. I would like someone to prove me wrong with just one single example.

I purchased my first condo in what is today's arguably most hip and happening neighborhood , Kakaako, in 1999 and today that same condo AFTER renovations is selling for approximately 2.5X 1999 prices. It's important to note that if you start the analysis at year 1990 the return is only ~2X since condo values were significantly higher in 1990 than they were in 1999. 2X over 33 years is quite frankly a horrible return by any metric. This is 2.1% annual returns. Imagine putting that same investment into stocks. Or bonds even. You'd have 10-50-fold++ more in returns.

Many don't know this but there are quite a few older fee simple condos that are selling for roughly the same prices they sold for in 1990. 33 years and ZERO gains. And thousands others that have appreciated at maybe 1-2% per year since 1990, at best.

Obviously the Japan bubble was a big influence and the popping of this bubble and other economic factors made homes historically incredibly cheap in 2000, the exact year many shock value publishers want to reference as the starting date for their "analysis". Fund managers use the same misleading charts to gloat their many X returns in equities. Anyone can claim amazing returns if they get to peg the starting point on their chart.

I am by no means saying housing is affordable here. It absolutely is not. But to use history to make an argument that housing is unaffordable today while it was always affordable before is 100% pure shibai. I think you can find incredible value in older condos today when compared to 10-20 years ago. And definitely 30-40 years ago.