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Hurricane Flossie and Direction of Real Estate Prices
During our last real estate down cycle from around 2006 to 2012, builders cut way back on new home construction and land purchases due to lack of demand. Most builders simply can not afford to sit on raw land.
During that period, new household formation and immigration created a huge pent-up demand for housing. Subsequently, builders have not been able to react quickly enough to meet the demand.
Given the fact that they must first secure the land, get all of the permits, and then build, it will probably take them 12 to 24 months to catch up with demand.
Because of the imbalance between supply and demand, prices will inevitably go higher. Affordability constraints, and rising interest rates will most likely result in prices rising at a modest rate.
Lenders have started relaxing loan standards. Recently, Stated Income Loans have returned to the market; however, you should not expect that we will return to the wild and wooly lending days of 2005 to 2006 where almost anyone could get a loan so long as they passed the breath test.
Have a wonderful week.
Mahalo Nui Loa,
Ken for The Smith Team
P.S. We dodged another bullet as Hurricane Flossie did not live up to its enormous hype….thank goodness! There was no major flooding on Maui, and the only significant damage I heard about was some downed trees, and a lightning strike which damaged one home in Kahului. Power was out in some areas for a few hours.