Honolulu Condo Boom (Bloomberg Story)

[Matthew Schroeder]

For those interested in the Honolulu market and/or more generally locations with significant supply constraints, here is a recent story from Bloomberg.

Bloomberg notes that property values (condo prices) have almost tripled since 2000 to an all-time high.  Nice chart at top of article.  @bob bowling  @Andrey Y.

Honolulu Condo Boom - Bloomberg, April 22, 2015

[Amit M.]

ha, reading that Bloomberg article made me laugh :). Could of traded in Hawaii for San Francisco, especially wrt building anything here. While we don't have (yet) the burial sites, we have a unique collection of 60's hippies that (still) love communism, and hate tech, progress (no idea why they are called "progressive") and success (especially landlord and real estate success roils their blood :)  Add to that an extremely incompetent Bored of Stupidvisors which has a nack for passing local rent control legislation that gets ruled unconstitutional in superior court. Cross that with the usual (wealthy) nimbys that don't want ANY changes, and planning/building departments with layers of bureaucracy that would make Stalin proud, and you have the perfect storm of why we have a chronic housing shortage.  Sounds a lot like Hawaii.  

My strategy has been to maneuver with smaller projects, and work in up and coming neighborhoods before all the nimbys set in on it, and before it gets major national and international attention. When I invested in the Mission district 10 years ago it was ALOT easier getting things done!  No tech shuttles buses to protest.  No tenant evictions due to "tech money" to protest.  No Twitter, Zinga or Uber headquarters to protest.  No fancy new restaurants to protest (they change the "character" of da hood, man ;)  As a consequence, our "representative" supervisor has gone bat sh!t crazy and now wants a building moratorium on all new (market rate) condo projects! Plus to designate parts of the neighborhood as a historical Latino cultural zone.  (Frankly I wouldn't touch a development project in the Mission.)  But all that's OK with me.  I say, bring it.  See, I already made my money in the Mission when I brought a couple of buildings here10 years ago.  So now I'll just sit back and benefit from the nimby housing restrictions that plague our other desireable, high end neighborhoods.  Plus that Latino cultural designation is sure to make our commercial streets real precious too, freezing in amber what is there.  Already there are loads of tourist buses pouring in to visit the many murals, "authentic" Mexican cuisine, etc.  Man, I've enjoyed the unique vibe (and the modern changes too btw) of the Mission district for 20 years, and I never thought it would become so desireable and precious this fast!

I also agree with Bob that the doubling of housing values usually comes in a few years of aggressive appreciation, usually followed by a downward cycle or flatline.  But we also learn not to sweat it.  The 08-09 crash is a classic example.  What a recession we had, but SF housing prices already surpassed that last high in back 2013!  From an appreciation perspective it's like recession?  What recession?

Right now we are still continuing to soar, and I do wonder when that rubber band will get stretched too thin, and snap back a bit (1, 2 years out?)  But here is the thing, even if we go back to 2013 gains, I'm still doing extremely well.  And then in another few years, we will break records again.  And all the nimbys and "progressives", etc. will complain again.  It's like clockwork around here.