Luxury Real Estate

Courtesy of Michael Saunders & Company

Brett Arends has had it up to here with all the trash talk. “Enough with the doom and gloom about homeownership,” Arends, a real estate reporter for the Wall Street Journal, says in his latest column entitled “10 Reasons to Buy a Home.”

The housing market has seen troubled times. But when Time Magazine announced in a recent cover feature that owning a home “may no longer make economic sense,” Arends decided to draw the line against such rubbish. In his article, he chastises Time for blatantly contradicting a cover story it ran at the height of the boom. That story “Home Sweet Home” celebrated the real estate boom even as it cheerfully posed the question: “Will your house make you rich?”

Is it any wonder then why buyers are totally at sea about whether to purchase a home in today’s market even though all indicators say there’s rarely been a better moment in time?

Arends then proceeds to set the record straight with ten well-grounded reasons why owning a home is a very good thing. Here are his “Whys:”

1. You’ll get a great deal. Many buyers sped-up their purchases to take advantage of the first time home buyer tax credit, creating a temporary shortage of home buyers once the deadline passed. With new buyers steadily creeping back into the market, determined sellers are more than willing to come to terms.

2. Mortgages are cheap. 30-year fixed-rate loans bear the lowest interest rates in recorded history.

3. You’ll save on taxes. You can deduct your mortgage interest and real estate taxes from your itemized federal taxes. You’ll also get a tax break on capital gains when you sell. For many, these tax savings make owning a home much less expensive than renting.

4. It’ll be yours. You can have all the space and privacy you typically lack as an apartment dweller; and it will be all yours to improve as you please.

5. You’ll get a better place to live. Want a better home in a better neighborhood? You’ll probably have to buy it. Rentals like these are hard to find.

6. Home ownership is a hedge against inflation. Long-term home ownership tends to beat inflation by a couple percentage points each year.

7. It’s risk capital. When the economy rebounds, real estate prices will climb again; which will make you awfully glad you bought when you did.

8. It’s forced savings. Your monthly rent is deposited into someone else’s bank account. Your mortgage payment helps build your own wealth through home equity accrued over the long term.

9. There’s plenty to choose from. Inventories are declining. But there is still a good selection of homes at great prices.

10. Sooner or later supply and demand will balance out. With the population forecast to grow by 100 million over the next few decades, roughly 40 million newly-formed households will be looking for homes. In the shorter term, with “Baby Boomers” retiring en masse, Florida will see more than its fair share of newcomers.

For more than ten years, real estate expert Steve Harney has kept a running comparison of the return on investment that real estate enjoys versus other traditional forms of investing. That comparison, shown on the graph below, speaks for itself. Even with all its recent woes accounted for, on average $100 invested in the real estate market back on January 1, 2000 would be worth $143.40 as of June 30, 2010; compared with $90.10 for the Dow, $80.90 for the S&P and $53.60 for NASDAQ. If you are thinking about purchasing a home, don’t let negative or sensationalized headlines be your sole persuader. Even journalists who write many of the stories behind the headlines are rebelling against the idea that real estate is on its way out as the foundation of many Americans’ wealth. We’ve certainly had our ups and downs over the years, but that’s expected in every investment’s cycle. As Arends suggests, we are getting much closer to a sustained up cycle. Read as much as you can from the sources you trust. That way you’re most likely to make the right decision for you, and with confidence. Above all, don’t let trash talk rob you of one of the most opportune moments in real estate history.

By Cedric Choi

SEPTEMBER 2008 STATISTICS FOR SINGLE FAMILY RESIDENCES – HONOLULU, HAWAII
Honolulu Board of REALTORS’® Monthly Statistical Report for September 2008 (released October 1, 2008). Each month, the Honolulu Board of REALTORS® issues a statistical report analyzing residential real estate activity on the island of Oahu. In addition to the general island-wide statistics, following is information for select individual neighborhoods:

Waialae/Kahala – See page 8 of Monthly Statistical Report
The statistics for this month are significantly different from last month, it is amazing! Comparing September 2007 to September 2008, the median price for a home in 2008 was down 33.3% (the same comparison for August 2007 and August 2008 showed the median price was up 37.8%). For the year-to-date statistics for January through September of 2007 versus January through September 2008, the median price for the neighborhood was up 7%.

Diamond Head – See page 8 of Monthly Statistical Report
The statistics are not specific (as provided by the Honolulu Board of REALTORS®), since the Diamond Head area (a high-end neighborhood) is mixed into the Kapahulu area (a moderately priced neighborhood). For the Kapahulu-Diamond Head area, the median price decreased by 3.3% compared to the same month in 2007. For the year-to-date (January through September of 2007 compared to 2008), the median price decreased by 3.3%.

Kailua-Waimanalo – See page 8 of Monthly Statistical Report
September 2007 compared to September 2008 had a -14.1% increase in the median price. Comparing January through September 2007 and the same period in 2008 shows a decrease of 4.9% in the median price. 



Other Specific Neighborhoods – There is no substitute for market information from people who are qualified and who know your market. The best way to view a specific neighborhood is to have your agent prepare and review a Comparative Market Analysis with you. For example, the MLS service permits us to do searches within very discrete Oahu neighborhoods, including Kahala/Black Point, Diamond Head, Ala Moana/Kaka’ako, Waikiki/Gold Coast, Hawaii Kai/Portlock, Hawaii Loa Ridge, Kailua/Lanikai and the North Shore.

It has been our experience that the neighborhoods that we concentrate on are less volatile than the market as a whole, which is down about 10%. Part of that involves the worldwide demand for spectacular luxury properties in outstanding locations.

Relative to the overall Oahu market, according to Harvey Shapiro, the Research Economist for the Honolulu Board of REALTORS®, “It appears that the Oahu housing market is reacting to the economic crisis that has been affecting financial markets worldwide.”


Editor’s Note:
Cedric Choi is the Vice President and Administrative Manager of Choi International, a member of the Luxury Real Estate Board of Regents. As a practicing attorney for more than 25 years, Mr. Choi has principally concentrated in areas involving commercial matters. Very interesting blog entry. Every one I post on the Luxury Real Estate Blog seems completely distinct in both tone and voice from every other. You can see similarities and fun little patterns when you read one person’s blog entries over a period of time, but it’s also fun to get a breadth of styles and information from a bunch of different sources, as well. Be sure to visit www.ChoiRealty.com for more resources on buying a luxury home in Hawaii.

By Jason LeMoine

On January 23rd, EveryBlock launched with the hope of answering the age-old question, “What’s happening in my neighborhood?” Though initially serving New York City, Chicago, and San Francisco, EveryBlock is a promising newcomer to the game, and is feverishly working to expand its reach.

Essentially, EveryBlock aggregates news and other civic information along with “fun from across the Web.” This information, collected from various public and private sources, contains GIS (Geographic Information System) data, which makes it possible for users to tailor searches with incredible detail. Would you like to stay on top of building permits issued in your neighborhood? Monitor crime reports? See what people on your block are photographing? All of this and more is possible on EveryBlock, and you can even subscribe to an RSS feed of your search.

I highly recommend checking the site out and exploring for yourself. If you’re lucky enough to live in one of the three launch cities, feel free to let them know what you think. They’re very receptive and open to suggestions. If you live in another city, let them know you’re interested, and join me in eagerly anticipating EveryBlock’s inevitable expansion.


Editor’s Note:
Jason LeMoine is a Technical Account Manager with LuxuryRealEstate.com. He is responsible for many of the advanced features you find on www.LuxuryRealEstate.com, as well as the sites we’ve built for members. In the digital age, we rarely need to look far to find a flood of information, although it would be nice if that information were better-organized. EveryBlock is a strong step toward organizing some of the chaos of data from a variety of sources. I can’t wait to see where this trend goes!