Kona Kohala Blog

I had a discussion today with a guy who had purchased a lot in Waikoloa about two years ago and found out yesterday that a similar lot across the street was for sale for nearly $30,000 less.  He was kicking himself for being stupid.

I explained to him that you can not time a market.  I asked if he still owned the lot, yes.  Okay, then you haven't lost a cent.  I asked if had the money at the time so he could buy the lot and not run short elsewhere in his budget, yes.  Again, that's the wisest buying criteria you can have, nothing stupid there.  I ask if he still planned to build, yes.  He's still going to realize his dream.

You can always look around in a declining market and say, "Wow, I could have gotten that for less."  True but the reverse is also true.  I closed on a lot today for some clients for $281,000.  A guy living near the lot told them he was trying to get another nearby lot for $249,000 and my clients asked if they'd over paid.  I pointed out that the other guy was trying to get the lot for that price which he didn't do.  I pointed out that lots just like their's, two years ago, were selling for over $400,000.

You can't time the market place.  Another example is today, I believe that while we may have a double dip in the real estate market, this phase has already hit bottom and is starting up again.  So far we only see that in North Kona Single Family Residences (SFR's).  We are seeing a leveling off in the other districts and remember, those figures are typically 45 to 75 days old, back when the property went into escrow.

You don't realize a bottom has passed or a peak has passed until a couple of months afterwards.  What's most important is that when you buy you are fully able to do so without hurting your overall financial picture.  It's important that you plan for the purchase and you have the money put away for it.  It's also important that the timing works for you.  So, if you have the money, the purchase fits into your budget and the time is right for you then proceed.  Historically, in the long run real estate has always gone up in price.  There's no reason not to believe that will continue.  Look at the numbers of people entering the world everyday, they will all need a place to live.  We've had over 13,000 people move to west Hawaii in the last decade, over 1,300 per year.  They all need homes.  Many of them are retirees who are buying their retirement home, many are first timers hoping to own their first piece of property.  Many are also investors knowing Hawaii, especially west Hawaii, Kailua Kona, Waikoloa and the resorts in Mauna Lani and Mauna Kea are desirable places to live.

There is no bad time to buy but there are some that are better than others.  Right now is a great time.  You may find the value of your investment decline for a while after you buy but unless you're thinking of flipping the property, it's a long term investment for you.  That means 5 to 7 years down the road, when you're thinking of selling, there's a very good chance the market will have recovered and you get a nice return on the home you lived in all those years.