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My husband and I work from home selling via the internet. We make a good living at it so that is the only reason why we think we could really make it just fine on Maui. If we had to look for jobs, I really don't think we would even be considering it.
I really think we are going to see more and more of this. The tech industry pays well, and while remote work is nice, it's also not that common in the end. However the Internet has enabled many different so-called lifestyle businesses, from SEO, marketing, content, direct selling (etsy, photography), consulting (programming, design, websites), to mobile apps and indie games. Some are part-time jobs, some pay for a whole family to live in Hawaii. I have seen many more threads on this forum where one or both partners makes a living this way.
What I think this means is that housing prices will continue to go up. As more people with more income see Hawaii as a viable place to move, it will drive up prices as people with money and Internet revenue out bid those dependent on local jobs.
What I think this means is that housing prices will continue to go up. As more people with more income see Hawaii as a viable place to move, it will drive up prices as people with money and Internet revenue out bid those dependent on local jobs.
Well, "driving up prices" is probably a good thing for those who live here and own a home. Most of the local population lately is really feeling good about housing prices going so high lately.
Hawaii has a net migration issue - more people leave than come to Hawaii. Population growth is driven by more births than deaths.
I really think we are going to see more and more of this. The tech industry pays well, and while remote work is nice, it's also not that common in the end. However the Internet has enabled many different so-called lifestyle businesses, from SEO, marketing, content, direct selling (etsy, photography), consulting (programming, design, websites), to mobile apps and indie games. Some are part-time jobs, some pay for a whole family to live in Hawaii. I have seen many more threads on this forum where one or both partners makes a living this way.
What I think this means is that housing prices will continue to go up. As more people with more income see Hawaii as a viable place to move, it will drive up prices as people with money and Internet revenue out bid those dependent on local jobs.
Like i said before give it 10 to 20years and the only people who will have the privilege to live in Hawai'i will be the rich unless you live multi generational ohana under one roof.
Well, "driving up prices" is probably a good thing for those who live here and own a home. Most of the local population lately is really feeling good about housing prices going so high lately.
Hawaii has a net migration issue - more people leave than come to Hawaii. Population growth is driven by more births than deaths.
Its funny you brought these things up, did you know Hawaii is in the bottom five for home ownership with 56.9 percent of adults living in a home they own. The home ownership situation is only worse in: Washington, D.C. (41.5 percent), New York State (53.7 percent), California (54.0 percent), and Nevada (54.9 percent). So i guess 1 out of 2 benefits.
Its funny you brought these things up, did you know Hawaii is in the bottom five for home ownership with 56.9 percent of adults living in a home they own. The home ownership situation is only worse in: Washington, D.C. (41.5 percent), New York State (53.7 percent), California (54.0 percent), and Nevada (54.9 percent). So i guess 1 out of 2 benefits
You may want to check your math - last I checked, 56.9% is a majority of the population, not 1 out 2.
Well, "driving up prices" is probably a good thing for those who live here and own a home. Most of the local population lately is really feeling good about housing prices going so high lately.
I don't see how this is true for the basic homeowner. The rising tide lifts all boats, so you can't "cash out" of the game because you have to live somewhere. You can sell for more, but if you want to still live in Hawaii, you have to buy or rent somewhere else, and those both cost more now.
Maybe you can leverage some disparities in the market, such as moving to a less desirable neighborhood or a cheaper island, and so you'll get some cash out of the game, but that's only if you got lucky that the property you had was one that increased more (people you bought from in the less desirable neighborhood didn't get as good a return as you did).
Or maybe you downsize, or even build an ohana unit and CPR your property. But however you look at it, you can't have the bigger house/land and the money too. I suppose the rising market gives more people a chance at more cash if they do downsize, so that may be what drives people to do it (it also drives development and densification).
Otherwise, the only people I see who really enjoy the real-estate bubbles are the speculators who are able to buy low in the downturns and flip the houses when the market peaks. But they only sell their investment properties, I doubt that when prices are going up they sell the house they live in.
But when the real-estate prices rise so much faster than inflation, it really is a disaster for the young, local families trying to buy their first home. People with local income can't buy into that kind of market. They end up living with family, or contributing to the net emmigration from Hawaii.
I don't see how this is true for the basic homeowner. The rising tide lifts all boats, so you can't "cash out" of the game because you have to live somewhere. You can sell for more, but if you want to still live in Hawaii, you have to buy or rent somewhere else, and those both cost more now.
Maybe you can leverage some disparities in the market, such as moving to a less desirable neighborhood or a cheaper island, and so you'll get some cash out of the game, but that's only if you got lucky that the property you had was one that increased more (people you bought from in the less desirable neighborhood didn't get as good a return as you did).
Or maybe you downsize, or even build an ohana unit and CPR your property. But however you look at it, you can't have the bigger house/land and the money too. I suppose the rising market gives more people a chance at more cash if they do downsize, so that may be what drives people to do it (it also drives development and densification).
Otherwise, the only people I see who really enjoy the real-estate bubbles are the speculators who are able to buy low in the downturns and flip the houses when the market peaks. But they only sell their investment properties, I doubt that when prices are going up they sell the house they live in.
But when the real-estate prices rise so much faster than inflation, it really is a disaster for the young, local families trying to buy their first home. People with local income can't buy into that kind of market. They end up living with family, or contributing to the net emmigration from Hawaii.
Well - a couple of things.
To leverage the value of your home - you don't have to move anywhere. You can always take equity out - and if your house keeps rising in price, the easier it is to qualify.
What I see happening in Kailua is a lot of long term homeowners temporarily moving out, tearing down the circa 1960's tiny house on a small lot, and rebuilding a newer and larger home - they can do that because the land value is so high so getting the construction loan isn't terribly difficult.
Another way to leverage your home if you choose to move - rent it. With rising prices come rising rents. That provides an income stream to allow you to move to a nicer neighborhood and still maintain the payment you had before.
Older residents have reverse mortgage options - the more value of your home, the higher your payment.
Young, local families, have the same challenges buying a home here as they do in NYC, SF, etc. So, that isn't really unique to Hawaii. On Oahu, plenty of cheaper starter housing on the West Side or Ewa Plain. Plenty of cheap condos - the median is $350K or so, so it isn't like no options exist.
Quite frankly, out of the last 20 interns I had in our group, at least 15 moved to mainland after graduation. None cited the high cost of Hawaii. They want to work in Silicon Valley, or in LA, Phoenix - they want to go into marketing, advertising - whatever, where those positions aren't offered in Hawaii.
Lastly, this notion of remote workers swarming to Hawaii is at best a niche market, at least in my opinion. You have to a job that lets you work remotely and then you have to company that lets that remote work occur in Hawaii, and then you have to be ok with the time zone changes. I see remote workers being clawed back into the office more and more and I think the peak has already occurred.
To leverage the value of your home - you don't have to move anywhere. You can always take equity out - and if your house keeps rising in price, the easier it is to qualify.
Borrowed money is risky money. Of course you can take out equity if you need cash for something, but you also have to keep paying it back, with interest. I assume that's why we see a lot of new trucks around. But that's also consumerism, it doesn't help the local family save or build wealth. Unless they took 100K out to use as a down-payment on another property, and were able to flip it and get cash out, but that risky, and do you really expect to cover your interest (say 6%) on the loan and the fees for 2 real-estate transactions (6% of the property value, so 24K on a 400K property).
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Originally Posted by whtviper1
What I see happening in Kailua is a lot of long term homeowners temporarily moving out, tearing down the circa 1960's tiny house on a small lot, and rebuilding a newer and larger home - they can do that because the land value is so high so getting the construction loan isn't terribly difficult.
Yeah, I also mentioned the CPR'ing and building/selling the ohana unit. Now they have a bigger house (with a loan again) on a tiny lot. The neighborhood is more dense, more cars, less trees, less gardens, less views. More and more like California and less and less like Hawaii.
Quote:
Originally Posted by whtviper1
Another way to leverage your home if you choose to move - rent it. With rising prices come rising rents. That provides an income stream to allow you to move to a nicer neighborhood and still maintain the payment you had before.
That works if you bought in early enough one or two cycles ago, so that that your mortgage is low enough to be covered by rent. Fortunately for wanna-be landlords, rents are going up right now (not so fortunate for the huge COL increase of the renting-class--text-book case of how wealth is squeezed out of the working class, accumulated by the capital-owning class, and then used to squeeze more wealth/rent out of the workers). Note that rents don't always go up with the real-estate price, for example during the last high cycle (2002-2006) they didn't go up nearly as much as purchase prices (so this scenario wouldn't work back then).
But let's say you manage to rent out your current house and cover the mortgage (with a bit of padding for maintenance and vacancies). Now you are in the position of every buyer in the market: prices are high, you don't get as much for your money, and you need a good salary because the mortgage is going to be much higher than the last. Also, in the 6 months it took you to move out of your house and rent it out, prices have gone up and now buyers are bidding up asking prices on the houses you want (the ones with good value). My point is mainlanders with mainland tech salaries have less trouble with this, thus driving the housing market out of reach for many in the local economy.
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Originally Posted by whtviper1
Older residents have reverse mortgage options - the more value of your home, the higher your payment.
Yes, you can cash out as you die. You also give away value of your net worth that would be inherited by your children. I know some old people don't want to move, but downsizing would be a much better option to preserve your net worth. Or if kids can do it, have them take care of the parents and the property so they can inherit it.
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Originally Posted by whtviper1
Young, local families, have the same challenges buying a home here as they do in NYC, SF, etc. So, that isn't really unique to Hawaii. On Oahu, plenty of cheaper starter housing on the West Side or Ewa Plain. Plenty of cheap condos - the median is $350K or so, so it isn't like no options exist.
$350K cheaply constructed condo with monthly fees and a 2hr commute, sounds great! Great for the developer, at least, who is going to offload these sub-par units for a sweet payout. That's also part of my point: the real-estate bubbles distort "normal" housing patterns, ending up with people in undesirable situations.
We've always said Hawaii has the same costs as big cities on the mainland--no disagreement there. But we've always said that what's unique is the low salaries. What we're talking about here, is exactly what makes Hawaii unique: it is desireable (like SF nowadays), it is very limited land-wise (much like SF-proper, but not like the huge Bay Area), but what Hawaii has is that extra bit of desireability and "proximity" to a huge number of wealthy transplants. This is going to skew the local r-e market, and it will be undesireable for the less-relatively-wealthy locals.
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Originally Posted by whtviper1
Quite frankly, out of the last 20 interns I had in our group, at least 15 moved to mainland after graduation. None cited the high cost of Hawaii. They want to work in Silicon Valley, or in LA, Phoenix - they want to go into marketing, advertising - whatever, where those positions aren't offered in Hawaii.
But your interns are university students, probably business or tech majors, and probably the top 5% at that (you're one of the big companies in HI, you get to pick the best). They will go on to mainland jobs to get lots of experience and some low percentage will return to high-paying work in HI companies one day. I'm really talking about the working class. As much as we'd all like an educated and high-performing working class, that just doesn't happen when your economy relies on tourism service jobs. And also Hawaii needs car mechanics, hair dressers, DMV workers, medical "technicians," school bus drivers, motor pool managers, restaurant and shop owners, and they have to live here. And as part of the larger community, I don't like to see it when these people have no chance to live a simple life because they're always struggling with huge rent/high mortgage payments, or inconvenient developments with long commutes, or both. We talk often about multi-generational homes, but when every nook and cranny of a property is turned into a cramped appartment for the daughter and her boyfriend to live in with a baby, and grandma spends her time babysitting so her daughter can work, it's not the ideal that people are thinking of.
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Originally Posted by whtviper1
Lastly, this notion of remote workers swarming to Hawaii is at best a niche market, at least in my opinion. You have to a job that lets you work remotely and then you have to company that lets that remote work occur in Hawaii, and then you have to be ok with the time zone changes. I see remote workers being clawed back into the office more and more and I think the peak has already occurred.
And I was pointing that out myself: remote work is actually on the decline. It's not practical, it's not efficient, and companies are seeing that. It really only works for a very small number of job descriptions and even then, the situation has to lend itself to remote work.
But what is rising is Internet work: people who can and do make a living as independent entrepreneurs thanks to the flow of information and products enabled by pervasive internet. A few app developers make 10K per month with their apps. Those SEO and marketing people were making 6 to 7 figures when things go right. Somebody tweeting and writing a popular blog can make high-5/low-6 figures off of the advertising. I could write a book about Kaua'i and make 10-20K extra per year. And all of these are geography-independent, which means Hawaii is at the top of their short list. It doesn't have to be tech either. Landlords in expensive cities who have amassed enough properties can get a manager and live anywhere off of their rentals.
Back to my point: consider a working class family, 2 bread-winners in 40-50K jobs, 550K house they bought for 350K 10 years ago, 2 kids in public schools, car loans on the minivan for mom & Tundra for dad to go fishing. Yeah, their house is worth 600K in a few years, but they can't do squat about it. OK, they might take out a 40K home-improvement loan and redo the kitchen and enclose the carport as a family room. Now their house is worth 650K and they're paying mortgage plus loan. Now what? Nothing, they just live there, consuming and saving only a little.
By the time their kids are grown, their house is worth maybe 800K. Let's say their kids grow up just like them, but with inflation, salaries are now 55-65K. How are these young adults going to buy that starter house? That's right, they're going to move to Barber's point, and buy a starter home in a new development (2-story condo in a duplex with postage-stamp yard, HOA fees, and 2 hr commute with gas at $6/gal) for 400K (450K if near a rail station)--just like in the sprawling Bay Area I might add. And now Barber's Point is all built up. When their parents are old, the children "move up" to their old house, which they eventually inherit (unless the parents did a reverse mortgage, and then poof, it's gone). It's probably worth 1Million by now, so they could finally cash out and stay in their cramped and noisy duplex (but that neighborhood is getting rundown, no good neighbors moving in), or sell both and move into something just a little better. So it takes the labor of 2 generations, with no major illnesses, to move up what used to be considered normal once or twice within one generation.
My point is, the real-estate bubbles (any time real-estate goes up so fast, you know it's not sustainable and will burst sooner or later) only benefit those who have investment houses before the bubble starts. That means people who have both the cash and investment-savvy to buy in. There are some locals like that. Even in my neighborhood, a few people have vacant lots next to their houses that they (or their parents) bought 30-40 years ago. Every time the market rises, a few of those get chopped into tiny CPRs (max density) and built up. But a lot of locals are working class, without much investment knowledge, and they can't benefit from the rise in real-estate, and it wipes out the idea of moving up each generation. In the meantime, it is mostly outsiders (both developers and single families) with lots of cash that swoop in and reap the benefits of the rising market.
It's just an observation of mine, I don't think the situation is good for Hawaii's people and economy, but I have no realistic ideas or solutions.
It's just an observation of mine, I don't think the situation is good for Hawaii's people and economy, but I have no realistic ideas or solutions.
We will have to agree to disagree - I don't think it is as complicated as you made it out, just my opinion. I don't believe it is a birthright to be entitiled to inexpensive housing just because you are born somewhere. We all have personal responsibility to make something of ourselves.
I also noticed a mistake in my other post which you quoted - I said people in Kailua are tearing down the tiny houses on small lots - I meant to say, the are tearing down the tiny house on the large lots.
But let me get to the core of my disagreement, especially the statement "I don't think the situation is good for Hawaii's people and economy". I feel really confident, that an economy in Hawaii of record tourism and low unemployment (which has a byproduct of rising housing prices - more people working - more people buying where demand is higher than supply) is far better than an economy of 2008 with low tourism, high unemployment, falling housing prices - that is when you really have a struggle, a lot of people forget that not that long ago, it was really bleak around here, certainly more bleak than today.
If the mechanics, bricklayers, and other blue collar workers are being pushed out by the economy, it all works itself out in the end, then the demand for those resources become higher, and with higher demand brings higher compensation.
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