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Yes, it is a special case. These are the "examples" many CDF members provide. Their special case examples are in no way indicative of the broader local market.
As for your statement about properties doubling or more since 2006, that is absolutely not true. Most properties have appreciated since 2006 but a 100%+ increase is extremely unlikely unless it went through a major renovation/rebuild OR the property was purchased far below market (see your example above). The typical Oahu property is worth about 20-30% more today than in 2006 (same property NO improvements). This data is supported by the Honolulu Board of Realtors and not by some cockamamie "examples".
I review my property tax assessment record. The assessment is divided into 2 parts: Land and Building. I will just use the land portion since that is a more accurate reflection of how the price of residential lot for SFD in urban core Honolulu has gone up over the years.
The earliest record C&C provides is 2001. In 2001, my land was valued at $197,800. In 2016, it is valued at $628,900. A 218% increase over 15 years -- outstanding performance in term of long term investment.
In 2006, the land was valued at $426,000. In 2016, it is valued at $628,900. 47% increase over a 10-year period.
IMO SFD in urban core Honolulu is a very good investment.
And for the total value (land + building), the increase is even more steep. In 2003, the total assessed value was $393,500. In 2016, it is assessed at $967,100. It is the same house without any further renovation.
I review my property tax assessment record. The assessment is divided into 2 parts: Land and Building. I will just use the land portion since that is a more accurate reflection of how the price of residential lot for SFD in urban core Honolulu has gone up over the years.
The earliest record C&C provides is 2001. In 2001, my land was valued at $197,800. In 2016, it is valued at $628,900. A 218% increase over 15 years -- outstanding performance in term of long term investment.
In 2006, the land was valued at $426,000. In 2016, it is valued at $628,900. 47% increase over a 10-year period.
IMO SFD in urban core Honolulu is a very good investment.
And for the total value (land + building), the increase is even more steep. In 2003, the total assessed value was $393,500. In 2016, it is assessed at $967,100. It is the same house without any further renovation.
City valuations are highly inaccurate. I have seen beach front property assessed at nearly $4M and sell for under $2M. And $300K condos transacting at assessed valuations of $175K. It isn't uncommon to see older homes have structure valuations that are under $50K, when in reality they are still worth well over $200K or more.
As for your land/building split explanation, this too is really not useful information. Look at condos for example... the land (as assessed by the city) may be worth only $30K for an old 500 SF one bedroom condo in town in the year 2000; the valuation of the building at that same time is $100K (combined land and building assessed value of $130K). But in 2016 the land is worth a mere $45K and the building $250K (combined assessed value of $295K). So what the city is telling you is that over 16 years, the building has appreciated (while actually aging and degrading the entire time) 2.5 fold and the land only appreciated a mere 50%? Clearly, that is absurd. The city's breakdown of land vs building is 100% useless and always has been.
Moreover, city valuation of property is highly politically and fiscally motivated. They have been known to let a small number of transactions (value) influence a much broader area of housing despite having few similarities that actually impact housing market valuations. And there is always going to be some influence on property assessed values based on the city's needs to fill its coffers since increasing tax RATES is always met with massive public opposition.
But I do agree 100% with you that the best long term investment on the island (by far) is LAND in the urban core. The Chinese are buying swaths of parcels in the urban core (in cash) and they aren't buying to flip. They are buying these lots and building new homes on them so they can live in them and/or generate stable long term cash flow.
City valuations are highly inaccurate. I have seen beach front property assessed at nearly $4M and sell for under $2M. And $300K condos transacting at assessed valuations of $175K. It isn't uncommon to see older homes have structure valuations that are under $50K, when in reality they are still worth well over $200K or more.
As for your land/building split explanation, this too is really not useful information. Look at condos for example... the land (as assessed by the city) may be worth only $30K for an old 500 SF one bedroom condo in town in the year 2000; the valuation of the building at that same time is $100K (combined land and building assessed value of $130K). But in 2016 the land is worth a mere $45K and the building $250K (combined assessed value of $295K). So what the city is telling you is that over 16 years, the building has appreciated (while actually aging and degrading the entire time) 2.5 fold and the land only appreciated a mere 50%? Clearly, that is absurd. The city's breakdown of land vs building is 100% useless and always has been.
Moreover, city valuation of property is highly politically and fiscally motivated. They have been known to let a small number of transactions (value) influence a much broader area of housing despite having few similarities that actually impact housing market valuations. And there is always going to be some influence on property assessed values based on the city's needs to fill its coffers since increasing tax RATES is always met with massive public opposition.
But I do agree 100% with you that the best long term investment on the island (by far) is LAND in the urban core. The Chinese are buying swaths of parcels in the urban core (in cash) and they aren't buying to flip. They are buying these lots and building new homes on them so they can live in them and/or generate stable long term cash flow.
Usually the C&C assessment for condo is over-valued while for SFD is under-valued. I paid almost twice of what C&C assessed when I bought my property in 2001. And I was not the only one. There were over two dozen buyers willing to pay that price. I had to increase my offer by $7K over the asking price.
I think only SFD lot in urban core Honolulu is good investment.
Usually the C&C assessment for condo is over-valued while for SFD is under-valued. I paid almost twice of what C&C assessed when I bought my property in 2001. And I was not the only one. There were over two dozen buyers willing to pay that price. I had to increase my offer by $7K over the asking price.
I think only SFD lot in urban core Honolulu is good investment.
Reservation about condo. The reason: market up, HOA fee up, market down, HOA fee still up. Plus Special Assessment Fee. Many condos are being assessed even though the building is quite new.
People need to consider that real estate is not homogeneous. Location, location, location. For condos value is building specific and location specific within a building.
Another factor with condos is the amount of amenities and the amount of value they add or not.
There are definite economies of scale. When I need a new roof I only pay one twentieth. Now it may cost slightly more for the height.
As an investor you want to buy properties that will likely increase most in value. Too many people buy based on a perceived "deal" and lose out on the doubling and tripling of values.
the market mechanics accounts for location in pricing. a lower priced aniani street condo in waipahu may be a better value than an oceanfront waikiki condo........................lol. its true.
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