HAWAII ? Real Estate in the Current Housing Market
Posted by Nick Niesen on November 8th, 2010
Paradise Deferred - S. Elliott
The median value of single-family owned and occupied housing in Hawaii is more than twice the national average.
As a result of Wall Street?s current cautious approach to real estate, Hawaii is suffering a disproportionate share of the fallout. Current reluctance to buy even well rated loans in the AAA range has had a profound short-term impact on the jumbo loan market. Jumbo loans, those exceeding $400,000, have skyrocketed by more than a full point, leaving many buyers unable or unwilling to take the plunge.
Hawaii, with its highly valued real estate, is in the middle of this quagmire. Lenders hoping that the higher premiums will jump start Wall Street, are concerned that the failure of this strategy will result in more than just a brief financial hiccup. Disturbing new trends are reflected in lenders escalating rates on jumbo loans to a point and a half above conforming loans. Historically, the premium spread is about a half to three-quarters of a point.
This new disparity is setting off alarm bells across the country, but nowhere more than in Hawaii, where it is fueling fears that a large number of motivated buyers and sellers will be crippled by the inflated price of these loans.
Because of many recent loan defaults, banks are stockpiling cash as a precaution against further losses from bad investments; they have become much more cautious about how and to whom they lend. Traditionally this has been called a "credit squeeze", but the fear is that, without an end in sight, we are headed toward a shortage of liquidity, a situation in which consumers have inadequate access to loans.
The prospect of a shortage of liquidity has far-reaching, global ramifications, potentially slowing economic growth on a global scale. For Hawaii, this could be devastating.
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About the AuthorNick Niesen
Joined: April 29th, 2015
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