In the last real estate cycle, it was the high priced properties that led the way. In our current market environment, we agree with Mary Ellen Podmoliks’ conclusions that are well articulated in her article, “Distressed Properties and First-Time Home Buyers - The Recipe for Real Estate Recovery?”
Yes, it will be the first time home buyers and investors buying up foreclosures and other distressed properties that will ignite the spark leading to a recovery. We can’t predict exactly when that will happen on Maui, but it does appear to have begun in many areas around the country, so we shouldn’t be too far behind. Why?
Well, for starters, there are many more distressed properties in the low and middle end of the market, and these properties have dropped disproportionately more than properties in the high end. Over the next 12 months, we expect a convergence between all segments of the market, i.e. the low and middle end of the market will drop less while higher priced properties will probably experience even steeper declines until they eventually catch up with each other.
Add to this the tax credit incentive for first time home buyers, and historically low interest rates, and you have a recipe for recovery.
This, of course, does not mean that you can’t find great deals in the high end luxury market segment. On the contrary, there is often more room to negotiate for properties in the $1 million plus range. Our featured property this week is evidence of that with an over 50% drop from its original list price.
Let us know if you would you like a list of pre-foreclosures, short sales, and REO’s (Bank Owned Properties).
Have a wonderful week.
Mahalo Nui Loa,
The Smith Team
Note: The above was the introduction from our most recent Newsletter. Please sign up by going to our Website.
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