The headline in this morning’s Honolulu Advertiser is another indication that the real estate market has changed. As I mentioned on August 13, the local mortgage lending market has been affected by the national mortgage crisis.
Perceptions alone can be enough to change a market
It’s more the perception of a mortgage crisis than anything else that is driving the changes in the local housing market. Subprime loans make up between 10 and 19 percent of the local market, compared to 20 percent of the national market. Interest rates on jumbo mortages haven’t changed dramatically either, according to the Advertiser. If sellers drop their prices, there may be enough interested, qualified buyers to support the historical sales volume.
Many small local lenders have shut their doors over the last few weeks, and some buyers are being asked for much larger down payments. In Hawaii, a typical down payment is 10 to 20 percent of the selling price, and that’s a problem:
Cash requirements, while perhaps relatively small in some Mainland markets, are amplified in Hawai’i where O’ahu’s median single-family home price in the second quarter was $665,000 — fourth highest in the nation. O’ahu’s median condo price was $328,000, topping the $223,800 national single-family home median price.
Borrowers with poor credit, and any borrower who wants to make a low down payment, are turning to local banks for mortgages, as more of the national mortgage firms scale back their operations.
Housing costs are a major factor when recruiting qualified IT professionals
Hawaii doesn’t produce enough skilled workers to satisfy the state’s needs. When companies, organizations and local government can’t outsource an IT position or service to the mainland, recruiters have to find prospects who can afford to live here. In the last month, that part of the applicant search become much more difficult. There are plenty of qualified IT professionals who could have moved to Hawaii earlier in 2007, but who cannot afford a mortgage here now. Rental prices and occupancy rates are still high in Hawaii, also.
It’s no wonder that Google is building new data centers in North Carolina and Iowa. The housing costs are reasonable in those states, and there’s plenty of available electricity and bandwidth to support these facilities.
Tags: data-center, economy, Google, government, Hawaii, Honolulu, housing, Iowa, mortgage, North-Carolina, USA
