Maui Blog
Maui Real Estate-2008 Outlook
and the Implications on Buyers and Sellers of Maui Real Estate
Goldman Sachs (GS) recently published its Issues and Outlook report for 2008. Its principal author, Abby Joseph Cohen is considered one of the most gifted predictive economists on Wall Street. Both the abbreviated and full version ("2008 Global Thems & Risks") of their report can be found on our website in Market-Market Statistics-State/National Reports section. Although GS predicts a modest 1.8% GDP growth for 2008 compared to 2.1% in 2007, they consider a recession unlikely. After a volatile first half of 2008, GS sees strong appreciation in stocks and other equities and predicts an S&P 500 at 1675 by the end of 2008 fueled by productivity gains, corporate liquidity, exports aided by a weak dollar and a friendly Federal Reserve. Although GS expects equities (stocks, etc.) to significantly outperform fixed rate securities (bonds, etc.) in 2008, they also expect lower-quality bonds to outperform high-quality bonds due to the markets overreaction to the subprime problems.
You will notice that GS does not rule out a recession, nor do they rule out more negative outcomes such as a downturn in the equities market, they believe these more negative outcomes are less likely to occur. Given Abbey Joseph Cohen’s stellar track record, such as her 2007 prediction, and Goldman Sach’s “best of class” ability to predict market outcomes such as selling their subprime portfolio before the subprime problems surfaced in mid-2007, we give their viewpoint significantly more weight than other experts.
Although the Maui real estate market is somewhat protected, our market here is unquestionably affected by the overall US economy. Since buyers and sellers or Maui real estate generally are among the most affluent cross-section of the economy, the impact of negative general US economic trends on our Maui real estate market are usually not as immediate or severe. Maui is currently in the middle of a market softening phase with increasing inventories and downward price adjustments rising. If we were to apply GS’s prediction for 2008 what we could expect to see is the general trend for the Maui real estate market to continue to deteriorate during the first part of 2008, and “bottoming out” during mid-2008 and then show signs of stabilizing the last half of 2008.
So what does this mean for buyers and sellers? For sellers in means that if you have property that you need to sell, you should price it aggressively to avoid continuing to chase the market down. For buyers it is a time to shop and bargain for good prices. But don’t wait too long to start, Maui’s real estate market is relatively small and it often takes several months to find the right property. We would encourage buyers to start looking now and set a goal to purchase property within the next 6 to 10 months.
Please contact us if we can be of assistance.
Bob & Marty Sutor
Saturday, January 5, 2008
