Yeah, I hate October. Not only do I have to prepare a bunch of tax returns for procrastinating businesses, but now I have to prepare their 3rd quarter reports by the end of the month. What also irritates me… I think everyone is concerned about the recession hitting the islands, and they want to raise their prices while asking everyone else for discounts. Wow, they’re asking for too much.
Anyway, I’m starting to see the slow down here in Hawaii, and usually I see these economic patterns way ahead of everyone else. Its a nasty domino effect, and if you understand the chain of these businesses, then you can calculate what area in society will get hit next.
For example, I ordered a couple of car parts, and its taking forever to get here. Apparently the docks are slow, and shipments seem to be too light to be profitable, so they wait until they get a certain capacity. Speaking of cars, the car dealers here looked to be way over-supplied. What concerns me most in Hawaii is the construction industry, which I have many indirect connections into… the word from the top builders is that in about a year and half, the unions are going to get hit with layoffs, as the last of the scheduled projects are completed. I actually think the timeframe might be shorter, since what usually happens are projects get cut even before they’re done, and builders seek to recover at least the cost of their expense, afraid that they’ll get nothing the longer they wait. Anyway, apply laws of supply and demand, I expect Hawaii home prices to drop significantly in 2009-2010, as we have managed to over supply our state with a bunch of homes in our latest construction boom, and now credit is tight. Ooops. That’s a lot of empty houses.
The only big Hawaii project we have left is our mass-transit system that’s been in the drawings for quite some time. I’ll keep you posted.
These recession periods are tough to get through. This happened to Hawaii in the early 90s when I was still in grade school, so I don’t quite remember it or didn’t care (missed those days). What I do know is that people still do what they gotta do to get through the day. People still buy stuff, sell stuff, eat stuff, play with stuff. It will be interesting to see how our local community reacts to our coming economic woes, and see how they survive it.
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Gio, is it true the last time you had a recession everyone downsized their surf-boards?
Early 90’s housing prices dropped after the Japanese had bid everything up and their bubble economy went pop. They were buying everything at top dollar. Housing prices in Hawaii are still nutz! Old plantation style houses for $500,000+. Absolutely insane. I can never understand why people move to Hawaii. I fully understand why they leave.
Side note, from Kirk, LPHI 52-week high. Fascinating business of re-selling life insurance. I need to do some homework but 52-week high in this bear market environment…LPHI gets a second look…Must be some kind of niche.
Russ: you know a lot about Hawaii. I think housing prices drop another 20% from here in the next 2-3 years. Those plantation houses for 500k are ludicrous indeed. The only ones who can afford a big house here are the Care Homes, which is a niche in itself, and a reason why I am bullish on stocks like AFAM for the long run. I can spot a trend from a mile away.