Every time I travel for business, one of my favorite activities is to attend a broker’s tour to get a feel for the local real estate market. The activity is free and enables me to talk with people who have intimate knowledge of the local economy. All indicators in Oahu show there’s weakness in the luxury market, defined by homes priced over $2M. The pattern is the same in SF and NYC, which makes me worry since weakness tends to start at the top and work its way down.
For kicks, I visited one property in Kahala, my favorite neighborhood in Oahu, with an asking price of $6.7M. It has 9,000 square feet of living space on a 15,000 square foot lot. Every single room felt like I was in a Las Vegas casino or on a cruise ship. It felt gaudy. When I asked where the sellers were going, the agent told me the owners finally bought a beach front property across the street for $20M!
Eleven years ago they had wanted a beach front home, but “settled” for this $6.7M house instead. Last year they finally bought their dream home and have spent the past year remodeling.
Here’s the kicker: the husband is turning 81 this year! He’s a real estate developer from the San Francisco Bay Area.
Waiting until you’re 80 to buy a dream home is perplexing. Perhaps when he was 70 he simply couldn’t afford $15 – $20M? Alternatively, maybe some time in his mid-70s he realized that he had way more money than he’ll ever need. He could die tomorrow, so why not ball up and buy the property he’s always wanted?