Are you wondering about the future of Hawaii’s economy? Will we see further contraction? What about our tourism, travel, entertainment, and recreational sectors? Real estate?
These questions were all top of mind during Hawaii’s CCIM/IRM Real Estate Forecast 2021 last week. If you want a detailed summary, you won’t be getting it here. I’m not an economist, and I’m not going to even try to attempt to summarize a two and one-half hour conference in this blog. What I will share, though, are my takeaways — in short form. Very short.
It’s the pandemic! Yep, it is still lingering and still causing headwinds. Especially for Hawaii. As you most assuredly know, Hawaii is a travel and leisure destination state. COVID-19 has impacted us more than just about any other state in the country. Nevada shares the distinct displeasure of being the other state, with Tennessee right behind us. For us, in order to get things rolling again, we need travel to open up and we need our tourists to come back. Though we saw the growth of passenger seats after the initial re-opening, the recent surge has set us back. What’s the answer — the vaccine! The rollout has been too slow and we need to do a better job of distribution. Much better.
It’s the pandemic! Sorry, but it’s true. I know that there are other underlying issues that impact the economy. Hawaii was already experiencing pre-COVID problems, for example, population loss. But, consumer behavior caused by the pandemic is what is currently (and what is mostly) stalling our economy. If people aren’t driving to town to work, they probably aren’t stopping at their favorite restaurant for dinner. They’re likely not visiting their favorite retail store either. What about those pre-work and post-work gym visits? Bottom line — working from home has big implications for restaurants, retail, and recreational activities, and not in a good way.
It’s the pandemic! Yep, job loss, business loss, and stay-at-home recommendations are impacting how we live and in very big ways. Did you know that we have more young adults living with their parents than ever before? Adults between the ages of 18-29 now living at home with their parents is a whopping 52% nationally! Wow! So, what’s that got to do with the economy? Well, without the formation of new households, there is no need for new furniture, new goods and services, home improvement, and new housing. You get the picture. If we want to see our economy strengthened, we need the formation of new households, but until people have jobs, the growth of new households will continue to wane.
Is There Any Good News?
I think so. For one, we now have the vaccine and it’s just a matter of time before the vast majority of people will be vaccinated. And, a lot of those same people want to travel. In fact, many are aching to travel — and to where? You guessed it — Hawaii. After all, we are still one of the most popular destination places on the planet. Granted, we may not have it together enough for a return of our visitors in the spring, but if we do things correctly and quickly, we can look forward to a better summer. And, even if the summer isn’t robust, the basic consensus is that we will still see a strong, robust recovery in 2022/2023. When you think about it, that’s not that long to wait.
So, while you are waiting for better days, seize the opportunities in front of you. If you own a multi-family dwelling or multiple investment properties, perhaps now is a good time to sell? Demand is high and you’ll avoid the possibility of further rent moratoriums or possible rent forgiveness programs. If you’re a buyer with job security, what are you waiting for? The interest rates will not stay this low forever. And, if you are thinking of selling, the inventory is still extremely tight and buyers are waiting in the wings.
My last takeaway is this: “In the midst of every crisis, lies great opportunity.” I didn’t say it, Albert Einstein did. And, he was a pretty smart guy. You may not have control over our current situation or the recovery ahead, but how you recover personally in and through this will depend a lot on the decisions you make today. So, seize the opportunities in front of you and call me if you need guidance for your real estate decisions.