PACIFIC BUSINESS NEWS
Earlier this month, PBN convened six real estate experts to discuss one of Oahu's largest industries at a time of disruption. Interest rates are rising for the first time since the financial crisis. New technology is changing advertising strategies, corporate culture and the way homes are bought and sold. All while Hawaii continues to struggle to keep up with demand for housing.
di Marie Imanaka, branch manager of Prime Lending; Matt Beall, CEO of Hawaii Life Real Estate Brokers; James Chan, partner and Realtor for Locations; Myron Kiriu, CEO of Better Homes and Gardens Real Estate Advantage Realty; Bill Pisetsky, senior vice president of sales and marketing for Howard Hughes; and Tim O,Leary, sales manager for Homebridge Financial Services.
THE I WORD Oahu's lack of inventory continues to plague all residents and has been felt by Realtors, who note that an increasing number of bid-ups and rising prices caused by diminishing supply reflect the demand for more housing. "It is a hard place for a developer in this town," Tim O'Leary said. "There is plenty of land on Oahu but the Land Use Commission could consider changing some of the zon ing laws because we are really fall ing behind." Matt Beall noted that Hawaii's slow permitting process continues
to be a challenge, and a lack of devel opment exacerbates the imbalance of supply and demand in Hawaii. "This problem is statewide, and while there is a lot involved that a Realtor may not have anything to do with, it definitely affects us and is felt by everyone," Beall said. "The more efficient and sophisticated we as a state can get at dealing with it, the better." While the panelists noted that a bargain on Oahu may be hard to find, Myron Kiriu suggested the areas in between West Oahu and the CONTINUED ON PAGE 14
Story by Katie Morar 1otos by ina Yuen
PACIFIC BUSINESS NEWS
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urban core are up-and-corning. “Ho’ olulu core is ways going to be busy, and I can~t believe wha is going on out in West Oahu, What is between those two is going to become more valuable, such as Aiea,” Kirlu said. “Before you didn’t really thin of it that way, out now• with two urban Gores developing and with business in both areas, it is going to be a very desirable place to live.” FIN DING SUCCESS With the amount of action ®ahu’s real estate industry is experiencing, James Chan said it Is a good e to become a Realtor, though only for those looking to wor full time. “There is a lot of business, but there are also a lot of Realtors, so it is cut throat. If you are a part timer, more experienced Realtors will overtake you,” Chan said. According to the panel, there are about 6,500 licensea Realtors on Oahu currently, with only a small portio actively selling. “We have about 10 percent of Realtors selling 10 or more trans actions per year, while the majority sells maybe one or two properties,” Chart said. Bifi Pisetsky noted that regard less of what type of property is being sold, the one thing that must be present is the connection with the customer. “What is the same is we sell one home at a time to one customer at a time, and ea h individual connects in a unique way with their respec tive customer,” Pisetsky said. “The difference is the product. We are not selling one home, we are selling five towers, which will ultimately be 5,000 homes. We are creating a city within a city so our product is dif ferent but our methodolo~i is very -much the same.” Pisetsky added that successful agents must be trained, and Howard Hughes invests in weekly meetings that focus on education. “Most people think that if you are nice looking and you smile then you can sell, but there is a science and methodology to good salesman ship,” Pisetsky said. “A good agent takes on.so many oles, and has suck
Tim O’Leary, Matt Beau, Bill Pisetsky, yron Kiriu
control of the process.” Kiriu said it is too easy to become a Realtor, which can reflect nega tively on the industry “Unfortunately, there are not enough barriers to enter the real estate market. You take one class and pass a test and you are licensed to do everything, which is a problem because a lot of people don’t know what they are doing,” Kiriu said. “We need a certain level of people to be selling homes.” There have been increased barn ers imposed on the lending side fol lowing the financial crisis, which has had both positive and negative implications according to O’Leary and Marie hnanaka. “The regulations caused a lot of people to leave the industry and it is hard to recruit good em loyees,” Imanaka said. “But we do have more knowledge and we are ore credi ble, which helps do a better job for the customer.” O’Leary said there is a lack of younger employees, which could bring much-needed change to the industry “The mo gage industry needs to be made more fun. That is the miss ing part right now, and it can be solved by bringing in millenials,” O’leary said. “They don’t choose jobs based on the money, they choose jobs that serve an inner drive, and makes them feel like they are part of something. I think the industry cul ture needs to be broken down and reassembled to reflect that.” According to the panel, the aver age age for a lender is 53, while the average age is 56 for a Re tor. Brhiging in younger employees will change the industries in terms of company culture, and the way agents interact with clients. Due to th&di~cfflty of hiring in Hawaii and the cost to train new employees, retaining employees is just as important as recruiting, according to the panelists. “Retaining agents is important to have a really strong culture in house. If they are happy, then they are not looking for reasons to leave,” Chan said. “Employers need to address their needs and make sure that they are suppo ed and they have the resources to succeed within the company” -
TECHNOLOGY As the economy inn oroves and with a decline foreclosures and delin quencies, Imanaka notes that the agencies are lifting some of the more stringen requirements, and there are more echnology tools that have helped facilitate closings. “The industry has become muck more electronic, and one thing we are going to do by the end ofthe year is have e closings, so you sign all your mortgage docs electronically,” imanaka said. While the increasing prevalence of c-signing has made the average closing time shorten, it has brought about some concern regthxllng lia bility because individuals who s(gn documents online are less likely to read the forms. “Millenials want electronic every thing, so we as practitioners have to slow them down and make sure they read i because a~ the end of the day if something goes wrong then it4alls onus,” Chan said. Bealjl notes that the increase of information available on the inter net has not taken authority away from Realtors if anything, it has bolstered it. “Because the technology corning on board is so ubiquitous, e value of i~he practitioner is more obvious,” Beall said: “S~ many things that we do are hardto articulate and you will not have an a op for, such as n~vi gating the transaction arid bringing empathy” The rise of social media has changed the way Realtors and lend ers advertise, though they still mar ket across all media to ensure reach ing each niche. ~Marketing 101 is kno g your customer, and understan g that the i~nessage and the method has to match the custorn~er,” Pisetskysaid. Ki/riu said his company still adver tises through print, but has hired a team of social media marketers to reach younger audiences. “We are trying to create as many buckets and cat~h points as we can, and hopefully we will get a liffle bit from each,” u said. Other waystechnology is becom ing more useful in the real estate realm is oug sales of sight-un seen properties, which involves -
APRIL 21, 2017
FEATURE showing homes via virtual tours to international and Mainland-base second home buyers. This practice is typically used for peo le buying above the $2 million price point. “People don’t have to wait to buy here anymore, and they don’t have to see it in person— ey just fly~ for the ins ection,” Chan said. “We are using technologr o make the prop erty and the experience as realistic as ossible as if they were there person.” Although this techriolo~i has cre afed an opportuni to expand the reach of a prope o more high end buyers, ealtors stifi refer to show the property in person due to e higher fall-out rate, which is about 30 percent. Real estate companies are also using other ways to show properties such as 360-degree pictures and vir tual reality tours. “I’m not sure what is eft to be done in terms of ew technology” Chan said. INTEREST RATES The current a erage 30-year fixed mortgage rate in Hawaii is 3.78 percent, while the current aver—
age 15 year fixed mortgage rate in Hawaii is 3 percent. The Federal Reseiye raised its benchmark interest rate last month to a range between 0.75 percent and 1 percent, its third increase since the financial crisis. Fed Chairwoman Janet Yellen said following the decision that the Fed plans to move slowly as th econ omy continues to grow, and fore casted two more rate hikes for 2017. Yellen noted that the Fed may adjust its plans following any ~politica1 or economic shifts, like the decision by President Donald Trump and Con gress to cut taxes or invest a large amount in infrastructure. These interest rates and politi cal shifts have not been felt yet in awali, according to the panelists. “I haven’t seen any radical changes so far this year, which is comforting given the uncertainty in the wor4d right ow,” Beak said. “There is not a measurable impact from the new achninistration yet, and there is no panic in the streets about interest rates yet.” O’Leary said the incremental increases of interest rates have cre ateda sense ofurgency in the market, specifically with loan applications.
“The three-quarter point adjust ment as well as the third year fix cre ated a sense of urgency, and in the last 30 days have seen our num bers doublelor applications for pur chase,” O’Leary said, noting that the refinance side has dried up in the past few months. Beafi said that home buyers should take advantage of terest rates, which are currently at histor ically low levels, before they increase again. “Sometimes buyers take their eye off the ball because when they are buying a house they think about their new kitchen or the extra room they are going to get, they don’t really think of i like they are buy ing money,” Beak said. “The afford abifity of that money right now is still so historically low that you have to take advantage of it before rates go up.” Luxury buyers may benefit from the Trump administration, accor ing to Pisetsky. The Howard Hughes Corp. recently announced plans to develop a 42-story 751-unit con dominiurn building in Kakaakao the sixth ed-use building announced for the Texas developer’s Ward Village community. -
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“Something we have heard from two high-end buyers, win is over $3 million, is that they have more confidence in purchasing the later towers because they believe this administration wifi help that ele ent ~ater on and there will be more money at their a sposal,” Pisetsky said. He also added that the buyers of future towers can take advantage of low interest ates and ock in a price now, which is a benefit in a hot market. “Depending on which tower they are buying in, they may not close escrow for a year to three years, and who knows what the interest rate will be then,” Pisetsky said. Imanaka said that Hawaii may feel more impact of interest rates, corn pared to the ainland, because ofthe higher home prices. “Hawaii is ore susceptible to rising interest rates because our price points are higher. if you look at a $100,000 mortgage in West Vir ginia, a 3 percent increase in inter est rates ~s really not going’ bumo the payment up too much,” she said. “When you have a $500,000 to $1 million mortgage, it makes a sig nificant difference.”