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Hawaii RE Technical Analysis- just for fun

// March 14th, 2009 // Comments // real estate

I dont have a crystal ball yet, but technically speaking, it doesnt look good. Of course there are all kinds of fundamental reasons why this market is fragile, but just for fun, Im only looking at technicals. Whether you feel that Obama and his magic printing press can turn it around in a year, or that we are fast approaching financial Armageddon, its fun to check the charts!

List prices are showing a lot of volatility and a trend change is looking quite possible. You can see sellers starting to test that level of support around $650K, and in fact have listed right through it recently. There are a few support levels below that, the strongest being the breakout from the previous high of the last boom at around $450K.

Months of inventory looks to have formed a similar bottom to the last boom and is in a clear uptrend. However it does have some room to get worse if you look back to the last meltdown. 97 and 98 were particularly heavy inventory years although that whole swath of the 90’s wasn’t pretty.

Number of days on market has bottomed in the similar support area as the previous boom and is in an uptrend, though notice the volatility and resistance at its current levels. If things get worse I’d expect to see a break higher into the previous highs of the 90’s.

The number of actual sales has declined rapidly, and is fast approaching its previous support levels from the last “crash”. Much of this could be due to tightened credit. I expect to see more volatility near the support zone, especially since Hawaii doesn’t have the problems of the mainland, yet…

Lots of volatility in the SFH sales prices over the past few months, as a top was clearly reached and it went on to form a nice sideways box pattern. The support zone I had drawn on previous charts I looked at has been hit, and we can see a slight attempt at piercing/holding this level so far. If it breaks this level, you can see where the next levels of support are. However, due to inflation, it would take some major Financial Armageddon to reach the previous support zone. More than likely the worst case support zone will be at the breakout area around the previous boom’s high price. But unless it gets very deflationary, it could bottom slightly higher. Who knows? All that we can see here though, is it’s clearly starting to trend, and its down.

Sales volume, (which is another important indicator besides price) is showing a massive drop off, like SFH’s, it is fast approaching the support levels of the previous “crash”. One would think the volume drop off due to credit problems, and thus expect it to hold this level of support rather than punch through. If you are a perma-bear however, one could say we are in Financial Armageddon and it will head lower still.

Charts can give a good look at what is happening in the now, and give you a great idea of where things are headed. Its important to take into account fundamentals as well however. Besides price trends, make sure to pay attention to volume. Volume is like a confirmation to price. Realtors also are greatly affected by volume, as less transactions mean less commissions are being generated.

This is just residential RE, we will most likely have to wait a bit to see the affects of this downturn on commercial RE, as retail spending dries up, so will go leases, which would cause lost revenue for property managers, and possibly another wave of foreclosures for banks.

Chart Source: Honolulu Board of Realtors