[LUAU] Top 10 Best / Worst Cities For Software Developer Pay

[Maddog]

You speculate a lot in your thoughts. I prefer to stand by my statements 
that real estate is a regional m,arket and that demand remians high in 
Hawaii. I don't see major price drops like we saw in the 90's. Employment 
remains strong as do the rest of the economic indicators.

The pronlem remains VC funding for the second round and beyond. Look at HOKU 
Scientific.  Eventually, they are going to have to move HQ's to the mainland 
due to lack of funding here. Hawaii Biotech is another victim of the same 
circumstances although the biotech market continues to develop here. Get 
significant dollars here from outside investors and the rest of the markets 
might have a chance.

Single family homes compared to Feb. 2006 are up 9.7%. Median house prices 
are up 0.2%. As I said before, demand remaions strong on teh island of Oahu, 
home prices are steady and there is no sign of a bubble. Maybe you are 
reading different stats? I see no rason why someone would pull their money 
out of ral estate to invest in a tech startup. Still a way riskier 
investment.

MD

----- Original Message ----- 
From: "Jim Thompson" <jim at netgate.com>
To: "LUAU" <luau at lists.hosef.org>
Sent: Monday, March 26, 2007 4:04 AM
Subject: Re: [LUAU] Top 10 Best / Worst Cities For Software Developer Pay


>
> On Mar 25, 2007, at 3:03 PM, Maddog wrote:
>
>> Hawaii's real estate market actually looks a lot better than other 
>> areas. Since real estate is a regional business and not a national 
>> business I would tend to think you might see a small dip rather  than 
>> "the sky is falling" . In comparison to the national averages,  Hawaii's 
>> subprime loans are far below what they are on the mainland.
>
> You do understand that the rapidly expanding default rate of the  subprime 
> loan market is what will pull the rug out, right?
>
> Do you mean that the number of subprime loans are lower than on the 
> mainland, or that the loan-to-value ratios are lower, or... what?   Just 
> what do you mean?
> S&P says subprime originations (nationwide0 last year were $421  billion. 
> The MBA says all originations were $2.5 trillion. If you  trust both data 
> sources, that means 16.8 percent of mortgage volume  (nationally) 
> consisted of subprime loans last year. That's dollar  volume, not the 
> number of mortgages. I suspect that subprime mortgage  balances are 
> smaller than average, so the number of borrowers is  north of 17 percent.
>
> And then there is the issue of the very definition of 'subprime'.  People 
> have told me it's loans with FICO scores of 620 or less.  Others have told 
> me it's 660 or less. But I've seen loan matrices  that count loans as 
> subprime with FICOs above 660 but loan-to-value  ratios of 95 percent 
> plus, or with low/no documentation, or both.  People outside the industry 
> might count those as subprime and people  in the industry are more likely 
> to call them Alt-A.
>
> What is your definition?
>
> What makes matters far worse is that all this wildly reckless  'subprime' 
> lending has been in the service of a suburban sprawl- building juggernaut 
> that will itself represent another layer of  grotesque liability for 
> Hawaii. The crash of the house-selling  bubble, based on absurd asset 
> inflation for slapped-together houses  on the wrong end of H-1, is 
> coinciding precisely with a permanent oil  crisis that will only 
> exacerbate the locational disadvantages of  houses built in the newest and 
> furthest suburbs.
>
> The good news is that when gas prices hit $5/gallon (or more), the 
> traffic problem on the H1 will solve itself.   The bad news is that 
> nearly all of Oahu's electricity is generated by ... oil, and nearly 
> everything we consume on this island is brought here by ship or  plane, 
> both of which consume .. oil during transport.  Its going to  get a LOT 
> more expensive to live in Hawaii in the next five years.
>
> Saudi Arabia's oil production was down 8% in 2006 (compared to 2005)  even 
> while the number of rigs in the field skyrocketed.
> http://www.theoildrum.com/node/2325
>
>> I don't see a market crash. I see the possibility of a small  downward 
>> trend as the condo market must absorb what was recently  built but single 
>> family homes are averaging 62 days on the market  which is also far below 
>> the national average and our housing  inventory is at 6.2 months compared 
>> to the national average of  above 8 months.
>
> OK, but in May 2005 it was 2.0 months, and in September of last year  it 
> was 5.4 months.   I smell a trend, do you?
>
> And the paper doesn't seem to agree with you:
> http://the.honoluluadvertiser.com/article/2006/Sep/28/bz/ FP609280333.html
>
> and this says 70 days: http://the.honoluluadvertiser.com/article/2007/ 
> Mar/06/bz/FP703060329.html
> quoting: "The median number of days homes spent on the market hasn't  been 
> as high as 70 since 1999."
>
>> Not only that but new townhomes and tract projectrs are conducting 
>> lotteries to enable folks to buy homes. With 30 homes to be built  more 
>> than 300 people are showing up at these sales. Demand is still  pretty 
>> strong here.
>
> That must be why the builders are offering freebies.
>
> http://www.honoluluadvertiser.com/apps/pbcs.dll/article?AID=/20061126/ 
> BUSINESS04/611260305/1071
> quoting:
> ---
> To be sure, many new home projects are not luring buyers with  freebies, 
> but to see incentives emerging at a few projects  underscores the shift 
> under way in the local real estate market that  in the last few years had 
> developers turning away buyers.
>
> The number of new-home sales this year is still up because of several 
> high-rise condominiums that are nearing completion.
>
> But weaker demand is evident in O'ahu's resale market, where sales of 
> previously owned homes fell 17 percent in the first 10 months of the  year 
> compared with the same period last year.
> ---
>
>> So to answer your question about prices here stabilizing and  rising, no 
>> I don't think 2020 is a good prediction. There were a  lot of factors 
>> that contributed to the stagnation here amoung them  the crash of the 
>> Japanese economy. With that a lot of money was  pulled out of Hawaii and 
>> the sound of air escaping Hawaii's economy  could be heard for years. The 
>> economy here has been fairly strong  and looks to slowing some now but 
>> not stopping nor going backwards.  I think real estate will remain strong 
>> here.
>
> http://starbulletin.com/2006/12/01/business/story01.html
>
> Meanwhile, Honolulu county's median household income is $60,739 (2005 
> dollars), this is 19.1 percent higher than the median in the US,  which is 
> $49,133.
> The median owner-occupied home value in Honolulu County for the year  2005 
> was $457,700.  This versus a median home value of $167,500 for  the rest 
> of
> the nation in that year.
>
> If, by some miracle (in a land of negative savings) someone with an 
> income of $60,000 had managed to save enough to make a 20 percent  down 
> payment ($91,400) on the aforesaid median-priced house and got a  30-year 
> mortgage for the remainder ($365,600)) at 7 percent interest,  his monthly 
> payment would be $2432. Add to that $250 a month in local  property and 
> school taxes and insurance and that brings it up to $2682
>
> That adds up to $32,184 a year in house payments. Let's say the poor 
> bastard pays $11,000 a year in combined income tax and FICA  witholding. 
> That leaves him with a grand total of $16,816 for  everything else. Then 
> there's the yearly cost of owning a car,  including installment payments, 
> insurance, gasoline, and maintenance:  around $8,000 a year. Oh yeah, if 
> he's a prudent fellow, he's got  health insurance, let's say a practically 
> useless high-deductible  policy costing $3,000 a year. That leaves 
> approximately $112 a week  for groceries, laundry, the collection plate at 
> church, and  everything else. (Too bad he can't afford cable TV and the 
> Internet.).
>
> Of course, the scenario above was based on the most conservative type  of 
> mortgage. If Mr. Median Income had gotten a creative (sub-prime) 
> mortgage, let's say a no money down, interest only, payment option, 
> adjustable rate mortgage, he would have been a little more solvent  until 
> the interest rate ratchets re-set. Then after enjoying the  place for a 
> year or two, he'd either have to sell it pronto, or  default on his 
> payments. And because all his payment option  shortfalls would have been 
> back-loaded onto the principal, the  mortgage obligation could be over 
> $400,000 now.
>
> This is a bummer, selling into a down market, especially after paying  the 
> Realtors their 6%.
>
> Of course, sooner or later under conditions of perpetually rising  house 
> prices, houses would have to be priced out of everybody's range  except 
> for Donald Trump, Paris Hilton, Oprah and a handful of other  lucky, 
> beautiful people who dwell in the perfumed ethers above the  pathetic 
> lumpenprole median zone.
>
> Getting back to the subject...
>
> The "software publishers" industry lost the largest amount of  employment 
> in terms of percentage, during the last five years, losing  65.8 percent 
> of the jobs from 2001 to 2006. This job classification  declined faster 
> than the industry sector across the State of Hawaii,  where the loss was 
> 63.7 percent. The losses in the "software  publishers" industry in 
> Honolulu County vastly outpaced the US in  terms of percent of decline of 
> industry employment, since the US (as  a whole) lost 12 percent in this 
> sector during the same period.
>
> By any measure, thats "failure".
>
> Top 5 Industries in terms of job loss (percentage) Honolulu County 
>  (2001 - 2006):
> 1. Software publishers (65.8 percent decline)
> 2. ISPs and web search portals (61.1 percent decline)
> 3. Glass and glass product manufacturing (53.4 percent decline)
> 4. Emergency and other relief services (52.2 percent decline)
> 5. Waste collection (49.8 percent decline)
>
> Total county-wide industry employment has increased by 9.7 percent  from 
> 2001 (2nd Quarter). The figures for Honolulu County are less  than the job 
> growth in the State of Hawaii as a whole, which saw a  gain of 11.0 
> percent from the 2nd Quarter of 2001. The gains the area  experienced were 
> greater than than the gain experienced overall in  the US of 2.6 percent.
>
>
>
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