Updated at 3:39 p.m., Wednesday, October 3, 2007
Big Island economy to grow at slower pace, FHB says
Advertiser Staff
The Big Island's economy will grow at a slower pace amid declines in the construction and residential real estate sectors.Meanwhile, Hawai'i County's visitor industry continues to do well despite a statewide dip in arrivals, said First Hawaiian Bank economics consultant Leroy Laney today.
"Hawai'i County is seeing many of the same indications of slowdown, especially in the construction and real estate sectors, as in other areas of the state," said Laney, who also is a professor of economics and finance at Hawaii Pacific University. "Any economic cycle contains periods of cooling down. This is not only inevitable, it's required for infrastructure to catch up and for slowly rising incomes to help bring affordability back."
Laney, who spoke at the bank's 33rd Annual Economic Outlook Forum held at both the Naniloa Hotel and Hapuna Beach Prince Hotel, noted that construction activity on the Big Island peaked in early 2006, with the decline continuing into this year. Residential real estate prices have been dropping since a high in 2005. In 2006, the median island-wide single family home price was $440,000. In the first half of 2007, it fell 4.5 percent to $420,000.
"Once such a cooling starts, it usually doesn't reverse in just one year, though there usually aren't sharp declines, just a plateau," Laney said. "I frankly believe there are more contractions to come, as the market returns to equilibrium."
