If at all possible, people who live in southern Arizona attempt to escape the heat of some part of late Spring and Summer. There are two major choices: mountains or seashore. At 6000+ feet above sea level in northern Arizona, New Mexico, and California days are warm and nights are cool, and there are many places reachable in a day's drive or a one hour air hop. Then there is the cool coastal California strip due to the prevailing north/south ocean current and off-shore winds. San Diego is closest since the "west coast" is actually oriented southeast to northwest. It's over twice as far to San Francisco, and the roads are not straight-line as they are to San Diego.
Southern California coastal summer weather is lovely, but unless you are a polar bear or wear a scuba diver's wet suit, the ocean is too cold for mere mortals who want to swim or surf. The readily available mountains are also delightful but, except for Santa Fe, there is not a whole lot to do, and Santa Fe is not a vacation spot for children.
When we lived in San Francisco and later in Santa Fe we took winter vacations to Hawaii. Winter is very pleasant in southern Arizona barring the chilly period around Christmas, so Hawaii in winter is not a priority. But Hawaii turns out to be a great place for summer vacations. Many, many coastal California families have summered in Hawaii for generations for good reasons: the ocean temperature is about 79 degrees F and the daily air temperature range is from the mid 70's to mid 80's at sea level. Plus the northwest trade winds at 10-20 knots keep occasional humidity from bothering. Typically one thinks of semi-tropical locations as very hot and humid in summer, and that's quite true of the Caribbean and Mexico's Yucatan and of course Florida.
We tested our new summer vacation discovery for a short time in HOT, HOT June and loved it. Good bye San Diego, aloha Honolulu! Tourists and transiting travelers from all over the world have discovered the same facts. Hawaii's tourism statistics showed a five year high in tourist arrivals in June, a statistic few tourist destinations can claim. Some of this is thought to reflect the decision by many Americans to cancel Mexican trips, due to on-going civil violence there, and rescheduling vacations to Hawaii. Also wealthy Chinese citizens have begun the tourist jaunt to Hawaii as generations of Japanese, Koreans, Taiwanese and southeast Asians have done. I would say from listening at the beach and on walks that Australians far outnumber them. I heard a lot of German and Scandinavian and Slavic languages as well and some French and Spanish being spoken, and many, many Japanese. One can more easily spot eastern Canadian English speakers than their mid-westerners and west coast citizens, but Canadians still seem to be fairly high on the national origins list. California remains the most visiting American state.
The Hawaiian economy seems to be strong. Obviously tourism is one reason, but there are a lot more prosperous small businesses including a boom in niche agriculture businesses which produce not only for tourists but for the locals and also for export. Also a strong tradition in professional arts, crafts, and music now provides many jobs. Of US states that collect retail sales taxes, only Georgia and Colorado have a base rate lower than Hawaii's 4% (as of 2009). New Jersey and California charge ~8%.
Real estate was impacted negatively in Hawaii in the past few years but in a different way and not as severely as I would have expected. I haven't done a thorough survey, but high end residential property appears to have taken the biggest hit. This probably means it was a casualty of the stock market and other market crashes far more than of unemployment as in Arizona. Then too, at least four new high rise and high end condominium buildings in Honolulu and Waikiki (the beach section) came onto the market last year and this. These were planned and permitted in 2005 or so when they looked like a good idea. So there was a glut of very fine new units which had to be marked down substantially on the orders of lenders. Thus my family found a very nice condo for summer vacations while we a were on a summer vacation. They were being advertised at 25% off original listing prices, and we came in at close to 35% off and our "bid" was accepted. Quality in every way in a superb location.
Those who have followed my portfolio posts know that I've had a lot of essentially "dead money" for several years in very short term Vanguard municipal funds. (In 2007 much of it was in very short term Federal notes.) Some of this fund is being re-deployed into the condo. This may well not even be close to a final bottom in real estate, but it will pay almost immediate and very enjoyable "dividends". Giving up a 1.5% "opportunity cost" from the short term munis will not be missed, and paying cash for the condo will keep operating costs very small. The operating monthly management fee includes all utilities except for electricity, and the dedicated in-building parking space can be rented or leased at a good rate if we choose not to buy a car, which is probable given the location and excellent local transportation and walking.
As David Knox Barker, a Kondratieff Wave analyst, put it in his latest update of "Jubilee on Wall Street", quality personal residential property is one of the few really worthwhile investments in the climax winter phase of the Long Wave. His view, and my own, is that 2012 is probably going to be the low before the economy bottoms and inflation re-starts.
Some of you will recall charts of Sergei Tarasov (http://timingsolution.com/) I showed here about 18 months ago. This one used only inputs of the Juglar's and Kuznet's cycles: http://www.timingsolution.com/TS/Forecast/2009_long_term/
Here are other Tarasov charts using very long term data and what is essentially Fourier cycle analysis for cycle synthesis of the bond interest rate and the earnings/price ratio of US stocks. All three charts and some others have indicated a pprobable low in 2012. Tarasov has suggested 2013 on occasion but these charts are pretty clearly for 2012:
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