Hawaii Real Estate Market
Hawaii remains one of the world’s most rare and attractive housing markets, and as the recovery continues, interest in buying and renting in Hawaii is bound to grow.
The persistent trend to remote work will benefit the state although inflation and low numbers of rental units will reduce this cultural trend. Still, with housing markets in San Diego, Phoenix, Los Angeles, Dallas, Austin, San Francisco and Miami so expensive, Honolulu may become migrants preference.
And the return of the vacation market will bolster the short term rental property market along with the general residential real estate market.
See the latest stats from March and February below on Hawaii’s major residential real estate markets including Honolulu, and Maui.
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Hawaii Real Estate Hits All Time High Price
Sales of homes falling but not stopping price from marching upward. Sales of homes and condos diverged in February and but prices did not.
With limited and dropping inventory of houses for sale, buyers will likely need to bid harder to acquire their next home. Sales have been subdued for several months in a quiet season, but signs are that things might be reawakening despite rising mortgage rates.
However, across all US residential real estate markets rising rates are taking a bite out of sales, and could begin to deter new construction in the Aloha state. Mortgage applications have dropped 40% in the last with an even steeper drop in the last 8 months.
With fewer buyers able to achieve financing, it would certainly affect capability to buy in the Hawaiian real estate market.
House Sales in February 2022
Total sales of houses across the state of Hawaii in February 2022 fell 8%. while condo sales increased by 3.2% year over year. Housing sales declined the most on Maui with a drop of 14.85%.
The decline steepest on the islands of Hawai’i and Kaua’i where sales took a 17% and 16.2% dive respectively YoY. Home prices overall have still risen strongly with a 21.95% growth overall, including Kaua’i where prices rocketed 37.54% YoY. There were 596 home sales in February 2022.
Condo prices rose strongly over the last 12 months as well, at 16.8% clip. There were 774 total sales at an average price of $633,750.
Redfin Hawaii Market Reports:
Redfin reports the median house price in Hawaii reach $696,000 in February which is up 10.4% from 12 months go. It shows a downtrend in price. Redfin also says home inventory has dropped 22.3% from 12 months ago and that 39.8% of homes sold above list price, which is 14.6% from last February.
Definitely share any our posts and material with your friends and business partners. Hawaii is a special place and the climate, culture, lifestyle, or business opportunities in Honolulu will draw digital nomads and rental property buyers here in 2022.
Oahu & Metro Honolulu Housing Market
The Honolulu Board of REALTORS® reports strong home price increases year over year. Both Honolulu condos and single family houses bounced back from the off season lull, jumping 27.1% to $1,150,000 from $905,000 in February 2021.
Single family homes in the city had sales fall 7.3% vs 12 months previous yet prices rocketed forward by 22.6%. Condos on the other hand saw a sales increase of 9% while $497,000, while prices rose 8.6% year over year.
Chad Takesue, president, Honolulu Board of REALTORS® said, “Along with rising median sales prices for both markets, median list prices are also starting to tick up as sellers take advantage of the lack of competition. Lack of inventory continues to be our number one challenge of getting families into homes. Active inventory remains significantly below pre-pandemic levels.”
They report that sales of houses below $900,000 plummeted 54% year over year. Anything below $900,000 might be considered affordable in Hawaii.
Pending sales for houses in Honolulu dropped 13.4% during February. In Hawai’i Kai, listings have dropped 150%, while in Ewa Plain listings are down 50% and in the Kailua region, listings have dropped 44%. Condo listings in Metro Honolulu however have risen almost 26%. Days on market dropped to 13 days for single-family homes and 14 days for condos.
Maui Housing Market
Realtors Association of Maui reports that the median price of a home on Maui rose 19.5% to $1,177,500, up from $985,000 12 months ago.
As in other Hawaii islands, sales of houses dropped by 17%. Those sales rates however are still above historical averages.
Average prices are climbing every year at a steady clip as depicted in the charts below. Falling house inventory is the story of this market too.
Inventory of Maui houses for sale has plummeted 25.7% in the past 12 months to low of 1.8 months supply.
The Hawaii Luxury Market
During the pandemic many new millionaires were born and plenty of them had their eyes on owning Hawaii real estate. The island of Kau’i was where many of them bought new million dollar dream homes. On each island however, there was growth.
Although there is an range of housing in Hawaii within reach, this market is more about the luxury market. High demand combined with limited availability creates ultra high real estate prices. The downside of that is a lack of affordable properties and also big challenges for renters.
Hawaii Life found that the growth of Hawaii’s ultra-luxury market this year has been exceptional. Transaction volume has risen from $151 million in 2020 to more than $1 billion in the first three quarters of 2021 alone.
The big news is how the ultra luxury market is faring in Hawaii. Hawaii Life reports strong sales activity in the luxury market with inventory falling from 5.3 months to 1.6 months of supply. Sales value has grown an astonishing 234.5% over 2020 (by dollar value). Hawaii Life in their major report, found that in the third quarter of 2021, 634 sales home priced above $3 million included 466 sales in the $3 million to $5.99 million range, 104 in the $6 million to $9.99 million range, and 64 sales of over $10 million.
You can see more on Hawaii’s exclusive luxury market and their beautifully packaged 3rd quarter report on the hawaiilife.com/blog/2021-luxury-market-report website.
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Big Interest in Hawaii Real Estate
Each year Americans, i.e., Californians search for houses for sale in Hawaii. Some are just looking as they visit for their annual golf vacations. And that’s how the word about Hawaii real estate has always spread.
Japanese and other foreign buyers are deeply interested too, however the 2020 Covid pandemic threats and travel restrictions have reduced interest from foreign buyers.
In an interview on sfgate.com, Hawaii Realtor Julie Peters, an agent with Island Boutique Realty said she sold 5 properties unseen. She cites that California, Oregon and Washington is where buyers are coming from.
From January to June 2020, California residents bought $587.6 million worth of Hawaii property, making up 41% of total sales during that period coming from the U.S., according to Title Guaranty, which owns and maintains the largest real estate database in Hawaii. – report on sfgate.com
Maui is a market of few listings and big price increases. Definitely a sellers market.Buyers from California, Arizona, UK, Australia, China, Germany, Russia, Japan, Canada, and other nations are the typical source for buyers according to sources. With recession talk in the past, one more stimulus payout, and good economic reports coming out, are Oahu real estate prices going to surge significantly in 2022?
Hawaii New Housing Construction
Will Hawaii’s builders come to the rescue? The stats actually show builders have grown their construction permits in the 3rd quarter of 2021 but are not keeping up with demand.
dbedt.hawaii.gov reports that during the 3rd third quarter of 2021, private building authorizations in the state increased $94.2 million or 11.2 percent% with the third quarter of 2020. And so far this year, private building authorizations throughout all islands grew $764.8 million or 32.9% vs same period last year.
Hawaii Housing Market Forecast: Demand to 2025
The Hawaii state government produced a report that suggests 19% growth in population by 2025. It adds that by 2025, Hawaii County’s population will grow 29%, Maui County’s by 25%, and Kauai County will rise by 19%. They forecast that housing demand by county is 25,847 units for Honolulu, 19,610 for Hawaii, 13,949 for Maui, and 5,287 for Kauai during the 2015-2025 period.
Foreign Buyers are the Key
Buyers from California, Arizona, China, Germany, Russia, Japan, Canada, and other nations have competed for too little real estate resulting in bidding wars and ultrahigh prices. If international sales slows, we’d wonder about where demand would come from in the years ahead. Given inflation and rising rent prices in Hawaii, income rental property investors will find this state a tough market to be successful in.
Hawaiian Paradise Too Hard to Resist
And Hawaii’s peace and serenity, beaches, parks, golf courses, hiking, Honolulu urban life, and culture are irresistible to buyers and tourists around the world. And you never know which tourist will decide to buy property on the Hawaiian islands.
Hawai‘i is a competitive, low-inventory housing market. The growth of purchases in the Aloha state in the last few years is astonishing yet housing supply will inevitably curtail sales and grow prices in 2021. Billions of real estate investment dollars have flowed into the Hawaii real estate market in the last few years.
Honolulu is the focus of most real estate investment interest. Investment is likely to grow.
Housing Market Conditions?
The Hawaiian economy is strong, unemployment is low and wages have risen over 4%. That makes for solid demand for rental units. The issue however is that rent prices are beyond the reach of most.
In 2020, Hawaii will likely continue as the least affordable housing market in the country, and as you’ve learned condo prices in some Hawaiian counties are rocketing.
Building permits reflect future construction trends and volume, and Hawaii’s year over year growth was at a brisk 62% over the last few years. Because of the pandemic, 2022 stats are not available as yet. Please bookmark this page and we’ll update when new data is released.
Here are the latest Hawaii public housing starts numbers from the FED:
With house and apartment construction numbers flagging so badly, we might forecast home prices and rent prices to rocket in 2021.
Hawaii’s Economy Doing Well
Hawaii’s economy is very dependent on US overall economic activity, tourism and upon Japan’s economy.
Tourism spending dropped 2% YoY in May, although spending by Canadians rose. Visitors from California and Japan slowed their spending, and dropped severely by visitors from elsewhere around the globe (-17%). Stats show a strong increase in visitors arriving via the airports and projections forward are for steady, strong growth.
GDP was predicted to grow strongly through 2022. The pandemic has taken a toll on all economies, however Hawaii should bounce back as shut in Americans, Japanese, Canadians, and Europeans come of out of lockdown isolation.
Hawaii’s real GDP growth is expected to increase 1.4% in both 2020 and 2021. Wages were rising and that should support higher apartment rental prices in 2021. See this forecast chart on economic indicators forward to 2021.
Types of Property Purchases in Hawaii
Similar to most housing markets in the US, Hawaii lacks housing supply which drives up prices. Another factor comes from lending rates affected by Hawaii’s unique real estate laws. Buyers who buy leasehold properties may not qualify for 30 year mortgage rates.
Hawaii real estate is offered in two different types: fee simple and leasehold. With fee-simple, property buyers have complete ownership of the property, which includes the land and any improvements to the land in perpetuity.
Leasehold ownership on the other hand means the buyer does not own the land; instead, they have a right to use the land for a predetermined amount of time. When the lease is up, the land reverts to the lesser. If you’re buying multifamily property, these rules could pose a problem.
Hawaiian lenders may prefer owner-occupied property financing, and those investing in rentals may face higher financing costs. There are residency requirements to qualify for government-backed Fannie Mae or Freddie Mac loan programs.
Hawaii’s Rental Market
Although apartment rental prices have declined in the last 12 months, Hawaii is one of the least affordable states to rent or buy as a rental property investor. Limited supply translates to big rent increases. Rental prices may be falling, however prices are often beyond the reach of many Hawaiians.
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