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Hawaii Housing Market Forecast

Hawaii Housing Market 2019/2020

It’s not just American buyers who want a slice of Hawaiian paradise during these good times. Foreign buyers too are pouring billions into the Hawaiian housing market.

Hot Oahu, Kauai and Maui

In May, home and condo sales and prices increased in almost all of Hawaii. In fact, sales grew 9.5% in Hawaii county, 12% in Kauai and almost 18% in Maui. On the Island of Hawaii, house prices fell in May, while condo prices jumped year over year in Oahu county, up to $474,000 (+$82,000). Condo prices in Kaui, rocketed 106%.

Listings are up so, why is property so expensive across Hawaii? Just as in other housing markets, high prices, International demand, and lack of affordable property pushes prices higher.

Buyers from California, Arizona, China, Germany, Russia, Japan, Canada, and other nations compete for too little real estate resulting in big price increases.

Income rental property investors can find properties here however and might be intrigued by the low new construction climate here.

Hawaian 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. 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.

Foreign investment in Hawaii. Screenshot courtesy of hawaiinewsnow.com

Housing Market Conditions 2019?

Screen capture courtesy of huduser.gov

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.

Hawaii has the least affordable housing market in the country, and as you’ve learned condo prices in some counties are rocketing.  Active listings jumped by 367 in January. The average sales price was $967,119 in January which was up almost $30,000 over January 2018. New listings have risen 117 units.

Note: if you’re interested in International real estate, please check out our post on the Australian housing market and Berlin and London UK property markets.

Zillow Home Prices Hawaii

Zillow rates Hawaii’s housing market as cool, with an expected price drop of about .9% over the next 12 months. The median home value in Hawaii is $614,100.

 

Oahu and Honolulu Forecast

According to the Honolulu Board of Realtors, sales have declined over the past year, however prices continue to climb.

During June 2019, single-family home sales fell 10.4% while condo sales fell 13.5% YoY.  Prices rose moderately with single-family homes up by 2.3% $800,000 while condos rose 3% to $432,500. New home listings declined by 8.9% from June 2018, yet overall inventory increased 6.7%. More condos were listed in Oahu.  They went up by increased by 6.3%, as did overall inventory by 13.8%.

June prices Oahu – stats courtesy of Honolulu Board of Realtors

DOM for single-family homes was 18 and was 27 for condominiums.

Honolulu condo market, the median price rose 3% to $432,000  and sales dropped by 13%.  These are better conditions since our last report, the market supply across Hawaii, and in Honolulu’s housing market is still constrained. Millions of new apartments are needed across the nation and in Hawaii.

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%).

GDP is predicted to grow 2.6% for 2019. Hawaii’s real GDP growth is expected to increase 1.4 percent in both 2020 and 2021. Wages are rising and that should support higher apartment rental prices. See this forecast chart on economic indicators forward to 2021.

Hawaii economic report – screen capture courtesy of Hawaii.gov Research and Economic Analysis

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.

Oahu Housing Chart

This chart showing the Oahu housing market sales and price stats, reveals 2018 hit the skids with sales, but not price. It’s a similar pattern in other similar housing markets including San Francisco, Los Angeles, San Diego, Phoenix, Denver, and Las Vegas.

Resales and Average Prices for Residential Property in Oahu. Screen capture courtesy of hicentral.com

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.

Contrast apartment prices to those across the US.

According to Rent Jungle, apartment rent prices rose $77 over the last 6 months.  One bedroom apartments have increased by $126 (8.3%) and two bedroom apartments have decreased by $33 (-1.9%).

Rent Price Timeline from Zillow

Rent Price chart courtesy of Zillow

 

Honolulu Rental Prices – screen capture courtesy of Rentcafe.com

If you’re looking for a home to purchase in Honolulu, Hawaii, check out Honolulu Magazine.

Additional Housing and Property Management Topics:

See also: US Housing Market Predictions | Colorado Housing MarketHawaii Property Management ExpoRental Property Software | Phoenix Housing Market | California Housing Market | California Property Management Companies | Las Vegas Housing Market | Oakland Housing Market | Australia Housing Market ForecastApartment Rent PricesLA Home Prices | Denver Housing ReportLA Apartment PricesBest Property Management Apps | Property Accounting Solution | When is Best Time to Buy Property? | Rental Housing Market | Time Management Tips | Apartment Rental Prices | Best Cities to buy Rental Property | Property Management Solution | Cloud Rental Property Software | Los Angeles Property Management Companies

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