Article Categories

Hawaii Housing Market Forecast

October 16, 2020

Hawaii Housing Market

Home sales and prices across Hawaii continued their upward climb in September. Much to the disbelief and chagrin of housing market critics, the Hawaiian real estate market is regaining its health. Single homes and townhomes are hot, while condos not so much.

Redfin believes the market is still not competitive yet in September homes sold above listing price grew to 15%, which is 31% higher than last September of 2020. Zillow projects Hawaiian home prices to soar $86,000 (+5.6%) by next September.

In an interview via KHON2 TV, Realtor Erik Taniguchi with Taniguchi and Associates said “We had 62 groups at an open house for a home in Kapahulu and eight offers came in. The home sold for $100,000 over asking price.”

Hawaiian Landlord and Property Managers: Time to Demo a Better Rental Property Management Solution?

Big Interest in Hawaii Real Estate

Each year at this time, Americans, i.e., Californians begin searching for houses for sale in Hawaii.  Japanese and other foreign buyers were buying in the state however the Covid pandemic restrictions and threat has reduced interest from them.

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 creating buyers for her.

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

September Housing Stats Hawaii

The Hawaiian housing market regained its pace for price if not for sales. Across the islands, single-detached home prices rose to $880,000 +13.3%  YoY.  Condominium sales fell 2.1% but prices have held.

As buyers enjoy record-low mortgage rates and work from anywhere employment situations, the demand for houses on the islands is up. Some experts believe the growth is driven by the Corona Virus pandemic.

Tricia Nekota, president, Honolulu Board of REALTORS® reports that “A lack of inventory coupled with high demand from buyers looking to capitalize on historically low-interest rates is driving a very competitive market for single-family homes on Oahu.”

Hawaii Single Detached Houses and Condos

Sales of single-family homes under $700,000 fell 36.3%, and those homes in the $700,000 to $1.5 million price range increased 39.4% over last September. Luxury home sales above $1.5 million saw a 42.9% YoY growth. Large homes with above 2,000 square feet saw a 38% YoY rise. Notable was a 26.1% jump in home purchases via VA loans.

Hawaiian condo sales dropped 2.1% YoY.  Condos priced between $400,000 to $499,999 and betweeen $600,000 to $699,999 saw the most growth in sales. The median condo sales price stayed at $445,000, even though DOM actually dropped by 6 days to 21 days.  Notable was a 34.7% uptick in condo purchases via VA loan.

Housing supply in Hawaii is trending downard.  The inventory of available single-family homes and condos fell 39.3% and 5.8% YoY.   Condo sales fell 13.4% in the 3rd quarter compared to 3rd quarter 2019.

Hot Oahu, Kauai and Maui

Traditionally, it’s not just American buyers who’ve want a slice of Hawaiian paradise. Billions of dollars have been poured into the Hawaiian housing market, giving it a positive outlook for the next 5 years, if the US economy holds.

The trade war with China combined, tourism disappearance, along with the effect of the Covid 19 pandemic lockdowns has hurt Hawaii’s economy, but it looks like we’re past the worst and recovery is on the way, perhaps aided by newcomers from the mainland.

Oahu single-family homes rose to a new record-high median sales price of $880,000.  That is $90,000 above the price of $790,000 in August of 2019. The average home price came in at $1,073,692  (12.8%).

Single-family sales rose 12.7% from September of 2019.  Single-family homes sold 9 days faster in September.

Sales of single-family homes on Oahu below $700k rose 36.3%. Homes between $700,000 to $1,499,999 a strong 39.4% . Homes sold above 41.5 million rose an even stronger 42.9% year-over-year increase.  Large homes with above 2000 sq ft, had a 37.9% year-over-year increase. There was a 26.1% surge in VA loan backed purchases.

Oahu Home Inventory Falling

According to hicentral.com, the inventory of available single-family homes and condos fell a significant 39.3% and 5.8%, respectively compared to September 2019.

Home Sales in Kauai and Maui

Home prices on the Island of Kauai rose a brisk $60,000 from August, and are up $190,000 since last September.  The average price of a single-detached home sold for $1,138,825 in September 2020.  Home sales were down 4% while condo sales rose 30%.  The median sold price of a condo on Kauai was $597,500,  rise of $182,000 from last month.

Hawaii home sales and prices by island. Screenshot courtesy of hicentral.com

 

Hawaii Home Sales Timeline. Screenshot courtesy of Hicentral.com

Maui Housing Market

On the Island of Maui, home prices rose 11% to $799,500 while condo prices trended downward -8% to $497,500 vs last September. Detached home prices are up $72,000 from last September.

Maui home sales dropped in September 2020, by -11% while condo sales fell  28% vs last year.  Median days on market rose

 

 

August Sales Stats: Maui

Maui Single Family Sales State. Screenshot courtesy of Maui association of Realtors.

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 2021?

With Maui condos, listings doubled from August 2019, and the growth in July is strong.  Pending sales and closed were both much lower than last year even as inventories swelled.

Maui Realtors August Sales of Condominiums. Screenshot courtesy of Maui association of Realtors.

Single-family home availability is consistent yet condominium supply is weaker. With renewed demand, condo prices in Oahu hold more potential for higher prices.

New Listings Maui. Screenshot courtesy of Maui Associations of Realtors.

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

Hawaii Housing Market Forecast: Demand (next 5 years) 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 compete for too little real estate resulting in big price increases.  Hawaii income rental property investors will be challenged to find suitable properties for rental.  Looking for a Hawaii property management company?  Ensure they’re using a modern cloud based property management solution.

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.

Foreign investment in Hawaii. Screenshot courtesy of hawaiinewsnow.com

Housing Market Conditions 2020?

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.

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.

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

Zillow Home Prices Hawaii

Zillow rates Hawaii’s housing market as cool and does not recognize or forecast rising home prices.

Hawaii Home Price Forecast. Screenshot courtesy of Zillow.

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 was predicted to grow 2.6% for 2019. Hawaii’s real GDP growth is expected to increase 1.4% 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 Hawaiian apartment prices to general US rental prices for apartments or houses.

According to RentCafe, the average rent in Honolulu is now $1881 which is up 17% over last September 2019. Monthly rent prices in communities such as Makiki, Holiday Mart, Ala Moana, Pawaa, University, Moiliili, McCully, Kapiolani and Waikiki are all above $1400.

Rent Price Timeline from Zillow

Hawaii Average Rent – Chart Courtesy of Zillow.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: Property Management Software | Hawaii Property Management CompaniesUS Housing Market Predictions | Colorado Housing Market |  Rental Property Software |  Phoenix Housing Market | California Housing Market | California Property Management Companies | Las Vegas Housing MarketAustralia Housing Market ForecastLandlord App | Denver Housing Report | HOA Management Software | Best Property Management Apps |  Best Cities to buy Rental Property | Property Management Definition |  Property Management Solution | Covid Foggers | Covid DisinfectionCovid 19 Cleaning TipsLos Angeles Property Management Companies

Get all the latest articles and information via email:

Thanks for your subscription!

You have been added to the ManageCasa mailing list.

Sign Up FREE