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Hawaii Housing Market Forecast

July 23, 2021

Hawaii Real Estate

Hawaii real estate became more expensive in June and the word from this point on is “pent up demand.” Realtors believe more buyers from the mainland and Asia will return after the Covid lockdowns to bolster demand for homes in Hawaii.

The word to describe Hawaii’s real estate market is “stressed.”  For buyers, the competition to find a home is very intense with limited availability.  High prices are encouraging some new listings, yet the supply is nowhere near what’s needed.

Properties that appear on the market are being purchased very quickly and about 60% are selling above list price. The same trend is happening in California and across most US housing markets.

The June real estate sales report saw sales grow well in all counties year over year, and in particular Kawa’i.

Single family home prices across Hawaii rose about $4,000 from May to $914,125 and condo prices jumped about $15,000 to a new level of $535,188.  And in May, condo sales rose by about 100 units and house sales rose by about 45 units across the islands.

More home were listed in June which enjoyed a 23.0% rise in new single-family home listings and a 31.1% growth in condo listings.

Oahu, Kauai, and Maui all saw strong growth.

Hawaii Realtors Association June Sales Report (Statewide stats)

Hawaii Real Estate Statewide Stats.

Hawaii Real Estate Statewide Stats. Screenshot courtesy of Hawaii Realtors.

Year to date growth vs 2020 is up substantially, however May and June of last year were the low points of the pandemic time period.

Year to date home sales and prices in Hawaii.

Year to date home sales and prices in Hawaii. Screenshot courtesy of Hawaii Realtors.

 

Last month, Shannon Heaven, president, Honolulu Board of REALTORS® said “We are in a vastly different market now compared to this time last year, when activity was slowly starting to ramp up versus now where properties are moving into escrow in record time… In particular, the condo market surged in 2021 because some buyers decided not to pursue a single-family home due to the severe lack of inventory and competitive bidding wars.”

This month she added that “Demand for limited inventory and increased purchasing power through low-interest rates has placed sustained upward pressure on prices.  While the record-setting median price and pace are good news for sellers, it creates a challenging environment for buyers who are up against the tough competition.”

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Much to the disbelief and chagrin of housing market critics, the Hawaiian real estate market continues regaining its health.  The lack of inventory will likely bring even higher prices for buyers.

A good portion of home buyers in the state of Hawaii are out of state buyers (California), and the pressure on home prices then contributes to higher prices for rental homes and apartments which are in short supply. As eviction moratoriums end, more renters will be looking for rentals that may not be there. And more owners are looking to sell as being a landlord during the crisis was not fun for many. They are looking to end tenancies as well.

Sales and Prices on Oahu

Oahu real estate Stats June.

Oahu real estate Stats June. Screenshot courtesy of Hicentral.com

Tricia Nekota, Presidentof Honolulu Board of REALTORS® said “This seemingly new normal of buyers entering bids tens of thousands of dollars over asking price clearly reflects the urgent need for more housing….Despite limited inventory, the high demand for housing is keeping O‘ahu’s real estate market strong and steady throughout the public health crisis.

Hicental reports that so far year-to-date,  Diamond Head and the Metro area, are up 84.4.% and 76.2%, respectively. And the Honolulu region – including Mapunapuna and Kalihi all the way through Waikiki and Moiliili – saw a 79.4% jump in condo sales, while the Ewa region had a 60.2% growth in sales.

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Big Interest in Hawaii Real Estate

Each year from November to March, Americans, i.e., Californians begin searching 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. That interest is forecast to return in the recovery in 2021.

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

June Housing Stats Oahu

O‘ahu’s real estate market remained an economic driver amid a challenging year…  We saw a relatively stable market, but with heightened competition. Offers over asking price were commonplace and the pace of sales grew quicker as the year progressed.” said Shannon Heaven, president, Honolulu Board of REALTORS®.

Oahu Single Detached House Prices Historical

Historical Home prices Oahu.  Screenshot courtesy of hicentral.com

The number of single-family homes sold over the original asking price was up 168.1% in the fourth quarter of 2020, representing 45.0% of the quarter’s sales compared to just 19.0% in the year prior.

Competitive bids for condos increased during the fourth quarter of 2020. The percentage of condos that sold over asking price grew by a whopping 93.2%, and those made up 22.3% of all condo sales in the 4th quarter compared to 12.1% in Q4 of 2019.

Home Sales in Kauai and Maui

Year to date, Kauai saw a 72.38% increase in home sales year over year in June, according to Hawaii Realtors. 312 single family homes were sold compared to 181 last year. Only 69 homes sold in May.

Median house prices on the Island of Kauai rose to an average of $1,100,000 while condos rose to an average of $620,000, but are down $9,000 from last month. That is still up $150,000 in the last year alone. There are only 59 active home listings and 33 active condo listings on the island, via the MLS.

Compared to June of 2020, new condo listings fell by 15. Homes here sit on the market for 128 days.

 

Kauai real estate stats.

Kauai real estate stats. Screenshot courtesy of kauaiboard.com

Maui Housing Market

Like Kauai and Oahu, Maui is becoming a more attractive place to buy a home or property. Listings are down and prices are rising across all three islands.

The median selling price of a single family house in Maui grew 44.5% to reach cent to $1,117,500, the median price for a condo rose 26.2%.  Days on market fell 27.3% for single family homes to reach 109 days and was down 16.1% for condos at 129 days.  Months Supply of Inventory dropped to 2.1 months for houses and 1.1 months for condos. New listings have stayed steady yet overall inventory of homes is 200 homes less than June of 2020.

Single Family homes sales and prices in Maui.

Single Family homes sales and prices in Maui. Screenshot courtesy of the Real Estate Association of Maui.

Condo prices and sales in Maui, Hawaii.

Condo prices and sales in Maui, Hawaii. Screenshot courtesy of the Real Estate Association of Maui.

Maui Homes for Sale

New home listings in Maui, Hawaii.

New home listings in Maui, Hawaii. Screenshot courtesy of the Real Estate Association of Maui.

Median home prices in Maui Hawaii.

Median home prices in Maui Hawaii. Screenshot courtesy of the Realtor’s Association of Maui.

Inventory of Homes for Sale Maui Hawaii.

Inventory of Homes for Sale Maui Hawaii. Screenshot courtesy of the Realtor’s Association of Maui.

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 2021?

Single-family home availability is consistent yet condominium supply is weaker. With renewed demand, condo prices in Oahu as predicted, increased in value.

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 expectations of 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.

Housing Market Conditions?

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.

 

Building Permits

Building permits reflect future construction trends and volume, and Hawaii’s year over year growth is a brisk 62% over last years.

Screenshot courtesy of Hawaii.gov

Screenshot courtesy of Hawaii.gov

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%).

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.

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.

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.

 

If you’re looking for a home to purchase in Honolulu, Hawaii, check out Honolulu Magazine.  See more on other housing markets and trends in property management on our blog.

 

Additional Housing and Property Management Topics:

See also:  Property Management Software | Hawaii Property Management Companies | Property Management UpdateUS Housing Market Predictions | Colorado Housing Market |  Rental Property Software |  Phoenix Housing Market | California Housing MarketBuy HomeHouses for Rent | Property ManagementCalifornia Property Management Companies | Las Vegas Housing MarketAustralia Housing Market ForecastLandlord AppHOA Management Software | Best Property Management Apps  | Reviews of Property Management Software

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