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Hawaii Housing Market Forecast

April 06, 2021

Hawaii Real Estate

Hawaii’s real estate market continued hot in February with single family housing sales growth of 5% along with price gains of 20% year over year to a new median price of $917,500. Condo sales rose grew 41% year over year with a new median price of $457,500.

Oahu, Kauai, and Maui all saw strong growth.

Hawaii Realtors Association February Report (Statewide stats)

Hawaii housing market stats. Real estate sales and prices for February 2021. Screenshot courtesy of Hawaii Realtors

Hawaii housing market stats year to date. Real estate sales and prices for February 2021. Screenshot courtesy of Hawaii Realtors

The Honolulu Board of REALTORS® reported Oahu real estate market ended 2020 with a spike in sales and new listings.  But now, house listings have dropped sharply by 19.3% and condo listings are down by 8.9%.  There are only 774 active house listings and 1,979 and condos for sales on Oahu.

Sales of homes above the $1 million price point doubled that of last February 2020.

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.” said Shannon Heaven, president, Honolulu Board of REALTORS®. “

Keep up on the latest in property management news, technology and markets on our blog!

Kauai’s real estate market was mixed with strong home sales and fewer condo sales. Its luxury market on the North Shore pushed average sold prices well up.  And the Maui real estate report shows median sales price rsoe 16.9% to $865,000 for single family and up 22.3% percent to $629,000 for Condos.  See more on the Kaui and Maui markets below.

Much to the disbelief and chagrin of housing market critics, the Hawaiian real estate market continues regaining its health.  Although, the lack of inventory may bring predictions of big price rises by spring.

Sales and Prices on Oahu During February


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.

Home Sales in Hawaii 2020 vs 2019

Oahu Annual Real Estate Report

Screenshot courtesy of Hicentral.com

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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

December 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 Houses

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.

Oahu House and Condo Sales Stats February

Oahu house prices in February grew 20% to reach $917,500.

In February, condominium prices rose 6.4% to $917,000. Condos sales jumped 41% year over year, to reach 446 sold units in February.

Home Sales in Kauai and Maui

Year to date, Kauai saw the biggest increase in home prices of all islands at 27.8% and 59% growth in sales over the same period in 2020. And Kauai condos saw a huge bump of 50% growth in condo sales, reaching a new average price of $485,000, according to Hawaii Realtors.

Median house prices on the Island of Kauai rose to an average of $1,026,000 while condos rose to an average of $675,000. There are only 173 active home listings and 208 active condo listings on the island, via the MLS.

Compared to February of 2020, new condo listings grew by 3, while new house listings grew by remained the same. Solds jumped by 13 units year over year, while sold condos grew by 9.

 

Screenshot courtesy of kauaiboard.com.

 

Maui Housing Market


Maui is becoming a more attractive place to buy a home or property and that is driving the price so high, fewer buyers can afford to purchase.

The median home selling price for single family houses rose 19.8% to a new price of $895,000. Sales of condos rose 24% to reach a new average price of $556,990.

Single Family Sales Stats. Maui Hawaii. Screenshot courtesy of the Realtors Association of Maui Inc.

Single Family Sales Stats. Maui Hawaii. Screenshot courtesy of the Realtors Association of Maui Inc.

Maui Homes for Sale

The telling statistic that drives most housing forecasts is inventory of homes for sale. Inventory of homes for sale have no reached 58.6% below 12 months previous.

The median Sales Price of houses sold on Maui in February rose 19.8% to $895,000 and rose .6% to $556,990 for condos. Days on market dropped by a significant 12% single family homes but increased 6.9% condos. Months of housing supply fell sharply by 59.3% for single family houses, yet actually grew 10.3% for condos. That reflects the continuing fear of condo living due to the Covid 19 pandemic.

Housing Supply. Inventory of homes Stats. Maui Hawaii. Screenshot courtesy of the Realtors Association of Maui Inc.

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.

Kaui Real Estate Market

Screenshot courtesy of Kauai Board of Realtors.

Please bookmark this page for future updates, including December’s report when it is released.

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.

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.

 

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 ManagementRental Unit AdvertisingCalifornia 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 |  Reviews of Property Management Software

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