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Hawaii Housing Market Forecast

January 15, 2021

Hawaii Real Estate

Hawaii’s real estate market heated up in December with sales growth of 36% along with price gains of 6%. Oahu, Kauai, and Maui all saw strong growth.

The Honolulu Board of REALTORS® reports Oahu real estate market ended 2020 with a spike in sales and new listings.  In December, sales of single-family homes on Oahu rose 36%, and condo sales rose by 20.1% compared to December of 2019.

Fortunately, new listings also grew 15.3% rose for single-family homes and were up 3.6% for condos.  Median sales prices for December 2020 were up 6.1% at $870,000 for single-family houses and up 6.9% to $455,000 for Hawaii condos.

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 December

Hawaii/Oahu home sales and prices. Screen Capture courtesy of Hicentral.

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.

 

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


The Oahu housing market regained its pace for much higher prices and for sales too.  The story appears to be heightened competition for limited inventory and continuing low mortgage rates.

Total annual single-family home sales on Oahu, rose 2.3% over 2019, yet condo sale declined 13.0% reflecting the exodus from urban high density living that has colored many major housing markets in the US.  Median house sold prices rose 5.2% to $830,000.  Condo price on average still rose 2.4% to $435,000. Total new house for sale listings fell 17.7% and were down 14.4% for condos compared to 2019.

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.

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 and Condos

Sales of single-family homes rose 5.6% or to 338 houses and the average price rose strongly 9.8% to $872,500.

Year over year, average house prices finished up 6.3% to a new median of $1,014,000 while condo prices fell 3.2% to $502,695. The higher average than median price reflects stronger activity in the large, luxury house market.

Active inventory of single-family homes in Oahu fell 34.0% year over year, yet new listings for single-family homes rose of 10.8%.

Oahu real estate market, sales and price history chart. 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 Condo Sales Stats

Condominium prices rose 1.2% to $420,000. Condos priced between $500,000 to $600,000 saw sales grow 19% over 2019. The mid range price of $400,000 to $499,999 comprised 22% of November sales.

New condo listings fell 4.1%.  Single-family homes and condos were on the market for 10 and 16 days respectively.

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 Realtors Association November Report

Hawaii real estate stats by island. Screenshot courtesy of Hawaii Realtors Association

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 increased 16.8% to $852,500 for single family homes and the price of condos rsose 3.9% to $518,520.  Pending home sales in November fell 10% for Single Family houses and 1.4% for condominiums.

Maui Real Estate. Median Sales Price. Screenshot courtesy of Realtor Association of Maui.

Maui Homes for Sale

The telling statistic that drives most housing forecasts is inventory of homes for sale.

Homes for sale Maui. Screenshot courtesy of Realtors Association of Maui.

Inventory of single family houses fell 31.5% yet inventory of condominums in Maui grew a whopping 33.5%.  The question is if condos are a bargain for property investors looking for a longer ROI term.

Homes and condos are selling fast on Maui, reflecting strong demand.  Days on market saw a 7.5% decrease in single family homes while condos were on the market for 33% less time.

Months supply of Housing inventory on Maui decreased 24% yet supply of condos grew 77.5%.

December Sales Stats: Maui

Maui is a market of few listings and big price increases.  Definitely a sellers market.

Hawaii single family housing sales state. Screen Capture courtesy of Realtor Association of Maui.

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?

Maui real estate Report, condo sales December. Screenshot courtesy of the Realtors Association of Maui.

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

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.

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.

 

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.

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.  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 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

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