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Hawaii Housing Market Forecast

August 17, 2021

Hawaii Real Estate

Hawaii home prices increased dramatically over June by $37,000 while sales dropped by almost one hundred homes.

Year over year, home prices are up 37.63% while sales rose 14.5% to a total statewide number of 814. Sales dropped most dramatically in Kauai while prices rose the most there.

On the Island of Hawaii, house sales dropped only slightly while prices dropped by $24,000 from June. On Maui, house sales stayed the same as June’s numbers while home prices dropped $60,500.

Condominium prices across the state rose $22,438 while sales dropped by about 130 units. Maui saw the biggest year over year growth in sales (+41%) while Kauai had the biggest rise year over year in prices (+31.9%). Condo sales on Oahu fell 25.6% year over year and were down 130 units from June. Oahu condos sold for about $15,000 higher on average vs June 2021, and were up 7.9% year over year.

State of Hawaii Housing Market Stats. Screenshot courtesy of Hawaii Reators.

The story of the state’s housing market is about a shortage of listings, exacerbated by the pandemic slowdown in construction and the pandemic flight from dense urban areas. While the condo market was suffering, stats show sales and prices are rising again. The success of the condo market of recent may help to ease price pressures on single detached homes in Honolulu.

Oahu Housing Market

On Oahu however, single family houses hit a new median price record high of $992,500 (+22%). That’s a jump of $177,000 from last July’s prices. And sales jumped almost 12% from 12 months ago. Days on market have dropped to 7 days. However, new house listings rose by 11% over last year.

We’re seeing these record-high median sales prices because inventory in the affordable and mid-range price brackets are dwindling,” said Shannon Heaven, president, Honolulu Board of REALTORS®. “Mortgage rates also continue to hover near record lows, enabling buyers to secure cheaper financing that, in turn, helps them to close on properties at higher price points.”

Oahu Housing Sales and Prices July.

Oahu Housing Sales and Prices July. Screenshot courtesy of hicentral.com Oahu Realtors.

On Oahu, in July, 38% of condo sales closed above the asking price compared to just 14% in July 2020. Metro Honolulu had the biggest sales volume growth of 127.5% or 218 sales last month. Condo listings are only up 1.1% from 12 months ago.

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Big Interest in Hawaii Real Estate

Each year Americans, i.e., Californians search 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.

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

Housing Stats History 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

Home Sales in Kauai and Maui

Year to date, Kauai saw a 72.38% increase in home sales year over year in June 2021, 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 Market | Hausverwaltung Software Germany | Berlin Germany Property Management  | 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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