The Current State of Hawaii’s Real Estate Market: A Comprehensive Guide

The Current State of Hawaii’s Real Estate Market: A Comprehensive Guide

Interest in Hawaii’s glorious beaches and phenomenal weather dates back centuries, long before the Western world discovered the North Pacific archipelago in 1778. The 50th and most isolated state in the U.S. — and the most isolated populous chain of islands in the world —  boasts some of the choicest pieces of high-profile properties, and the globe is increasingly taking notice.

In 2021, at the height of the COVID-19 housing boom, Jeff Bezos purchased a 14-acre slice of Maui’s serene, untouched, and exclusive South Side for a jaw-dropping $78 million. Oprah Winfrey owns an estimated 1,000 acres on the Valley Isle, on an island that only comes in at 727 square miles. The founder of Facebook (now Meta), Mark Zuckerberg, owns 1,500 acres on Kauai, and Larry Ellison — the technology magnate who founded Oracle — legally possesses 98% of the island of Lanai.


But it isn’t just behemoths of the technology industry and world-famous celebrities who are keenly interested in Hawaii’s sublime climate and legendary waterfalls. As the pandemic roiled the world, Hawaii’s real estate scene reached unprecedented heights. Then, houses would draw as many as 20 bids per day, and the median price of a home in Maui shot up to a record $1,160,000


It was a huge boon for real estate agents and sellers, who cashed in on the collective desire to flee urban centers and seek out a quieter pace of life 2,472 miles away from the U.S. mainland. This is to say nothing of the foreign investors who swept in searching for vacation properties, challenging an already contentious housing market where even the hardest-working Hawaii residents struggle to find reasonable rent, let alone purchase a house.


And yet, as we’re nearing the end of the first quarter of 2023, one has to ask, what is the current state of Hawaii’s real estate market? Is it still enjoying the frenzy the pandemic inspired? 


Real estate pro Tommy Kim is here to provide you with important insights.

Home sales across Hawaii have slowed

While sellers enjoyed multiple offers, cash bids, and above-asking prices in 2020, 2021, and part of 2022, 2023 has gotten off to a slower, more level-headed, and less frenetic start. 


Hawaii Business Magazine reports that the average time to sell a home on Oahu, the most populated and exhilarating island in the state, recently dropped to 47 days (from listing to an accepted offer). To understand this radical shift, consider how the median time to sell a home in the same place was 13 days in February 2022.


Meanwhile, as of March 2023, sales volume for single-family homes is down 36% statewide. The median sales price for these properties dipped below $1 million, a significant milestone for single-family properties. And while there are more condos on the market, the condo vertical saw a 34% decrease in sales volume at the end of Q1 2023.   


What does this mean, in general? It means we have officially entered a more equitable market. The Hawaii real estate scene isn’t as slanted toward sellers, who were often presented with multiple offers with no or few contingencies attached. Instead, buyers and sellers will be in a more balanced position, and each may have leveraging power.


Consult an expert real estate agent like Tommy Kim for hyperlocal insight into inventory across Hawaiian islands. For example, let’s say you’re interested in Oahu homes listed between $800,000 and $899,999. Tommy could tell you there are three times as many such homes on the market than there were a year ago.

Interest rates have factored hugely into the present real estate market

Much of the homebuying frenzy Hawaii and the rest of the country saw during the peak of the pandemic was due to historically low mortgage loan interest rates, which hovered around 3%. Rising inflation spurred by the pandemic and supply chain issues prompted the Fed to continually raise interest rates. As of March 26, 2023, the national average interest rate for a 30-year fixed mortgage comes in at 6.87%, a jump that has caused buyers to press pause on their home searches. 


Will this impact buyers like Bezos and Zuckerburg? Doubtful. But it has already impacted the “temperature” of the national real estate market, including Hawaii's

Home prices may decline in some parts of the state – and continue to climb in others

The overall cooling off and slowing down of the housing market in Hawaii and elsewhere has naturally affected home prices. As previously mentioned, Hawaii’s median home price recently fell below $1 million for the first time in over a year. Despite encouraging factors like population growth and the tourism industry, the market for Hawaii real estate has decelerated in the beginning of 2023. 


That said, the most desirable areas of Hawaii are less affected by adverse conditions. The median price of a home on Maui, for example, continues to top $1 million, and home sales on the Big Island have risen 0.47%. Buyers looking to take the road less traveled should consider places like Hilo, with its low entry point ideal for first-time buyers, or Waikiki, where median household incomes are on the rise. Meanwhile, home prices on Kauai have gone down about 14%. In other words, where you buy or sell will make an enormous difference.

What does all of this mean for prospective homebuyers?

Even as we advance into the peak season of 2023, the slower real estate market in Hawaii means you can peruse properties at a more leisurely pace than was possible in the recent past. This allows you to explore more hidden gems, particularly in places like Oahu, which has dramatically unique enclaves within the state’s capital city. 


Further, bear in mind that you may want to buy in places where prices have dropped before the next surge of moguls comes marching in — yes, even with higher interest rates, which are not only expected to fall (albeit only slightly) in 2023 but also because you may have the opportunity to refinance in the future. 


Additionally, and this ought to be a cause for celebration, you should have more leeway during negotiations as you may not face the bidding wars that defined the previous years.

And what is the outlook for sellers?

As a prospective seller in Hawaii, the relative strength of your position depends on your island, your neighborhood, and your competition. 


If you own a home on Maui and have been weighing the idea of selling it, now may be a golden, opportune time for you to sell. With the exception of 2008, the adage that “prices on Mauri rarely, if ever, go down” has held true, so an honest real estate expert would not advise you to rush to sell.


Regardless of where you are in the Aloha State, you can expect a longer time on the market than in the high-paced days we just saw; moreover, buyers may demand contingencies, including inspection clauses. These trends underscore the importance of staging your home and performing a pre-listing inspection to ensure you aren’t caught off guard during negotiations. 


Lastly, in many ways, part of the future of Hawaii rests in your hands. How can you contribute to its sustainability, its kama’aina? Answering this, even if it’s only internally, will help guide your path forward. Your best course of action could be to sell your property or perhaps transform it into a long-term rental that could benefit a full-time resident and their family. 

Your next steps in Hawaii real estate

Maybe you want to sell and then buy a different property to keep in your ‘ohana for generations. Above all, your wisest solution is to work with a consummate professional who understands the nuances of the local market and is passionate about Hawaii as a whole. The best real estate agents can recommend local mortgage lenders, home inspectors, and other contractors.


This describes expert real estate agent Tommy Kim perfectly. A former pro golfer, Tommy has been recognized with the prestigious Coldwell Banker International President’s Premier award, among other distinctions. Buyers and sellers enjoy peace of mind with Tommy working on their behalf. Schedule a consultation today for impeccable service, straightforward counsel, and a trustworthy partner for your Hawaii real estate goals.

Photo by Alisa Matthews on Unsplash 

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