Hawaii Real Estate Market Prices, Trends, and Forecast 2023

Only one state can boast year-round sunshine and world-famous beaches, the longest life expectancy of all 50 states, and the US’s only capital city to boast a true royal palace — Hawaii.

Have you been dreaming of owning a home on one of the islands of this lush tropical oasis? Or maybe new opportunities are taking you elsewhere, and it’s time to sell? Because real estate investment is one of the most substantial purchases you’ll make in your lifetime, it’s always wise to do your homework before closing the deal. Tracy Allen, a trusted Honolulu real estate expert, has compiled the latest Hawaii real estate market data along with timely advice about how to buy or sell in this current market. Read on!

This question can be a complex one, as the data is subject to widely varying interpretations, depending on how you view the Hawaii real estate market. Most data charts compare year-over-year, and it probably comes as no surprise that in looking back to 2022, the year of record-setting 9% inflation and seven federal interest rate hikes in response, the market experienced a downturn. Just prior to this dramatic downshift that the inflation and interest rates inspired, real estate values had surged far beyond any previously witnessed values thanks to the pent-up demand and low interest rates during the Covid-19 pandemic.

It’s important to keep these historic events in view as we look at the short-term market data, but we will also take a step backward and evaluate the growth trajectory of real estate over a longer period of time, comparing where we are now to the historic Hawaii real estate market.

According to the late statistics from Hawaii Realtors, condo sales are down by 26.7% across the state since this time last year. In addition, condo prices have increased by 7.1%. Single-family home sales are down by 25.1% over the last year, and prices have decreased by 16.3%.

Now, with these short-term statistics in mind, let’s step back and take a look at the last decade of real estate in Hawaii. 2022’s and early 2023’s “diminished” sales are only lesser when compared to 2021. Next to every other statistic, 2022 was the second-highest in sales. By drawing a line that runs through the sales number or dollar value of home sales over the past 10 years, you’ll see a steady, upward trajectory with occasional fluctuations.

Despite seeing the number of home sales decrease in recent months, the prices for these homes have only decreased slightly. Why? This has much to do with supply and demand.

The available inventory of houses for sale began to decrease in 2022, as substantially more condos and single-family homes were sold in 2021 than any other year prior. 2021 saw the sale of 9,786 single-family homes and 11,304 condos state-wide, both of which dropped in 2022. Those high rates of sale during the pandemic were not sustainable, as there simply aren’t enough houses or condos available on the market.

We must consider the impact of last year’s economic changes as well. Inflation surged so dramatically and so rapidly that many would-be home buyers (and sellers) decided to watch and wait, hoping for inflation to decrease. The Fed attempted to curb inflation by raising interest rates substantially, leaving the Hawaii real estate market in a difficult position along with the rest of the nation. Home buyers knew they would have to pay hundreds more dollars per month for the same mortgage, all the while getting less home for the investment. Thus, sellers found their pool of interested buyers shrinking.

Three separate factors will be good news for those who are considering buying properties for rent. The median single-family home price topped $1 million, making purchasing a home an impossibility for a significant portion of the population. These residents will be looking for long-term rentals near schools and their places of employment. Additionally, those high interest rates, for as long as they remain so, will make it difficult for some buyers to secure home loans. These families will be looking for long-term rental property as well.

Also, tourism is well on its way to recovery. Americans from the mainland are the most frequent guests in the Aloha State. US tourism increased significantly last year, and tourist rentals are thriving as a result.

Would-be home buyers will be glad to hear that home prices in some parts of Hawaii have decreased somewhat. Other islands’ real estate continues to appreciate, however. For instance, the Kaua’i real estate scene has seen a median sales price decrease of 29.6% for single-family properties, and Maui has seen a drop of 19.6%. The islands of Oahu and Hawaii have seen similar shifts, although to a lesser extent. It’s also important to note that the median price of condos on Maui has risen significantly (by 21.9%).

If you have long-term investment goals in Hawaii, it’s time to make a move! With declining inflation and expectations that interest rates will follow suit throughout this year and into 2024, confidence in the market will increase buyer activity.

Due to new construction restrictions, and by virtue of the fact that Hawaii is an island, the asset of buildable land is very limited, and appreciation of real estate is inevitable. Whether you plan to use the property for your own residence, a vacation home, or a rental property, there are many ways the home can add value to your investment portfolio.

According to the economists at UHERO, Hawaii has tremendous strengths to draw from in order to weather the changes the US economy has experienced in the last year. Growth in job opportunities and tourism, coupled with the undeniable desirability of living in this world-famous island paradise, are all great news for investors.

If you’re ready to reach your island dreams, it’s time to get in touch with Tracy Allen, a highly experienced Hawaii real estate professional. She is prepared to work tirelessly to help you find that perfect property to call your very own. Give her a call today to get started.