Real estate in Honolulu has always been a popular option for those looking to retire or even work from paradise. Honolulu real estate is an even hotter market since the beginning of 2020. This list contains some of the latest Honolulu real estate market trends that you need to know about before deciding if now is the right time for you to buy your dream home in Honolulu.
1. Seller’s market
Honolulu real estate market trends indicate that it is strongly a seller’s market, and will potentially remain a seller’s market into at least the near future. Because of a limited amount of space on the island, Honolulu––and Hawaii in general––has a low housing inventory. This means that there are often more potential buyers than there is real estate in Honolulu for sale. Sellers are at an advantage in this scenario.
A substantial number of homes sell for above the asking price, and there are often multiple potential buyers looking to purchase any one piece of property. The competition among buyers in Honolulu is strong currently. If you are looking to buy a piece of real estate in Honolulu, you will want to be prepared to move quickly, and potentially offer a higher maximum bid than you would typically consider.
2. Investors turned landlords
The lack of housing inventory in Honolulu indicates that many investors of real estate in Honolulu will start becoming landlords. The increase in interest rates by the government will also have an impact on Honolulu's real estate market trends like this one. As the cost of purchasing a house in Honolulu increases, more people will turn to renting. This leads to an increased need for rental properties. As home prices rise, there becomes a smaller profit margin for flipping houses in the Honolulu area. Long-term investment in rental property is beginning to look like the direction that real estate investors will take.
3. Hot luxury housing
Year after year, the number of luxury homes in Hawaii has decreased dramatically. As is typical of a seller’s market, the low inventory has caused an increase in the cost to buy luxury housing in Honolulu. Since the pandemic began in 2020, many people are seriously considering where they should live, and Hawaii is often a popular choice because of the luxury housing, scenic views, and beautiful weather. Inventory shortages are predicted to continue into the immediate future as we come out of the pandemic and travel becomes a possibility for many.
4. Mainland vs. international buyers
Currently, mainland buyers – that is, buyers located in the mainland United States – are buying more property in Hawaii than international buyers. As travel became harder throughout 2020, international buyers that would typically purchase around 4-5% of homes in Hawaii, dropped to around 1%.
As the pandemic restrictions are lifted, Hawaii is expected to see an increase in international buyers again. These buyers have been waiting to purchase real estate in Honolulu, and are expected to begin their search again soon. International buyers tend to make their real estate transactions in cash, meaning that the rise in interest rates will not have as much of an impact on these buyers as on mainland buyers. This influx of international buyers could cause the prices of housing to increase even more, continuing the Honolulu real estate market trends that indicate a seller’s market in the future.
5. Single-family vs. condo
Potential homebuyers who would typically be looking into the purchase of a single-family home are reassessing their options. The rise in real estate prices is causing people to reconsider single-family housing in exchange for a condominium. While prices of condos are increasing as well, they are still often available at a lower price point than single-family housing. There does not appear to be a decrease in the number of people looking to purchase property in Honolulu, just a change in their priorities and final decisions.
6. Remote worker influx
Many jobs across the United States turned to remote working throughout the pandemic, and many continue to remain remote. This means that homeowners across the United States are reconsidering where they can live and raise their families. With the ability to work from anywhere, many are choosing to relocate to Hawaii, with a specific influx of buyers from Silicon Valley in the market for luxury housing. Even if they need to go into the office, they still get to return to their home in paradise at the end of their travels.
The trend of Hawaiian home purchases spurred by the pandemic is an interesting one. Because of the quarantine requirements for those traveling to Hawaii, homebuyers are taking real estate tours virtually and completing their sale entirely online. Then, once they arrive in Hawaii, their plane can land and they can go directly to their newly acquired property.
Many buyers are choosing to forgo housing that is already built and instead choosing to purchase land around Honolulu to build their custom houses. Since remote work is here to stay, they are willing to pay to build a house that meets their needs, including a fully built-equipped home office.
Now that you have had a good look at the latest trends in the Honolulu real estate market, you’re ready to decide if now is the perfect time for you to buy your dream home in Honolulu. When you’re ready to begin looking for your perfect piece of real estate in Honolulu, you want to work with a real estate agent that is local to the area and has an expert level of knowledge surrounding the housing market. Sean Sonoda was born and raised in Oahu and has more than 15 years of experience in real estate. Sean treats each of his clients as though they are a part of his family, and will go above and beyond to meet their needs throughout the home buying process. Reach out to Sean when you are ready to get his help finding your dream home in Honolulu.