Hawaii Housing Market Update Report - Fall 2022
What’s the Hawaii Housing Market Like?
The islands of Hawaii are some of the most attractive places to live in the United States, the area is also one of the most expensive Real Estate markets in the nation. The median sales price of single-family homes across the 4 main islands tops at $977,625, and for Condos the Year-to-Date Median price is $640,125, according to the Hawaii Association of REALTORs.
Comparing the median price year over year, single-family homes have gone up 10.98%, and condos have gone up $16.54% from the same period in 2021.
Much like the rest of the nation, Hawaii's real estate market numbers reflect the impact of the pandemic and recent mortgage rate hikes. Sales volume has dropped a bit year over year. In Sept 2022, there were 1,228 homes and condos sold in the state of Hawaii, a 31% decrease from Sept 2021, when there were 1,791 homes sold.
The number of sales over the last three years peaked at 1,978 in June 2021; compared to Sept 2022’s numbers, we are down 38.7% in the number of homes sold from the peak of the last three years. Relatively speaking, this is a significant drop in sales which is a reflection of the impact of the pandemic and rising interest rates.
As of Sept 2022, the median price for a home in the state was $780,125, down3.3% from Sept 2021. It is clear that the recent steep rise in mortgage rates has curved sales activity and shrunk affordability, and the result has been a drop in home prices and sales.
How Does The Hawaii Housing Market Compare to the National Housing Market?
Hawaii has some significant advantages over the rest of the country. The Hawaiian islands are a tourist mecca attracting over them 10 million tourists in a typical year. The islands are also home to over 1.4 million year-round residents.
The diverse Real Estate landscape of the Hawaiian islands makes it one of the most unique locations in the nation. The market is fueled by wealthy out-of-state buyers causing demand for second homes to outpace any other part of the US.
As mentioned previously, the Hawaii Real Estate market is one of the most expensive in the nation. However, the average yearly household income of $83,173 in Hawaii is also above the national average, which to some degree, balances out the high prices.
Another positive characteristic of real estate values is that over the past 5 years homes have appreciated at an average of 5.8% a year, which is a modest and steady appreciation rate. Whereas many areas of the country have seen huge peaks and valleys, the trend line in Hawaii is steadily up.
Hawaii Areas With the Hottest Housing Markets
Due to its unique location and limited space where homes can be built, Hawaii remais as one of the worlds most attractive and rare housing markets. Even though the pandemic took its toll on sales numbers, as the pandemic is slowly disappearing the demand for homes will continue to grow. We are going to look at the top 5 markets with the fastest growing sales prices, an indicator of demand and desirability of Real Estate in the market.
- East Honolulu
- EWA Gentry
- Pearl City
East Honolulu is a competitive area in terms of demand. It is an area which is part of the city of Honolulu, the capital of the islands state.
The median sales price in East Honolulu is $1,424,000 in Sept of 2022 which is 28.5% higher than in Sept 2021.
In Sept of 2022, there were 38 homes sold in East Honolulu, a 42.3 % drop in sales from the same period in 2021. Looking back at the last 3 years, sales peaked in June 2021 at 91 sales.
The median days on the market is 59, which indicates a seller's market. Compared to Sept 2021, the median days on the market have gone up by 43.9%.
Although demand is tapering off in the area, we can see the that an increase of nearly 29% in the median sales price is a good indicator of the value in the area.
EWA Gentry is currently a mildly competitive market. In Sept 2022, 24 homes were sold with a median price of $800,500. The median home price in EWA Gentry is up 22.7% from Sept of 2021, while the number of homes sold was down 36.8% compared to the same period last year.
The median days on the market is 55, and it’s up 31% compared to last year.
Kailua is located on what locals know as the Winward side of the island of Oahu, and it is considered one of the most affluent communities to live in the island . The median price of a home in Sept 2022 was $1,525,000, which is definitely on the upper region of home prices compared to the national median price. The median price is 22% from Sept of 2021 and 23% from January 2022.
Kailua is considered a competitive real estate market right now. In Sept 2022, 31 homes were sold, which is 46.6% down from Sept of 2021. This is not necessarily indicative of a slowing market trend but rather a natural occurrence when you have a statistically small number of transaction in the area.
Median days on the market in Sept 2022 were 46, which is 4.5%% lower than Sept of 2021 and 8% less than Jan 2022. Whereas a large portion of the nation is experiencing a slowdown in sales, Kailua is holding steady.
Pearl City is is one of the more affordable places to buy a home in the the islands of Hawaii. Located just north of Honolulu international airport, this city of roughly 47,000 people is bustling with activity.
As of Sept 2022, the median price of homes in Pearl City was $875,000, up 19.9 percent from 2021. Over the past 3 years, prices peaked in December 2021 at $892,500
There were 25 homes sold in Sept 2022, the same number as Sept 2021. Median days on the market in Sept 2022 was 45 day, an 19% drop from Sept 2022. Sales are not slowing down and demand keep growing in Pearl City.
Kailua-Kona (Different than Kailua above) is located in the Big Island (Hawaii) which is the largest island in the nation, home of Kona coffe, the only coffe grown in the United States.
The median home price in Kailua-Kona was $685,000 in Sept 2022, up 19.1% from Sept 2021 and 5% from January 2022.
23 homes sold in Sept 2022, down 11.5% from Sept 2021. Looking back over the past 3 years, sales peaked at 56 april 2021.
The median days on the market has increased from 57 in Sept 2022 to 64 in Sept 2022. A slight increase that is not statistically significant to be considered a trend.
Higher Mortgage Rates Could Slow Price Growth in Hawaii
How will interest rates affect the housing Hawaii housing market? Hawaii is likely to fare better than many other areas of the country for a few reasons. The median household income is higher than the national median so people can absorb higher payments better.
Additionally, many of the homes in Hawaii are 2nd homes and vacation homes, many of which are purchased with cash. These types of sales are not impacted as much by rising mortgage rates.
As of early November 2022, the 30-year fixed rate mortgage is above 7% on average. The feds just announced yet another .75% increase to the Federal Funds rate which means higher cost of borrowing in many areas. Although not necessarily tied to mortgage rates, an increas in rates in business loans, credit cards, etc. put additional pressure on budgets which ultimately impact how much house someone can afford. Again, because of the high income status of the local market, and the fact that most purchases are “discretionary”, higher rates all around will have less of an impact on the Hawaii market than other markets, perhaps.
Key Market Stats for the Hawaii Housing Market:
As of the latest compiled housing report with data through Sept 2022.
Median single-home price $1,096,250 - up 20% from 2021
Median condo price $683,100 - up 25% from 2021
Existing single family home sales: 732 - down 21.1% from 2021
Existing condo sales: 902 - down 21.2% from 2021
Months supply of inventory: 3- unchanged from 2021
Historic price changes & affordability
The Hawaii housing market has seen moderate appreciation for years. Over the last 3 years, homeowners saw their homes appreciate by 19.1% in 36 months which is moderate compared to many other states in the nation.
The steep rise in mortgage rates has shrunk affordability across the nation. Fortunately, the Hawaii economy is poised to be more resilient than other states due to its higher income earnings and purchases from out of state buyers who are well heeled.
- The housing market is clearly shifting, and Hawaii housing market predictions for 2022 and 2023 are a bit more confident now than they were just a few months ago. Hawaii has not seen break-neck appreciation; therefore, it is likely that prices will hold relatively steady with only modest declines.
The economics of Hawaii are rather unique in terms of local residents’ earnings and also investment purchases from outsiders. The diversity of the market will help Hawaii fare well if there is a national correction.
- Real Estate markets are highly local, and even within the same state, there will be areas that are projected to be hit hard by the market shift, and others will fare better.
- Timing the market for buying or selling is a big gamble. If it makes sense for you to buy, go ahead and buy a home. For sellers, if you have to sell in the next 12-24 months, you may want to consider doing it sooner than later, especially if you are in an area that may be considered overvalued and has a high potential for house prices to drop.