There are a lot of reasons to want to live in Hawaii. It may be the state with the most picturesque settings anywhere in the country. Its unique Pacific island location makes it unlike anywhere in the continental United States, with a tropical climate, rainforests, volcanoes, and a consistent sun. It has always been a place people love to vacation, but until recently, demand for real estate in the state hadn’t reached a fever pitch. That is no longer the case, as, over the past ten years, real estate has surged in Hawaii.
Let’s look at some of the major developments in the Hawaii real estate market right now and consider the year ahead.
Honolulu’s Precarious Real Estate Situation
Honolulu is the biggest city in Hawaii, located on Oahu Island, with a metro area population of almost one million. It is an exceedingly popular tourist destination known for top-notch restaurants, stunning beaches, and a vibrant nightlife. In short, it is an incredible place to live. In recent years, the real estate market in Honolulu has surged, much as it has throughout the state, but the pandemic has proved disruptive.
One of the most vital aspects of the Hawaiian economy is tourism. As the pandemic has heavily impacted the tourism industry in the state, many have lost jobs. Homes in Honolulu are expensive, and there is a shortage of housing. With many unemployed residents and ongoing economic problems, there appears to be a real problem for the average person in Hawaii.
All the while, the cost of homes has been increasing. According to Fortune Builders, the median sales price in Honolulu was $1,050,000 in 2021, a 17.5% 1-year appreciation rate. The number of home sales was up to 371, a 10% increase from the prior year. This shows that the value of homes is still extremely high, and affordability might be a problem for residents going forward.
Luxury and Ultra-Luxury Market Has Skyrocketed
Hawaii is an incredibly beautiful place. For most people, living in a luxury Hawaiian home near a beach is a dream come true. Especially during the pandemic, where lockdowns had people re-evaluating the merits of big city living, the appeal of a spacious home in a pristine outdoor environment is clear. Hawaii has some incredibly beautiful homes, and, in the past couple of years, its luxury market has climbed to new heights.
Hawaii’s luxury real estate market is unquestionably soaring at a shocking rate. In the first three quarters of 2021, homes valued at $3 million or more saw a sales volume rise 235% compared to the same period of 2020, according to CNBC. Luxury home sales are climbing at a pace and volume that the state hasn’t seen before.
The state’s previous record for luxury sales volume was set in 2017, when the first three quarters saw 317 transactions and $1.67 billion in luxury sales. Over that same period, 2021 saw double the volume and transactions. Homes are being swept off the market incredibly fast, with local realtors saying it’s unlike anything they’ve ever seen.
The ultra-luxury market has had an even more incredible year. This market is composed of homes priced at $10 million or above, and there has been unparalleled growth in this sector. The same CNBC report showed that in the first three quarters of 2021, there were 64 transactions in this segment totalling $1.06 billion in sales. This was a 603% increase over the same period in 2020.
What’s in Store for 2022?
All the trends indicate that homes will only get more expensive in Hawaii going forward. According to Hawaii Public Radio, the median sales price of a single-family home on Oahu was over $1,000,000 for the sixth consecutive month. Even amid some financial turmoil for many in the state, there is an influx of buyers with a lot of money that have migrated towards the state.
The same report from Hawaii Public Radio states that inventory has decreased to record lows in the state as we head into 2022. That lack of inventory will serve to drive prices and competition up, and Hawaii is firmly a seller’s market. While homes in Hawaii won’t come cheap, there are many gorgeous options. With some of the best beaches, surfing, and natural beauty anywhere on the planet, it is hard to blame buyers for seeking out their Hawaiian dream.
