Why are house prices in Honolulu, HI going down?

Question

I've noticed in forecasts that house prices in Honolulu, HI are going down. Does anyone know why? Also i've noticed many of the houses have been on the market for a very long time (even before COVID.)

My wife and I currently live in NYC but she grew up in Hawaii and we're ready for a change of pace and are currently looking at properties. Any insight you can share would be very helpful!

Lane Kawaoka · Answer

Hawaii is being very conservative in terms of opening up. Its a little sad watching the tourist economy getting destroyed.

I live here but don't invest here for that reason... don't want to be a landlord in a blue state where the landlord laws are not on my side.

Isi Nau · Answer

Aloha @Jake Silverman

Right now we're seeing wide ranges in DOM, sale to list ratio, year over year appreciation/depreciation, etc. depending on the neighborhood and property type within the neighborhoods.  You'll want to determine which neighborhood and property type you're interested in, and then crunch numbers within those criteria.  The market right now in Hawaii is requiring a little more work to determine if a property is a good buy.  It is too risky to look at island-wide or state-wide metrics.

We're still seeing strong metrics for properties in the $700k to $1.5m range on Oahu.  I can only provide anecdotal theories as to why.  The buyers we're seeing in this price range are those who still have strong employment (i.e. not effected by the pandemic and 14 day quarantine).  There is still quite a bit of competition in this part of the market.

Feel free to reach out if you have any additional questions.  I hope you folks can make the jump!  NYC to HNL would be an awesome change of pace.

Rob King · Answer

@Jake Silverman there has been a strong market on the islands for numerous years, recently Kauai saw almost 100% appreciation in less than 2 years so the market is slowing to correct for that rapid expansio and yes there is the staggering affect of covid as the islands saw unemployment rates above 32%.

I am not a realtor but an investor and even my open source research suggests that over 70% of sellers are waiting until the quarantine is lifted, that being said my better half just signed on a SFH below market that needs a lot of TLC but we will be able to see instant equity.

The market is in an interesting place but as an investor there are plenty of opportunities.   Some will say wait until the correction stabilizes but I've never met anyone who can time a market.

SD Young · Answer

@Lane Kawaoka I agree it's sad. I drove through Waikiki the other day,  it's depressing. Boarded up windows on several properties. Not a lot of foot traffic. I made it a point to dine at one of the restaurants, and there was only one other customer seated. Limited menu, one server.  With unemployment over 20%, it's going to be a slow recovery I fear.

Michael Borger · Answer

You might be referring to a recent headline that made a blanket statement that 'sales were down' in the islands. However, what the article really said was that volume was down - prices, on the other hand, were not. So it depends on your definition of a 'down market'. It was a misleading headline that was circulated around the net.

Percy Matsunaga · Answer

@Lane Kawaoka

I agree with that. A state that is not on the LL side is not good.

Percy Matsunaga · Answer

@Jake Silverman

I lived in Honolulu for a while during the whole housing crisis and prices fell 2-3%, but it kept rising after the crisis was past.

One thing about the Hawaii Islands, it’s running out of land to build more properties so prices might fall but it will keep on rising no matter what.

Ex: In 2005 Condo average prices were $310K but now in 2020 it’s averaging $365K. And that’s just for a regular 2Bed/2Bath.

Lake Lutes · Answer

Aloha Jake! I sent you a PM. Hope to see you guys back on the island in the near future!

Why are house prices in Honolulu, HI going down?

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