Hawaii recognizes as one of the most beautiful places in the world. With its white sandy beaches, crystal clear blue waters, and lush green mountains, it’s no wonder that people are still flocking to the island state and looking to buy property here. The Hawaii real estate market has been hot for a while now. However, recent changes during the global pandemic have made it an even better time to buy, with mortgage rates still near historic lows, a reduction in foreign buyers, and the move toward the Great Resignation. This article will discuss why moving fast is your best bet if you’re considering buying property in Hawaii.
More Buyers than Available Housing
The Hawaii real estate market is experiencing unprecedented demand in 2022, with supply unable to keep up. As a result, property prices are soaring, with bidding wars driving up prices in popular tourist areas like Honolulu and Lahaina. The luxury housing market is booming, with $3.7 billion worth of homes above $3 million sold in 2021, double the previous record. Hawaii’s Department of Business, Economic Development and Tourism reports a 21.95% overall growth in property prices, with a 20.7% increase in Honolulu’s median price for single-family resales in Q4 2021 compared to the same period in 2020.
Despite the high demand, there are fewer homes on the market compared to last year, resulting in a drop in sales for both single-family units and condominiums. The median days on the market for condos in Hawaii has decreased from 25 to 16 days, indicating that properties are selling quickly, with some buyers purchasing homes sight-unseen.
If you’re considering buying property in Hawaii, it’s crucial to act fast in this competitive market. With prices steadily rising and supply unable to keep up with demand, now is the time to make your move and secure your dream home in paradise.
They are Not Making More Land in Paradise
Hawaii’s housing supply cannot keep up with the demand, which will only increase as more people look to move to the island state. High-profile individuals like Jeff Bezos and Mark Zuckerberg buying property in Hawaii have demonstrated investment potential and increased prices. Despite the stable construction industry, more construction efforts are needed to meet buyer demand due to strict building codes and regulations, resulting in lengthy entitlement processes that can take years to complete.
The time-consuming and costly permitting process presents many hurdles for developers, with some projects needing to be abandoned before they start. Labor costs have also risen, and Honolulu now has the third-highest building costs after New York and San Francisco. The lack of available properties, lengthy entitlement process, and high construction costs make it unlikely that Hawaii’s housing inventory will catch up to demand soon. Therefore, purchasing property in Hawaii while you can do so is essential in this competitive market.
Reduction of Foreign Buyers in the Market
The pandemic and recent global events have led to a significant decrease in foreign property investment in Hawaii, mainly from Japan, South Korea, China, and Russia. Sales to Japanese buyers decreased by 61% in Q4 2021, while sales to South Korean buyers dropped by 70% in the same period.
During the pandemic, travel restrictions and country advisories prevented potential buyers from physically visiting properties, and global political tensions have made some investors hesitant to purchase property overseas. However, foreign investment is still happening, and with travel restrictions lifting and vaccines becoming widely available, we can expect a rebound in foreign investment in the coming months.
As a result, property prices in Hawaii are likely to rise even higher, making now an opportune time to buy, as fewer foreign buyers currently compete for properties. But this may only last for a while, so taking advantage of this situation is crucial.
Interest Rates Are Still Near Historic Lows
Since the pandemic’s onset, mortgage rates have dropped significantly, reaching an all-time low of 2.65% in March 2020. Rates were under 3% by the end of 2020, which, while low, is still significantly lower than pre-pandemic rates.
It is an excellent opportunity for potential home buyers in Hawaii to purchase a property with lower monthly mortgage payments. Low mortgage rates provide significant savings as mortgage payments are one of the largest expenses for homeowners. Higher speeds reduce a buyer’s purchasing power, with every percent increase in interest impacting buyers by approximately $100,000 in buying power.
These low rates also make it an ideal time to refinance an existing mortgage or invest in a property. Buyers can take advantage of lower interest rates, resulting in more money to reinvest in the property.
Considering the potential for mortgage rates to rise again, now is an excellent time to purchase property in Hawaii and take advantage of the low-interest rates and potentially more favorable terms. Take advantage of this opportunity!
The Bottom Line
If you’re thinking about buying property in Hawaii, you’ll want to act fast before the prices become unattainable. The market is expected to rebound in the coming months as more travel restrictions are lifted and foreign investment starts to flow back into the market. In addition, interest rates are still near historic lows, making now a great time to buy a property with a low monthly mortgage payment.
Additionally, The Great Resignation poses another opportunity for potential home buyers and renters. Many people have been re-evaluating their lives during the pandemic and deciding that they want to live in a place that brings them happiness. For many, this means moving to Hawaii. The state has seen an influx of people moving here over the past year as they look to escape the cold winters, high taxes, and fast-paced lifestyle of places like New York City and Los Angeles. As working from home has become the new norm for many people, it has made it easier for them to relocate to a place like Hawaii where they can enjoy the year-round sunshine and slower pace of life.
If you’re considering buying a home in Hawaii, there’s no time like the present. is here to help you find the perfect property and get the best mortgage rate possible. Contact Elias today to learn more!
