Welcome the beautiful Aloha State! If you were one of the 7.8 million U.S. tourists to visit this tropical paradise in 2022, you’ve no doubt been longing to return ever since. If you weren’t, the photos your friends and family shared certainly inspired some real travel envy. If you dream beyond simply visiting Hawaii, but would love to experience “ohana” in one of the close-knit communities Hawaii is known for, Agora Hawaii, Honolulu’s real estate experts, would love to introduce you to all that Oahu has to offer.
Honolulu overview
Hawaii’s beautiful capital city and cultural hub of Honolulu is located on the southeastern corner of Oahu. The city is known for world-famous Pearl Harbor, Waikiki Beach, surf style, and a blend of island culture and modern city living.
Honolulu is a hub for young professionals, offers a great quality of life, and is diverse in populace and culture. Regardless of the season of life you find yourself in, Honolulu is an excellent place to raise a family and home to some of the state’s best public schools. If you’re looking for a great place to retire, Hawaiians have the longest life expectancy of any part of the U.S., and Honolulu is one of the best places to retire in the island state.
Local residents celebrate the ample outdoor activities, from watersports to hiking, in the most beautiful settings. Diverse cuisines and cultures meld for delectable dining experiences. Because so many residents are from other islands or other nations originally, they have left home and family behind to embrace living in Honolulu. This creates a unique atmosphere of close-knit ties and a level of community involvement and neighborly support that can’t be found back on the mainland.
What’s happening in the Honolulu real estate market?
How we see the current market for homes for sale in Honolulu really depends on the lens through which we view the data. It’s no surprise that Covid-19 and its recovery shifted everything in the housing market, so if you zero in on the last year’s trends, you may conclude the Honolulu market is volatile or unpredictable. In May 2023, home sales for single-family dwellings had diminished 24% over one year earlier. Prices have remained high regardless, declining only 4% for homes. Condo sales have declined by 36%, yet prices have only dropped 2%.
Now, take a step back and look at the housing market through a longer-range lens. The number of homes for sale has returned to pre-pandemic levels, even though those numbers seem low compared to recent history. Home prices are very similar to what they were in September of 2019, and the rate of sale now is better than it's been in years, with the exception of the few months of post-pandemic frenzy.
What factors are contributing to the current market?
The most comprehensive research and analysis of all sectors of Hawaii’s economy are conducted by UHERO, the University of Hawaii’s Economic Research Organization. In their second-quarter report, several factors were illuminated that either directly or indirectly impact the housing market.
Covid-19 recovery
First, the real estate surge post-Covid-19 resulted in unprecedented home prices and sales that have never been seen before or since. Those 2021 record-making months have skewed results, making modest progress or modest downturns seem cataclysmic.
Job opportunities
Unemployment is extremely low at 3.5%, better than the mainland average. The construction industry is seeing the greatest levels of employment, a promising indicator of future development, impending economic growth, and hopefully alleviation of the housing needs through new housing developments.
Banking
In March, the Silicon Valley Bank and Signature Bank’s failures created a nationwide scare in the industry. As a result, most banks, particularly the smaller ones, tightened their lending policies. This impacts the ease with which buyers may be able to qualify for loans, as well as the terms of those loans.
Inflation
By the summer of 2022, inflation was an unprecedented 9%. Lowering energy costs and numerous interest rate hikes by the Fed have helped to curtail the impact of inflation, with current levels approaching 5%. Food and housing costs still remain high, so it can be difficult for a significant sector of Hawaii’s population to be able to afford a home and everyday living expenses.
Interest rates
With inflation coming swiftly down and nearing the ideal rate of 2%, is it time for the Fed to lower interest rates and give homebuyers some relief? Many hope so. All eyes will be watching the Fed carefully in the upcoming months to see their next move.
What’s in store for Honolulu real estate through this year and beyond?
A mild recession is predicted for the U.S. as a whole, but several factors may help Hawaii avoid the economic pains of mainland states. Hawaii is a top tourist destination on a global scale, and as the world returns to travel, this sector will have a positive impact on all sectors of the economy, including housing, both the retail and the rental markets. The cohesion and resilience of the people of Hawaii are also a force to be reckoned with. All business sectors are eager to collaborate and solve problems to keep Hawaii strong.
Opportunity is increasing in Honolulu. Unemployment is at a fifty-year low, and gainfully employed workers who will see their dollar stretch further as inflation continues to decline will soon be ready and able to make home purchases. The rental market has seen a 17% increase year-over-year since the pandemic. This rate of growth is not sustainable and is expected to stabilize soon or even decrease.
Because of Hawaii’s unique place in the world and the community that makes it a great place to live, the housing market can be expected to make significant gains in the upcoming months. When people no longer fear what the economy will do and don’t have to worry if they will be able to qualify for loans, they will become more willing to buy and sell real estate.
If you’re a homebuyer, now is a great time to consider an adjustable-rate mortgage (ARM), or rest assured knowing that you can buy now to get that perfect property you love and refinance later at better rates as they finally drop to more sustainable levels. If you’re selling a home now, odds are you will be competing against a smaller pool of homes for sale in Hawaii. Working closely with your agent to strategically price your home at a competitive rate will ensure the best deal for you.
Where do I start?
If you’re ready to make your first move toward a real estate transaction in Honolulu, you need the local expertise and customer-oriented approach of the Agora Hawaii team. They will help you stay abreast of all the latest changes in the market and what that means for you as a buyer. They’re also committed to helping your family find the perfect place in Honolulu to call home.
