Light at the End of the Tunnel: Dr. Lawrence Yun on Hawaiʻi’s Housing Market

On Friday, October 31, Honolulu hosted an insightful Economic Forum featuring Dr. Lawrence Yun, Chief Economist for the National Association of REALTORS® (NAR). Known for his candid, data-driven outlook, Yun summed up the current real estate climate in Hawaiʻi with humor and honesty:

“There’s a lot of not going on.”

Yet, beneath the quiet surface, Yun sees signs of renewed movement and even light flashing through the end of the tunnel for Hawaiʻi’s housing market.

From Flat to Forward: Market Finding Its Footing

Yun explained that the local market has entered a steadying phase after several years of turbulence. Hawaiʻi often follows a predictable rhythm: we go up a lot, and then we level off.

During the pandemic and stimulus surge, prices climbed nearly 40%, pushing the market to historic highs. Since then, things have flattened, but Yun emphasized that this pause is a healthy recalibration, not a decline.

Despite challenges, Hawaiʻi’s fundamentals remain strong — limited land, high demand, and a resilient economy continue to underpin long-term value.

Three Tough Years — But Better Days Ahead

Dr. Yun acknowledged that the past three years have been among the toughest in recent memory for real estate nationwide. The market has faced the most aggressive interest rate policy in decades, with sharply elevated borrowing costs freezing mobility.

“Elevated rates have kept people from moving,” Yun said, noting that many homeowners have stayed put to preserve their low pandemic-era mortgage rates. But the good news, he added, is that this long period of stagnation may finally be breaking.

Mortgage applications are now on the rise, rates are near one-year lows, and the Federal Reserve has already begun cutting rates — with expectations for another cut on the horizon. Yun forecasted even better conditions by 2026, with more manageable borrowing costs and an increase in housing inventory as more sellers return to the market.

“Conditions are moving in the right direction,” Yun said confidently. “There’s light at the end of the tunnel.”

A Tale of Two Markets: Houses vs. Condos

Yun described today’s Hawaiʻi housing scene as “a tale of two markets.”

• Single-family homes continue to perform relatively well, supported by tight supply and strong long-term demand.
• Condos, however, face headwinds from rising maintenance costs, insurance challenges, and special assessments.

Over the past decade, maintenance fees have risen about 40%, Yun noted, squeezing affordability. He also cited approximately 196 condominium buildings (and possibly more) facing special assessments for major repairs, reserve requirements, or insurance costs — all of which have weighed on condo pricing.

Even so, Yun does not expect further broad price declines, saying that prices have likely stabilized as the market adjusts to these new realities.

Insurance Pressures and a Local Bright Spot

One of the most significant challenges Yun highlighted is Hawaiʻi’s insurance crunch. With only three licensed insurers actively writing property coverage, premiums have soared — especially for older buildings.

Yun urged federal lenders like Fannie Mae to revisit strict insurance requirements, which have made it harder for buyers to obtain financing on certain condos. Relaxing some of these guidelines, he argued, would help restore balance to the market.

But there’s also good news: Hawaiʻi’s Hurricane Relief Fund has begun to play a constructive role in driving insurance rates down, providing essential support to keep premiums more affordable. This, Yun said, is a positive step toward stabilizing the condo market and improving overall affordability.

Real Estate as an Inflation Hedge

Yun reminded attendees that real estate remains one of the best hedges against inflation.
“Over time, property values tend to rise with the cost of living,” he said, emphasizing that owning a home continues to offer both shelter and long-term financial protection.

In a world where prices for nearly everything are up, real estate continues to serve as a reliable store of value — and, for many, a cornerstone of personal wealth.

Looking Ahead: Steady Improvement in 2026 and Beyond

Dr. Yun’s overall outlook for Hawaiʻi was measured but optimistic. With rates easing, inflation cooling, and more inventory expected, the pieces are falling into place for a gradual market recovery.

His key takeaways:

• Rates are trending lower, with further improvements likely through 2026.
• Inventory should increase, helping to unlock pent-up demand.
• Prices are holding steady, and Yun does not foresee a major decline.
• Buyer confidence is rising, reflected in the uptick in mortgage applications.

In short, Hawaiʻi’s housing market appears to be turning a corner.

Final Thoughts: Stability and Opportunity

After several challenging years, Hawaiʻi’s real estate market is showing early signs of renewal. While Dr. Yun’s quip — “a lot of not going on” — still rings true in some segments, the tone of his forecast was decidedly hopeful.

The message from the forum was clear:

• The worst of the rate shock is behind us.
• Market conditions are improving.
• And real estate continues to provide stability and long-term growth potential.

For buyers, this may be the time to re-enter the conversation. For sellers, it’s a chance to prepare for more activity in the coming year. And for Hawaiʻi as a whole, the housing market may soon be ready to trade “a lot of not going on” for a lot of moving forward.

Let’s Talk About What This Means for You

Every neighborhood, condo building, and housing type in Hawaiʻi is responding a little differently to these shifting market forces. If you’d like to understand how today’s trends — from rates and insurance to inventory and pricing — affect your buying or selling plans, I’d love to help.

📞 Contact me directly for a personalized market update, current opportunities, or a deeper look at your neighborhood’s outlook. Together, we can navigate the changes ahead — and position you to make the most of Hawaiʻi’s next market chapter.