Many of my clients are concerned about the state of the real estate market in Hawaii. That is a tough one. During the last few months, we saw some price reductions, declining sales, and lower buyer activity, though not as drastic here as in many other markets in the nation.
There are strong voices that are pretty optimistic about the following year. Zillow, for example, expects “the U.S. Home values to rise 1.4%” in 2023.
There are also voices with a more negative outlook for the coming year. The opinions are split on the future forecast.
Hawaii has a very specific real estate market. Besides the views and great weather all year, there is also a lifestyle that provides safety and security to its residents. We are isolated from disturbing events happening almost daily on the mainland, and it comes with a price tag. However, people that move here are willing to pay a little bit more to live Aloha.
During the last two years, we had a large influx of new residents which unfortunately exceeded the number of homes being built. There are a few new developments in plans that might offer some relief, but even with these efforts, the housing inventory is growing slowly or not at all.
Right now, we are definitely in a pause, which is typical for the shoulder season in Hawaii. When tourism season is slow, so is the real estate market here. We often see a surge in home prices and sales in January and February after the holidays are over and buyers are ready to start looking for properties again.
In addition, the Japanese market is picking up with the loosening of COVID travel restrictions both in Japan and here in Hawaii. Japanese usually represent a significant portion of real estate buyers, and I expect to see a pick-up in their activity this year.
What we are witnessing now is not comparable with past experiences. However, being an optimistic person, I still believe that we will make it through the interest rate hikes and coming recession in relatively good shape.
Hawaii still has a lot of value to offer for real estate buyers: a perfect climate, a great healthy lifestyle, safety and security, American Dream, and the list goes on. The demand for it will only be higher in the future and accessible for those who can afford it. We might lose the lower-end market with more interest rate hikes, but the luxury market should remain strong and healthy.
Being an agent for over 40 years, I have seen several big market moves, but if you look at the longer perspective, you will be doing very well buying a property in Hawaii. After all, you don’t just invest in real property; you invest in your life!