From the rugged and soaring volcanic peaks of Mauna Kea and Mauna Loa to sandy beaches in hues of white, black, or green, the island of Hawaii is a sight to behold. Combine the natural beauty with the warmth and hospitality of the Big Island, and it is easy to see why so many are moving to Hawaii.
For those interested in making this perfect slice of paradise their home, the experienced agents at Hawaii Luxury Real Estate have created an in-depth analysis of the recent developments in the current Hawaii housing market. Read on to discover a data-backed forecast of where the state’s real estate market is headed in 2023 and beyond.
The state of Hawaii’s economy
While Hawaii did feel the impact of COVID-19 in 2020 and 2021, most painfully in the tourism sector, the numbers of visitors have now returned to pre-pandemic levels. Visitors from the US mainland arrived first, and as national economic concerns slowed down their numbers, a rise in international tourism provided the perfect counterbalance.
Hawaii is setting the pace for a return to healthy inflation levels, measured against the ideal rate of 2%. Currently, Hawaiian inflation is at 3%, but it is expected to continue to wane, bringing it down to 2% later this year.
Economic growth may be moving at a slower pace right now, but Hawaii is not in a recession. All eyes are on the building sector, as new construction projects will provide considerable employment opportunities and help mitigate housing shortages and the high prices of available housing. Worker demand is growing steadily, and employment is up 1.8% currently.
As global and national economies continue to rebound and inflation across the United States continues to wane, Hawaii is poised to welcome even more visitors to its beautiful shores.
Recent market trends
The Hawaii housing market has favored the seller for quite some time. With limited development zones, increasing travel, and all that Hawaii has to offer, existing houses in Hawaii appreciate rapidly. The supply of available Hawaii vacation homes rarely meets the demand. In Hawaii County’s capital city, Hilo, properties go from listed to sold in approximately four weeks.
In March of 2023, 162 houses and 58 condos were sold, a significant decrease from the 291 homes and 86 condos sold in March of 2022. However, just because sales numbers have decreased for both types of property does not mean there’s a decrease in demand. It merely means there’s a reduction in inventory, as evidenced by prices remaining high. In the same month-by-month comparison, single-family home prices have increased by 5.7%, whereas condo prices have decreased by 1.8%.
Why have condo prices decreased? Home prices have remained on a growth trajectory for more than a decade, and condos, particularly, have experienced explosive demand. From 2020 to 2021, condo prices rose 20%, and from 2021 to 2022, prices jumped another dramatic 15%. This level of growth was not sustainable, and we are observing a mild market correction.
Making the most of current real estate opportunities
If you’re waiting for larger inventories, better interest rates, or other factors before purchasing Big Island, Hawaii real estate, consider your decision carefully. There is no guarantee that inventory is going to increase significantly in the immediate future, and even if interest rates do fall in the future, the listing prices of houses are expected to increase. If interested, you can always look into refinancing your loan when rates improve. This will keep you from missing out on that beautiful property you’ve had your eye on.
Are you interested in moving to Hawaii? Eager to access all of its incredible amenities? If so, you will need a knowledgeable real estate agent to help you through the process. Consider contacting our team at Hawaii Luxury Real Estate, whose knowledge, skills, and experience will help you locate the perfect Hawaii vacation home for you and your family. We look forward to seeing you on Big Island soon. You’re going to love it here!