What is the Future of Hawaii Real Estate?

The Future of Real Estate on Oahu

Hawaii Industry Professionals Share Their Predictions

If you are looking to buy or sell a home – or even if you are a current property owner or aspiring investor – it is important to know where Hawaii’s unique real estate market is headed in future years. Our dynamic world includes changing real estate market conditions, so understanding Hawaii’s market will inform future decisions to buy, rent, or sell.

To help strategize your real estate endeavors, we asked local experts about the future of real estate in Hawaii. Here are the top twelve trends they predict for Hawaii’s future real estate market.

1. Appreciation Slows but Still Grows

Hawaii real estate is always a long-term investment because of the scarcity of land. The question is not will my real estate go up in value but at what velocity. Right now, home values are seeing less appreciation than in the past ten years, but the pendulum will eventually swing back. -Joel Kurata, Mortgage Consultant, Element Mortgage

2. The Cycle Swings Affecting Hawaii Home Values

We're seeing leading indicators that would say a transition is underway. As for Hawaii real estate and more specifically, Oahu real estate, home prices have reached record levels and continue to put an enormous strain on local buyers. Over the course of the last seven to eight years we've seen appreciation rates of 5 to 10 percent. Without incomes keeping pace, I don't know how we'll sustain upward pressure on home values especially if/when interest rates spike, further eroding affordability and buyer confidence. -Koa Cassady (RA) with Locations LLC

Home values will fluctuate based off the supply and demand of the real estate market. On Oahu, there are many condos being built and that will heavily increase the supply over the next 5 to 10 years. -Holden Lau, Realtor-Associate at Coldwell Banker Pacific Properties

Home values in Hawaii have always been good, because Hawaii is an island and is always in demand, yet supply is short. You always have adjustments in different cycles. -Joe Paikai, Realtor, Broker in Charge, Keller Williams Honolulu

3. Real Estate Remains a Long-Term Investment

Hawaii, along with most of the U.S. real estate market, has been on a bull market since the “Great Recession”. Future values are not for anyone to predict. Many speculators who think they are capable of predicting the lows and highs end up with miserable returns. Property investment should be considered a long-term investment. On Oahu, the statistics show the average annual increase in median sales price over the past 34 years is 4.84% in single family homes and 4.64% in condos. -Chris Y. Zhu (RA) RS-81398, Coldwell Banker Pacific Properties

4. Shift from a Seller’s to Buyer’s Market

We are currently in a shifting market from a seller’s to buyer’s market that will occur in the next year or two. Prices of higher-priced homes are being reduced because of less activity and demand and the possibility that the perception of their value is less. On Oahu, the months of inventory is increasing and is currently at 3.9 months of inventory; it will change to a buyer’s market when we reach five months of inventory. My indication is that the Hawaii market changes when the West Coast market and the Maui resort market changes; this is because the West Coast market sales will affect the Maui resort market sales, which will affect the market on Oahu. -Joe Paikai, Realtor, Broker in Charge, Keller Williams Honolulu

5. Consistently Low Interest Rates

I see interest rates staying in this general range for the next few years, as the government wants to keep the housing market robust and keep the economy up. Remember, we are still at historic lows for interest rates so now is still a great time to purchase or refinance. -Joel Kurata, Mortgage Consultant, Element Mortgage

6. Affordable Housing Developments

As prices keep going up, developers and the government will look to make more “affordable” housing for people with lower incomes. These developments would be outside of “town,” or the Honolulu area. I also see the luxury condo market slowing down as there is no way that it can sustain the same pace as the last decade. -Joel Kurata, Mortgage Consultant, Element Mortgage

7. Adding to Existing Homes to Meet Housing Needs

More parents are renovating or adding on to their existing homes for their children or parents. Hawaii needs about 5,000 units built per year, but we only build about 2,000 units. Homes are in demand for purchase and rent. -Joe Paikai, Realtor, Broker in Charge, Keller Williams Honolulu

8. Modifying Building Laws

The City and State are looking at changing some of the building requirements and possibly land owned by the State of Hawaii. Land is limited and construction materials and labor costs are high. But in the next 10 years Hawaii will need more affordable housing for purchase and rent. -Joe Paikai, Realtor, Broker in Charge, Keller Williams Honolulu

9. Growth of Online Real Estate Firms

I believe we'll continue to see new tech startups and venture capital pouring money into the real estate industry over the next 5 years. We're already seeing a number of new, tech-backed brokerages trying to find their legs with full intention to disrupt the traditional brokerage model that's been a mainstay for decades. -Koa Cassady (RA) with Locations LLC

Technology has paved the way for the rising popularity of “tech” real estate firms like Redfin. It’s a tech-based model that has gained popularity over the past five years. I’m not going to say traditional real estate is dead, but firms like Redfin will definitely take their piece of the market. -Joel Kurata, Mortgage Consultant, Element Mortgage

More venture capital is going to more online real estate companies: Compass, Redfin, Open door, Zillow; Amazon just did a partnership with Realogy, who owns Coldwell Banker, Century 21, ERA and Sotheby's. I think that other technology companies may also get involved, including Google. -Joe Paikai, Realtor, Broker in Charge, Keller Williams Honolulu

10. Agents Won’t Become an Anomaly

Although technology brings convenience to our daily lives, the real estate industry has not turned out to be as dramatic as many thought it would. The real estate agents have not been replaced by artificial intelligence. Being a state where word-of-mouth referral thrives the most, Hawaii is no different. The use of search sites benefits buyers to look for properties based on their own preference. However, buyers need agents’ experience to help verify the property disclosure. -Chris Y. Zhu (RA) RS-81398, Coldwell Banker Pacific Properties

As for the 10+ year outlook, I'm inclined to believe that we'll see the real estate industry constrict due to eroding commissions, tech, and automation; leaving only enough oxygen for high-value real estate agents and niche specialists to survive. Large real estate teams and those who can capitalize on herding consumer attention may lead the charge in sucking the oxygen out of the room. -Koa Cassady (RA) with Locations LLC

11. Local Lenders Remain

In the mortgage industry, online lenders, like Quicken, will continue their presence in Hawaii, but many buyers still prefer local lenders who know Hawaii’s unique market and can service them better. -Joel Kurata, Mortgage Consultant, Element Mortgage

12. Data-Informed Housing Decisions

Technology has changed how buyers and owners get information. Information is much more accessible.  It has changed how information is presented and digested. -Holden Lau, Realtor-Associate at Coldwell Banker Pacific Properties

Housing data is available to more people now than the last ten years, which is allowing the new generation to look at neighborhoods and homes prior to their purchase. -Joe Paikai, Realtor, Broker in Charge, Keller Williams Honolulu

Market knowledge and client service will always remain as the great equalizer, but technology can also run parallel and catalyze more market knowledge and service to those who leverage it right. Technology is also putting a number of tools in the hands of the consumer, equipping them with knowledge and resources that were once only available to them by way of consulting a real estate professional. -Koa Cassady (RA) with Locations LLC

Industry Professionals

Holden Lau (RA)
Coldwell Banker Pacific Properties

Koa Cassady (RA)

Joel Kurata
Mortgage Consultant
Element Mortgage

Joe Paikai (RB)
Keller Williams Honolulu

Chris Y. Zhu (RA)
Coldwell Banker Pacific Properties