The housing market in Honolulu, Hawaii, is a unique blend of beauty, desirability, and specific market trends. In 2023, the Honolulu housing market is experiencing notable changes in terms of house prices and trends. In this article, we will delve into the current state of the Honolulu housing market, exploring key insights.
Honolulu Housing Market Trends
Decrease in Median Sale Price
According to Redfin, the median sale price of homes in Honolulu has seen a significant change compared to the previous year. In July 2023, the median sale price was $515,000, reflecting a decrease of 10.5% from the previous year. This reduction in median sale price suggests a potential shift in the market dynamics and buyer preferences.
Extended Days on the Market
Homes in Honolulu are now taking longer to sell compared to the previous year. The average number of days a home spends on the market before being sold has increased to 58 days, up from 53 days in the previous year. This extended time frame could indicate a slight decrease in buyer demand or an increase in available inventory.
Decline in Number of Homes Sold
Another noteworthy trend is the decrease in the number of homes sold in Honolulu. In July 2023, there were 293 homes sold, which is a decline from the 364 homes sold in the same period last year. This reduction in sales volume could be attributed to various factors, including economic conditions, interest rates, or changes in buyer behavior.
Competitive Landscape
The Honolulu housing market's competitiveness is rated based on the Redfin Compete Score™, which assesses the level of competition in an area. Currently, Honolulu is categorized as “Not Very Competitive,” with an average of two offers per home. Homes are selling at around 2% below the list price and spend approximately 62 days on the market. This suggests a relatively balanced market where buyers have a reasonable amount of time to consider their options.
Market Forecast and Comparison
Honolulu vs. National Average
Honolulu's median sale price of $515,000 is 22% higher than the national average, highlighting the premium associated with owning property in this picturesque city. However, it's important to note that the overall cost of living in Honolulu is 83% higher than the national average, which could impact affordability for potential buyers.
Nearby Cities' Competitiveness
When comparing the competitiveness of Honolulu to nearby cities, it's evident that the market is somewhat less competitive. While some nearby cities experience multiple offers on homes, Honolulu remains in a balanced state. This can influence buyers' decision-making processes, giving them more time to evaluate properties and negotiate offers.
Sale-to-List Price Ratio
The sale-to-list price ratio in Honolulu is an essential metric indicating the negotiation power of buyers and sellers. In 2023, the ratio stands at 98.4%, suggesting that, on average, homes are selling very close to their list prices. This could be indicative of a market where sellers are pricing their properties reasonably, and buyers are willing to meet those prices.
Migration and Relocation Trends
Honolulu's allure isn't limited to its existing residents; it continues to attract people from outside metros. Approximately 0.79% of homebuyers are searching to move into Honolulu from other areas. The top origin cities for new residents are New York, San Francisco, and Los Angeles, highlighting the city's popularity across the nation.
On the other hand, 62% of Honolulu homebuyers are searching within the metropolitan area itself. The most popular destination for those leaving Honolulu is Hilo, followed by Las Vegas and Kahului. These migration patterns provide insights into the city's attractiveness and the preferences of both incoming and outgoing residents.
Honolulu County Housing Market Trends
Honolulu County, Hawaii, renowned for its stunning landscapes, rich culture, and beautiful beaches, also holds an intriguing real estate market. For those looking to invest, relocate, or simply stay updated on housing trends, delving into the current market situation is essential. The following Honolulu county housing market trends are based on single-family, condo, and townhome properties listed for sale on Realtor.com. Land, multi-unit, and other property types are excluded.
1. Median Listing Home Price and Price per Square Foot
As of July 2023, the median listing home price in Honolulu County, HI stands at $775,000. This figure showcases a slight decline of -3% when compared to the previous year. Additionally, the median listing home price per square foot is recorded at $656. These figures reflect the evolving nature of the market, providing potential buyers and sellers with essential pricing insights.
2. Sale-to-List Price Ratio
In July 2023, the sale-to-list price ratio for homes in Honolulu County, HI is an impressive 100%. This signifies that homes are selling for nearly their asking prices on average. Such a trend highlights a balanced market where buyers and sellers can engage in transactions with a fair degree of confidence.
3. Buyer's Market Dynamics
Currently, Honolulu County, HI is classified as a buyer's market. This designation suggests that the supply of homes available exceeds the demand. This scenario can provide potential buyers with more options to choose from and potentially negotiate favorable terms. Conversely, sellers might need to strategize their listings to attract buyers effectively.
4. Median Days on Market
Homes in Honolulu County, HI are spending an average of 54 days on the market before being sold. This metric, known as the median days on market, provides insights into the pace of the market. Interestingly, there has been a slight increase in this figure compared to the previous month, as well as a marginal uptick from the previous year. This data suggests that while the market is active, properties might be taking a bit more time to secure buyers.
The real estate market in Honolulu County, HI, as reflected by realtor.com®, presents a mix of trends that provide valuable insights for both buyers and sellers. While the median listing home price has experienced a slight decline, the market remains balanced, with properties selling close to their asking prices. The buyer's market status signals ample opportunities for those seeking to purchase homes, while the median days on market metric suggests that properties are being transacted at a steady pace.
Honolulu Housing Market Forecast 2023-2024
The housing market in Honolulu, Hawaii, has long been a topic of interest due to its unique combination of stunning landscapes, vibrant culture, and limited land availability. The real estate market in Honolulu, specifically in the urban area, has experienced fluctuations in recent years.
Current Market Overview
Typical Home Values: According to Zillow, the average home value in Honolulu currently stands at a noteworthy $800,614. However, it's essential to note that this figure has experienced a slight decline of 1.8% over the past year, reflecting a shifting trend in the market.
Market Activity: The market's responsiveness is indicated by the median number of days a property takes to go pending, which is approximately 20 days as of July 31, 2023. This suggests a relatively fast-paced market where properties are moving quickly.
Sales Ratio: The median sale-to-list ratio, which stood at 0.989 as of June 30, 2023, indicates that properties are generally selling close to their list prices, underlining the competitiveness of the market.
Sales Patterns: The sales dynamics are intriguing, with 21.3% of sales closing above the listed price and 54.6% of sales occurring below the list price as of June 30, 2023. This indicates a diverse range of negotiation strategies being employed by buyers and sellers.
Urban Honolulu and Its Significance
Urban Honolulu: Urban Honolulu refers to the densely populated metropolitan area on the island of Oahu in Hawaii. It encompasses the state capital, Honolulu, and its surrounding neighborhoods. As the economic, cultural, and political hub of Hawaii, Urban Honolulu is a crucial region with a significant impact on the state's overall housing market.
Market Forecast
The forecast for the Urban Honolulu housing market indicates interesting trends for the coming months. The following figures represent the projected year-over-year growth in home values:
- August 31, 2023: 0.4% growth
- October 31, 2023: 0.6% growth
- July 31, 2024: 2.8% growth
These projections suggest a potential rebound in the market, with a gradual increase in home values over the forecast period. This could be driven by various factors, including economic recovery, demand-supply dynamics, and local policies.
The Honolulu housing market, specifically in the Urban Honolulu area, is showing signs of resilience and potential growth despite the slight dip in average home values over the past year. The fast-paced nature of the market, diverse sales patterns, and projected increase in home values emphasize the complexity and dynamism of real estate in this region.
Should You Invest In Honolulu Real Estate Market?
Investing in real estate is a significant financial decision that requires careful consideration of various factors. Honolulu, Hawaii, with its stunning natural beauty and unique culture, may seem like an attractive location for real estate investment. However, before making such a decision, it's crucial to examine the potential benefits and drawbacks. In this section, we'll delve into the top reasons to invest in Honolulu real estate, as well as some potential drawbacks to be aware of.
Top Reasons to Invest
1. Strong Demand: Honolulu is a popular tourist destination and a major economic hub in the Pacific. The city's robust economy, coupled with its unique charm, attracts a consistent stream of visitors, professionals, and retirees looking for housing options. This strong demand for rental properties and homes can provide a steady income stream for investors.
2. Limited Supply: Honolulu's geography limits the availability of land for new developments. This scarcity of land contributes to limited housing supply, which can drive up property values over time. Investing in a market with constrained supply can potentially lead to appreciation in property values.
3. Tourism Industry: Honolulu's thriving tourism industry can provide lucrative opportunities for short-term rentals, such as vacation homes and Airbnb properties. The demand for accommodations from tourists can lead to higher rental income during peak seasons.
4. Potential for Appreciation: While past performance is not a guarantee of future results, Honolulu has historically shown appreciation in property values over the long term. Investing in a market with a track record of appreciation can offer potential capital gains.
5. Diversification: Investing in Honolulu real estate can serve as a diversification strategy for your investment portfolio. Real estate often behaves differently from other asset classes, such as stocks and bonds, providing a level of portfolio diversification.
6. The Large Military Market: A Factor in Honolulu Real Estate Investment: The substantial military presence significantly shapes Honolulu's real estate landscape, presenting both opportunities and challenges for investors. With major military installations like Joint Base Pearl Harbor-Hickam and Marine Corps Base Hawaii, the city hosts a sizable military population comprising active-duty service members, civilian employees, and retirees.
This demographic contributes to a steady demand for rental properties, given the transient nature of military assignments, offering stability for investors through consistent rental income. Additionally, the potential for short-term rentals to accommodate transitions further enhances investment prospects.
However, increased competition, market volatility influenced by government decisions, higher tenant turnover rates, and regulatory considerations are challenges that investors must navigate in this unique market. Recognizing the impact of the military community is pivotal for those seeking success in Honolulu's real estate investment arena.
Potential Drawbacks
1. High Costs: The cost of real estate in Honolulu can be significantly higher compared to other markets. Property acquisition costs, ongoing maintenance expenses, and property taxes can strain an investor's budget.
2. Market Volatility: While Honolulu has shown appreciation in property values historically, real estate markets can be cyclical and subject to economic downturns. A sudden economic downturn can lead to a decrease in property values and rental demand.
3. Regulation and Zoning: Honolulu has strict regulations and zoning laws that can impact real estate investment. These regulations may affect property use, short-term rentals, and property modifications. Investors need to be well-versed in local regulations to avoid legal complications.
4. Property Management Challenges: Managing properties remotely or as an absentee owner can be challenging, especially if you are investing in short-term rentals. Finding reliable property management and maintenance services is essential.
5. Natural Disasters: Hawaii is prone to natural disasters such as hurricanes, earthquakes, and tsunamis. While Honolulu has measures in place to mitigate risks, these events can still impact property values and disrupt the rental market.
Conclusion
Investing in Honolulu real estate offers both promising opportunities and potential challenges. It's essential to thoroughly research the market, understand local regulations, and assess your risk tolerance before making an investment decision. While the strong demand, limited supply, and potential for appreciation are enticing, the high costs, market volatility, and regulatory complexities should also be considered.
As with any investment, careful planning, due diligence, and a long-term perspective are crucial to success in the Honolulu real estate market. Buying an investment property is different from buying an owner-occupied home. Whether you are a beginner or a seasoned pro you probably realize the most important factor that will determine your success as a Real Estate Investor in Honolulu, HI is your ability to find great real estate investments in that area.
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Remember, caveat emptor still applies when buying a property anywhere. The information contained in this article was pulled from third-party sites mentioned under references. Although the information is believed to be reliable, Norada Real Estate Investments makes no representations, warranties, or guarantees, either express or implied, as to whether the information presented is accurate, reliable, or current. All information presented should be independently verified through the references given below. As a general policy, Norada Real Estate Investments makes no claims or assertions about the future housing market conditions across the US.
Sources:
- https://www.zillow.com/Honolulu-hi/home-values
- https://www.redfin.com/city/34945/HI/Honolulu/housing-market
- https://www.realtor.com/realestateandhomes-search/Honolulu_HI/overview
