What factors affect the price of Hawaii homes for sale besides the standard real estate factors?
The rate of single family home sales tend to be higher in the summer, while slowing down during the winter. Condo sale tend to peak in February through May, while hitting a lull after the summer season closes. Land sales don’t see as much seasonal variability, since it takes time to close on property and gain permission to build. You can come to Hawaii, fall in love and buy a condo to return to next winter much faster than you can close on a home or buy property to perhaps eventually build a dream home on.
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The median home price for the entire state of Hawaii, according to Zillow, was $550,800 as of September, 2015. This was a 5.4% increase over the prior twelve months. Zillow expects prices to rise 2.9% in the next year.
Oahu is home of some of the most expensive houses for sale in Hawaii, which is already one of the most expensive housing markets in the United States. Housing in Hawaii dropped dramatically with the Great Recession, but housing prices on Oahu have fully recovered. Oahu’s prices passed their pre-recession highs in 2014, with the median price of Oahu single homes hitting $730,000 by the end of 2014.
The other islands haven’t fully recovered their 2007 high prices. The median price of single family homes on the big island of Hawaii sold for $390,000 in the summer of 2015. The median price of homes of all types for sale on Molokai as of September, 2015 was $180,000. The median price for a single family home in Maui is around $550,000 as of August, 2015. The median price of a single family home for sale on Kauai was $662,500 as of August, 2015.
Housing prices vary significantly even on the same island. The most expensive real estate on the island of Kauai is around Wainiha, Princeville and Hanalei, while neighboring Kilauea is a little cheaper. Koloa is also expensive, while Kalaheo, Puhi, Lihu’e and Kekaha are a little cheaper. On the big island of Hawaii, the eastern side of the island near Pahoa is cheaper than the western side.
On many islands, the leeward side is typically cheaper because gets less rain and thus is less green. The leeward side, though, has the best beaches. Honolulu and Waikiki are leeward. On Oahu and many other Hawaiian islands, you pay more for the dry side of the island because of the many sunny days you can spend on the beach.
You also pay more for properties by the beach. In places like California, you pay a premium for simply seeing the ocean. In Hawaii, you pay a premium for seeing the ocean and an even greater one for access to it. The ocean is so ingrained in Hawaiian culture that the law requires you to own a boat or pay a fine, but the reality is, especially on dense Oahu, many people fight crowds to reach the beach. Properties on other islands don’t cost a fortune to live near the beach, but you’ll still pay two or three times as much for a condo that lets you walk out from the front door to the water in front of you as compared to homes that merely look down upon the sea. Conversely, you pay less for homes in Central Oahu than you do those near the coast. Likewise, the median price of single family homes in central Maui was $477,500 while homes in Haiku near the coast had a median price of $830,000 in August, 2015.
Another side effect of the demand for access to the water or view of the water is the real estate prices paid based on the view of the ocean. The median listing price for properties in Manoa and Makiki are higher than the homes in downtown Honolulu. Prices there are almost as high as what you pay in Waialae Kahala, which is on the beach.
You pay more for properties with amenities than you do those that simply provide basic housing. If the condo complex features a gym instead of a basic exercise room, a restaurant on the premises instead of a small over priced store, concierge services instead of simply a front desk, a lazy river or large pool in addition to access to the beach, you’ll pay more for the condominium.
The median price per square foot of living space is in part a reflection of demand for real estate on the island. Yet the price per square foot can vary significantly even on the same island. For example, on Maui, the median price per square foot ranges from $253 in the 96793 zip code to $425 in the 96761 zip code. The average price per square foot for homes in Honolulu, Hawaii was $555 in September, 2015, while Waianae had a median price per square foot of $278. But Honolulu is near most major employment opportunities, while Waianae is predominantly military personnel and defense contractors.
But regardless of the median price per square foot, you will pay more for real estate with more living space if all other factors like location and amenities are equal.
Type of Property:
You pay less for condos than townhomes, and townhomes cost less than detached single family homes. The median price of a condo in Hawaii exceeded the record high price of $383,000 set in the summer of 2007. The state median price for a condo reached the same high in February 2015. The median sale price of condos in Hawaii in September, 2015 was $395,000. This is roughly $150,000 less than the median single family house price. The price differential isn’t simply because homes tend to be larger than condos. When comparing a condo with a thousand square feet versus a thousand square foot detached bungalow, the condo typically costs less because they are built more densely. Condos in towers tend to be cheaper than single story and two story condos, because the price to build the structure is relatively low compared to the price of land in Hawaii.
You cannot underestimate the impact of the local economy on the price of Hawaii houses for sale. The relative lack of jobs on islands like Molokai other than agriculture is why homes there cost a third of properties on Oahu, which is home to major employers like the port, military bases and every firm that imports products into the state. Kauai appears to be an exception to this rule until you realize how many of the home purchases there are investors or retirees buying vacation homes, buoying the real estate market.
The price of homes in an area is affected by outside investment and purchases by seasonal visitors, but markets like Oahu and Honolulu are dramatically impacted by local demand. And the local demand for housing is driven by where the jobs are.