Skyrocketing real estate prices in Hawaii may finally be catching up with the state.
While many places across the U.S. have dealt with spiking real estate and subsequent affordability crises over the last decade, one state stands out for a particularly spark discrepancy.
A recent calculation found that the average single-family home in the Hawaii capital of Honolulu costs $1,198,000 — it would take a household with the median income a decade to save enough for just a standard down payment.
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In the rest of the state, the median home price is just slightly lower at $1.06 million by the summer of 2022 but this is still an increase of nearly 40% since 2019.
Soaring Hawaii Real Estate Wreaked Havoc On Locals
The spiking prices were directly connected to the influx of wealthy residents coming in amid the pandemic. Looking to get away from dense cities and newly able to work remotely, many high-earning tech professionals from California and Washington came to buy a home and settle at least semi-permanently in the state.
The soaring demand sent real estate prices for many local residents soaring and in particular for those who have not yet managed to buy a home. At one point, rent prices for a two-bedroom home were up by 140% year-over-year.
This prompted both a homelessness crises (the per capita rate is, according to the Associated Press, the fourth-highest in the country) and an exodus of locals who left in search of more affordable places on the mainland.
The demographic scales shifted to the point that, in 2022, there are now fewer Native Hawaiians living in Hawaii than outside it.
“It really bothers me that we are saying to the young people of Hawaii, ‘It’s great that you might have been born and raised and educated here, but now that you’ve become an adult, you have to leave and you cannot come back,'” Senator Stanley Chang (D-HI) told the Associated Press.
Hawaii’s Skyrocketing Real Estate Market May Have Finally Tipped
Years of unfettered growth are bound to come to a head at some point and Hawaii may finally be seeing that shift. By February 2023, the median price of a single-family home dropped to $970,000 while a median condo price fell to $495,000.
This is, according to local analysts, more of a correction from overly inflated prices than a return to any sort of affordability since even a double-digit drop will not get prices down to what they were pre-pandemic. Some of the most popular areas, among which is the entire island of Maui, did not see any drop in prices.
“The issue in Hawaii is we don’t have enough housing so as interest rates go up, it’ll force more people to look into homes that aren’t necessarily million dollar homes but maybe $800,000 apartments,” Anne Perry, a local Realtor with Compass (CMPGF) , told a local news outlet.
The main problem is that homes are just not being built fast enough to meet the demand of both locals and incoming new residents. Local housing stats unveiled by the AP show that only between 1,000 to 2,000 new homes have been built annually throughout the last decade. This number was at over 10,000 in the 1970s and, to get even somewhat close to what economists estimate will be needed by 2025, current construction would need to be at least doubled.