Out-of-state investors sweep up >25% of Hawaii homes

Posted by Aaron Agsalda on Wednesday, February 17th, 2016 at 8:46am.

Would Hawaii real estate be so expensive if not for foreign investors?

Probably not. Consider these facts:

The average sale price of homes sold to foreign buyers from 2008 to 2015 was $785,604 and the average sales price for mainlanders was $630,390. By comparison, the average sale price of homes sold to local buyers over the same period was $478,189.

So foreign buyers on average have spent 65% more than local buyers, while U.S. Mainland buyers have spent 32% more than local buyers. Also worthy of note is the quantity of homes being acquired: more than a quarter of homes sold in Hawaii are purchased by non-Hawaii residents. On neighbor islands, nearly half the homes are swept up by out-of-state investors

These and other findings were recently reported in the first study of its kind by DBEDT.

Is this good news or bad news?

Well, it depends on who you are. If you are an out-of-state investor with lots of money, you probably won’t have much trouble purchasing your own piece of paradise.

But for local non-homeowners (45% of household earners in Hawaii), this news can be very upsetting. High demand makes it harder for renters to attain the benefits of home ownership.

High demand for real estate is good for homeowners.

For homeowners (55% of household earners in Hawaii), high demand for housing is great news. Since the lowest point of the recent recession, Oahu real estate values have gone up 35%. To put it in practical terms, if you bought a house in January of 2009 for $500K, it would be worth $675K today, having gained $175K in value. Add the $65K or so you would have paid down on your mortgage and you’re looking at $240,000 in equity over 7 years. 

High demand for real estate is good for would-be homeowners 

If you live in Hawaii or are moving here, you may be able to leverage the strength of our market to your advantage. But many who are able to purchase Hawaii real estate choose not to. If you're on the fence, consider this: Twenty years ago, a $1000/mo mortgage payment was a lot. But anyone who bought 20 years ago is the envy of today’s buyers, since their mortgage payments are still $1000/mo after 20 years! Rents go up but mortgage payments stay the same. Yes, real estate is expensive in Hawaii, but it is more expensive because it’s more valuable. 

“People love Hawaii, and they love to invest in Hawaii,” said Eugene Tian, state economist. “Out-of-state investments make our housing demand very strong.”

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