Have you ever found yourself at the airport in Hawaii, heart-sick about getting on the plane that will take you away from these beautiful tropical islands? If so, you’ve probably daydreamed about staying.
Ready to take that dream further—and buy a home in Hawaii? Becoming a homeowner in Hawaii can be a little different than other places, including the mainland. In this article, we’ll walk you through exactly what you need to know. We’ll also show you how to make your dollar go a little further in Hawaii, offer you some help choosing the right island for you, and help you set yourself up for home buying success.
First, let’s start with the big question: How much does it cost to own a slice of paradise in Hawaii?
Step 1: Do Your Research and Set Your Budget
If you’re coming from a low cost of living area, you might be surprised at the price (and popularity!) of real estate in Hawaii:
$842,487 – Typical home value in Hawaii, according to Zillow
$1,140,000 – Median sale price of a single-family home on Oahu, as reported by Locations Hawaii
$499,000 – Median sale price of a condo on Oahu, as reported by Locations Hawaii
$639 – Average price per square foot statewide, according to Redfin
17 – Median days on market, as reported by Locations Hawaii
40% – The rise in Oahu home sales in 2021, according to Civil Beat
Keep in mind, though, that prices vary from island to island, neighborhood to neighborhood, and property to property.
Which Hawaiian Island Has the Most Expensive Real Estate?
In general, Kauai is the most expensive, both in terms of buying a house or a condominium. Right behind Kauai, you’ll find Maui, the second-most expensive Hawaiian Island for buying real estate in both categories.
Which Hawaiian Island Has the Cheapest Real Estate?
The lowest prices for Hawaii houses and condos are most often found on the Big Island. For the next-lowest prices, look for a house or condo on Oahu.
To sum it up:
Which Island Is Most Expensive for Buying Real Estate in Hawaii?
- Big Island
To get a sense of exactly what properties are going for on each island, you can browse the Hawaii MLS listings. From there, you’ll start to figure out the budget you’ll need for the kind of home you’re interested in.
Additionally, remember to account for those “extra” costs above and beyond your mortgage payment, including:
• Homeowners’ association fees
• Closing costs
• Property taxes
• Homeowner’s insurance or condo insurance
Once you take the current market value of comparable properties into account—plus these costs—you’ll arrive at your final budget. This is a key piece of information you’ll want to pass on to your real estate agent in Hawaii.
Since Hawaii real estate isn’t cheap, you might be interested in a few ways to save a few dollars—or bring a few more in. We’ll cover those next.
Step 2: Know How to Make Your Dollar Go Further in Hawaii
Property Tax Exemptions
In Hawaii, property tax is regulated at the county level, so you’ll need to examine your chosen county’s regulations to determine what kind of exemptions you’ll be eligible for. For example, the City & County of Honolulu, Hawaii County, Maui County, and Kauai county all offer exemptions for homeowners who purchase and occupy a property as their principal residence.
You may also be eligible for additional exemptions based on age, disability status, and more. If you’re still deciding which island is right for you (more on that next!), the available property tax benefits may help in making a decision.
Renewable Energy & Related Tax Credits
Energy costs are high in Hawaii—the highest in the nation, in fact. As a result, if you choose a home with a solar panel system, it may offer you a break on your electricity bill, depending on the setup. Additionally, you may want to consider installing a few solar panels of your own, which can come with federal, state, and even county tax credits (in the C&C of Honolulu). With plenty of sunshine in Hawaii—and plenty of benefits to your finances—solar panels can be a big win-win for you.
Finally, some people purchase real estate in Hawaii with the intention of renting some or all of the property. Although this can be a smart way to offset the cost of a high mortgage, there are a couple of things you need to know.
Short-term rentals are a hot-button issue in Hawaii, and they’re regulated differently (and carefully!) in each county. If you’re thinking of buying a property to list on Airbnb or Vrbo, make sure you discuss what’s possible in that particular area with your real estate agents. Short-term rentals—usually anything less than six months—outside of designated areas may have to go through a permitting process.
Long-term rentals are also an option. Both Kauai and Maui Counties offer some property tax breaks for landlords with one-year (or longer) leases with tenants. To incentivize affordable rentals, Kauai does require that rental rates adhere to specific guidelines in order to qualify for the tax break. Talk with your real estate agent for more specific information related to your county and your location.
And while we’re on the topic of location…
Step 3: Figure Out Which Island Is Right for You
You may already know the answer to this question. After all, each one of Hawaii’s four major islands has its own character, atmosphere, and vibe. If you’ve spent time in the Aloha State, you may know which island fits your vision of Hawaii life. If that’s the case, you can skip ahead to the next step.
However, if you’re not sure which island is right for you, check out our article: What’s the Best Hawaiian Island to Live On, and Why? We’ll give you the run-down on Oahu, the Big Island, Maui, and Kauai so you can narrow your focus to the island that you’ll soon call home.
Once you’ve figured out which island is right for you, it’s time to make some decisions.
Step 4: Decide What You Want for Your Hawaii Home
You’ll find a diverse range of housing types in Hawaii—condos on the beach, multi-dwelling estates on acres of land, luxury homes with private pools, single-family homes in tightly-knit neighborhoods, and more. In order to start narrowing your search, get clear on your must-haves and your nice-to-haves for your ideal home. This will help your Hawaii real estate agent pick out the right listings and avoid wasting your time on properties that will never work.
For example, are you looking for:
- A condo that means little to no outdoor upkeep for you?
- A big house that can accommodate a family—and maybe even an extended family? Or a house with plenty of room for out-of-state visitors?
- Something that’s move-in ready? Or a fixer-upper that you can customize exactly how you want it?
- A private, quiet community or a vibrant, family-friendly one?
- Easy proximity to stores, restaurants, and bars or a more remote, serene setting?
- A house with an ohana unit, either for one of your in-laws or to rent to a tenant? (What’s an ohana unit?)
Tip: Stay Flexible
Once you divide your thinking into musts and wants, try to stay flexible. The perfect property may not exist on your island—or in the neighborhood where you want to live. By focusing on the musts and being more adaptable with your wants, you’ll likely find a property you like more quickly. (And, with a little renovation, your house or condo may quickly become the house that meets both your musts and your wants!)
Next, when you’re looking at homes in Hawaii, you’ll encounter a few quirks that make this real estate market a little different than you might expect. If you’re new to Hawaii, run through this list so you can go into your house hunt fully informed.
Step 5: Understand What’s Different About Real Estate in Hawaii vs. Other Places
The Market Is Competitive
Let’s face it: On an island, space is limited. And while real estate has gotten competitive on the mainland, it’s gone from competitive in Hawaii to ultra-competitive. Nowhere is this more clear in the percentage of properties in Hawaii that are selling above asking:
42% – Single-family homes that went for prices above asking
38% – Condos that went for prices above asking
In other words, when you’re buying real estate in Hawaii, get your bid strategy ready early. Discuss it carefully with your real estate agent, and work with them closely to maximize your chances of getting the home you want.
Fee Simple vs. Leasehold
If you’ve browsed real estate listings in Hawaii—especially in Honolulu—you may have noticed a detail that reads: “Land Tenure: Leasehold.” The other thing you’ll notice is that these properties are significantly less expensive than comparable ones listed as “fee simple.”
Hawaii is one of only a few states in which you’ll see leasehold arrangements. (New York or Florida are the others.) Before you enter into a leasehold agreement, it’s important to understand that it’s different than buying a property outright. Instead, a leasehold is something like a long-term lease, with some additional benefits and responsibilities. You can read all about leasehold properties in this article. While leaseholds offer an advantage to some buyers, a fee-simple arrangement is better for others.
Island Traffic Is Real
For many people, one of the perks of paradise is the possibility of leaving their long, dull commute behind. However, you’ll still find traffic in paradise, no matter which island you choose. In fact, Oahu’s traffic was once named the worst in the nation. And don’t think that the neighbor islands are immune. You’ll also find backups on Maui, Kauai, and the Big Island.
If the idea of a long commute turns your stomach, consider your family’s driving patterns when you’re choosing a neighborhood. Will you be going with the traffic or against it when you head to work? What about school? How heavy is the traffic in your area at the busiest times of day?
You don’t want to spend all your time in Hawaii behind the wheel. Make sure you consider your location and your potential driving habits carefully before committing.
Hawaii’s incredible and diverse ecosystems are one of the reasons many people move here. The idea of living right near the beach, tucked on the side of a dormant volcano, or nestled in a tropical rainforest all sound intriguing, no? However, some of Hawaii’s environments come with some other considerations that you might not have dealt with in your current location, including:
- VOG: When Kilauea is actively erupting, many Kona residents on the Big Island experience the effects of VOG—volcanic fog. Although this is largely an issue on the Big Island, when the wind shifts, other areas can feel the effects of VOG, especially nearby Maui. Read more about VOG in our article about living in Kona. If you have asthma or other respiratory conditions, make sure you do your research on VOG before choosing a home.
- Sea Spray: Living near the beach sounds wonderful, in theory. However, homeowners right on the shoreline may find that constant sea spray starts to erode their metal fixtures, barbecue grills, exercise bikes, etc. For some, this is simply the cost of those gorgeous coastal views. For others, this becomes annoying—fast. Ask your real estate agent about this probability if you fall in the second camp, and inspect the property carefully to get a sense of whether previous owners have struggled with this issue.
- Mold & Mildew: All the rain that keeps Hawaii green and verdant can quickly turn into mold and mildew, when not attended to. Some areas are more prone to mold and mildew than others. If this is a concern of yours, make sure to bring it up with your real estate agent.
Finally, Hawaii is one of 14 states in which home inspectors do not need to be licensed. As a result, you’ll want to pick your inspector carefully. Understand the experience and background that qualify your home inspector for their role and, ideally, get a referral from a professional you trust. Additionally, it’s worth trying to be there in person to go over the report in person with the inspector. That way, you can truly understand any challenges or problems they find.
Finally, we’ve got a couple of tips to help you position yourself for an easy, fun, and successful home-buying experience.
Step 6: Set Yourself Up for Home Buying Success
Find the Right Real Estate Agent
Your first home purchase in Hawaii is a big decision, and in a competitive market like this, you want to have the right person representing you. Check out our article on finding the right real estate agent in Hawaii. We’ll give you our tips for locating a solid professional who will connect you with the perfect place in paradise.
Get Pre-Approved for a Mortgage
Getting pre-approved for your mortgage can offer you significant peace of mind that you’re going into your house hunt with the full buying power you’ve anticipated. Pre-approval can also make you more attractive to sellers, since they know your offer is rock-solid—which is key in a competitive marketplace like the one you’ll find in Hawaii. It also means a smoother closing process, which means starting your life in paradise that much more quickly.
Take Your Time—but Be Prepared to Act Quickly
We’re not trying to rush you, by any means. If you’re buying your first home in Hawaii, make sure it’s the right one for you. However, given that homes in Hawaii don’t spend much time on the market, when do you find one you like, be ready to jump on it. Otherwise, you’ll likely lose out to another buyer.
In other words, once you officially enter the Hawaii real estate market, prepare yourself to take the plunge. You’ll likely find the perfect home for you before you even know it!
Making Your Move to Paradise
Once you’ve secured the home of your dreams, all that’s left is to make the actual move. If you’ve got a house full of furniture and belongings, we’d be happy to help you get it all to Hawaii. We’ve done tens of thousands of moves of all sizes to just about every destination in Hawaii, and we’ve got teams on all four major islands who are ready to assist.
To get started on your move, reach out to one of our experts for a complimentary quote.
Tell us about your move!