Honolulu is more than just a vacation destination. As the capital of Hawaii, it’s also the economic hub of the islands. The city is home to a diverse range of industries, including technology, defense, healthcare, research, finance, retail, and of course, hospitality and tourism. The thriving job market offers plenty of employment opportunities with wages that account for the cost of living. Moreover, Honolulu and Hawaii consistently rank as one of the best states to live in. It scores high for quality of education, environmental factors, health, and life expectancy.
The booming economy and high quality of life, paired with year-round sunny weather and outdoor recreation, make Honolulu a premier destination for finding the perfect work-live-play balance. While other real estate markets have either slowed down or unpredictably fluctuated due to interest rate hikes, Honolulu benefits from constant high demands as newcomers, visitors, retirees, military personnel, and professionals seek housing or rentals. If you’re considering buying or investing here, read the following Honolulu real estate market forecast for 2023.
Honolulu home prices are higher than the national average
As one of the most popular destinations in the world, it’s not surprising that Honolulu real estate fetches high prices. Home prices have greatly increased in the last decade. Only 10 years ago, the median home price was about $524,000; at the end of 2022, the median home price in Honolulu was nearly $875,000 — a remarkable increase of 66.6%.
The city’s median home value is well above the national average of about $320,000. The median price for homes for sale in Honolulu was $1.05 million at the end of 2022. That’s more than twice the median price for houses sold in the U.S. in the 4th quarter of 2022.
Strong first quarter in 2023 for sales
Rise in home sales
Per the Honolulu Board of REALTORS®, O‘ahu’s housing market experienced a boost in activity from February to March. Sales rose about 36% month over month for single-family homes and condominiums. The number of pending sales also increased from February to March. There were 258 contracts signed for single-family homes, which marked an 18.9% increase, and 444 contracts were signed for condominiums, which marked an 11.3% increase.
Rise in sale prices
Median sale prices for single-family homes increased to $1,083,750 for March 2023. Meanwhile, the median sales price for condominiums in March set a new record of $536,000. That’s 0.4% higher than the previous record of $534,000, set in June of 2022. Overall, the sale price for condominiums is moderately rising year over year. Prices are expected to continue growing, with home values predicted to increase as much as 12.4% over the next year.
Rise in housing inventory
While the increase in demand and prices is good for sellers, buyers also have plenty of opportunities. The inventory of houses for sale on the market has improved. From February to March, the volume for single-family homes went up 25.8%, and the volume for condominiums went up 14.5%.
More days on the market
Properties are staying on the market longer than 2022, putting less pressure on buyers to submit offers and close sales immediately. Single-family homes remain on the market for an average of 21 days, about double the average from the previous year. Even so, more single-family homes are recouping their asking price or above than at any time in the past seven months.
The upward trend in prices and inventory means there are opportunities for both sellers and buyers. We recommend watching the market closely and consulting a local Honolulu realtor that can give you up-to-date information and listings.
Why you should invest in the Honolulu real estate market
High appreciation values
The housing market in Honolulu has rebounded quite well since the Great Recession and the recent pandemic. Investors who know how to navigate the real estate market can benefit from the current trends. Even short-term investors can capitalize on the market’s rapid appreciation in home values. In Honolulu, home prices went up an average of 18.8% in the last year alone.
Strong rental market
The demand for rental properties has been high and consistent. Honolulu’s popularity as a tourist destination fuels the short-term and vacation rental markets. Platforms such as VRBO and Airbnb make it easier for property owners to rent their homes.
High-end properties with upscale amenities and those near the beach are especially sought-after and can garner premium rental rates. The most desirable properties often receive multiple applications, and prospective tenants may offer more to secure the rental.
Owners can raise the rates during the summer, holidays, and other peak times. Rental properties can provide owners with a steady source of income.
Population growth
Another factor that will affect the demand for housing is the growing population. Honolulu County is the largest county in Hawaii. The estimated population of Honolulu in 2023 is 1,035,498. This represents a growth rate of 0.62% in the past year, according to the United States census data. Since 2010, when the population was 953,207, Honolulu’s population has grown by 8.6%. City data predict the population of Honolulu County to reach 1,062,100 by 2035 (although that may be a conservative estimate).
While the population is growing, housing will always be limited. The main factors contributing to this are the island's geography and its strict zoning regulations. Both restrict new building and development, which in turn limits the housing supply and drives up the sale prices of homes on the market.
Learn more about the Honolulu real estate market
Providing unparalleled customer service, Real Select Vacations specialize in elite properties and luxury resorts in Honolulu. Property owners and renters can work with a team of real estate professionals and take advantage of their multi-channel approach to marketing properties. With a dedication to providing the ultimate luxury experience for their clients, Real Select Vacations is regarded as one of the best in the business. Contact RSV today to find out more.
*Header photo courtesy of Shutterstock
