Wealthy buyers whether local or from the mainland have distinct preferences and impacts on Hawaiis real estate landscape.
Median home prices climbed dramatically statewide, especially during 20202022.
This rapid appreciation outpaced income growth and cemented Hawaiis status as the most expensive U.S. state for housing.
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High-income buyers have been critical in sustaining sales amid these soaring prices.
Total deal volume in Q1Q3 2021 exceeded $3.7 billion, averaging 16 luxury homes sold per week statewide.
However, affluent buyers proved resilient.
Many high-income purchasers simply circumvented high borrowing costs by paying cash or refinancing later.
By 20202021, demand swung heavily toward single-family residences with more space and privacy.
High-rise condos in Honolulus Ward Village or Waikiki offer luxury amenities and proximity to city dining and culture.
Some affluent older buyers have downsized from large houses into high-end condos for a more manageable lifestyle.
Price points targeted by these high earners span the luxury spectrum.
On Oahu, many local high-income families purchased in the $13 million range for primary homes.
These ultra-high-end purchases were typically by the super-rich including tech executives, finance leaders, and celebrities.
The island led in luxury transaction volume in 2022, with the greatest number of high-end deals.
Downtown Honolulu and Kakaako condos also attracted buyers who wanted an urban lifestyle.
and affluent transplants who still need city amenities.
The islands resort communities (Wailea, Kapalua, Kaanapali, etc.)
offer secluded beaches, golf, and five-star amenities that lure wealthy mainlanders and international buyers.
For high-income earners living on Oahu, Maui might also be a preferred spot for a second home.
It offers vast space and newer luxury developments, especially along the Kona-Kohala Coast.
High earners from the mainland found Big Island attractive for its relative privacy and lower density.
As remote work made location more flexible, some even chose the Big Island for primary residence.
Out-of-state buyers dominate many of these transactions.
The motivations included gaining a home office, a dedicated gym, bigger yards, or multi-generational living space.
This was evidenced by the surge in sales of high-end single-family homes on Oahu and Maui in 2021.
Downsizing and Simplifying
A counter-trend emerged more toward 20222023 involving downsizing.
More commonly, downsizing was seen among older affluent residents.
Tech sector employees and executives from Silicon Valley firms suddenly were free to work outside the Bay Area.
Many seized the opportunity to live in paradise.
They sought large, comfortable homes where they could both work and play fueling demand for luxury single-family properties.
Work-from-Hawaii Trend
The pandemic created a short-term trend of wealthy individuals riding out the crisis in Hawaii.
In 20202021, technology stocks and broader markets surged, and many affluent households accumulated substantial savings.
During 20182019, local affluent families were the majority of buyers in Honolulus luxury neighborhoods.
However, local buyers often found themselves in competition with deep-pocketed newcomers, which posed challenges.
Mainland U.S.
Buyers
Affluent mainlanders have historically loved Hawaii real estate, and that affection grew in this period.
During 20202022, mainland buyers from California, Washington, and New York drove up demand significantly.
They were behind much of the luxury market growth, especially as international travel was restricted.
Many mainland high-income buyers in 202021 were essentially new Hawaii residents in the making, thanks to remote work.
International Buyers
Foreign investors and buyers have long had a presence in Hawaii.
In 20182019, international buyers (from Canada, Asia, etc.)
were involved in some luxury purchases, particularly condos in Honolulu and resort homes.
However, their role diminished during 20202021 due to travel bans and pandemic hurdles.
This dynamic has spurred talk of policies to restrict or disincentivize outside ownership.
In 20182023, this shifted mainland buyers took the lead and international influence diminished.
Even 2017s record year had half the number of $3M+ sales that 2021 achieved.
The period 20182023 saw a boom in vacation-home buying, followed by some cooling.
The pandemic sparked a vacation-home buying boom across the U.S., and Hawaii benefitted from this.
A lot of second-home purchases double as investment properties through vacation rental platforms.
In Maui and Kauai counties, around 15% of the housing stock is used as short-term rentals.
One interesting dynamic in 20202022 was blurred lines between vacation and primary homes.
Some high-income people who bought vacation homes ended up staying much longer (effectively making them primary homes).
Conclusion
From 2018 to 2023, Hawaiis housing market underwent an extraordinary period shaped by high-income buyers.
The data reveal a market that became increasingly dependent on outside wealth.
Out-of-state buyers accounted for a large share of Hawaiis high-end home purchases, especially on the Neighbor Islands.
Looking ahead, the sustainability of these trends will depend on economic conditions and policy responses.
The tug-of-war between local needs and outside demand will remain a central theme.
