With such a gap, condos often represented the entry-level option for young families and first-time buyers.
Single-family homes were still the goal for many, especially those with growing families.
However, buyers under $250k income often had to compromise on location or size.
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Many purchased older homes in more remote or suburban neighborhoods, or smaller starter houses.
Multi-generational living arrangements allowed some families to pool resources and purchase larger single-family homes together.
Condos and townhomes predominated for first-time buyers and singles.
During 20182019, condo sales were strong and even outnumbered single-family sales statewide.
2021 was a frenzied year: statewide condo sales jumped 58% from 2020.
For many, that meant starting small buying a condo or modest townhome.
Their median income also trailed older buyers, so younger buyers often had to settle for less space.
Between 2018 and 2021, low interest rates made these moves more attainable.
However, by 20222023, upsizing became harder as mortgage rates spiked and prices stayed high.
Retirees
Older homeowners and retirees were often downsizing, especially on Oahu.
Many long-time Oahu residents approaching retirement sold large family houses and moved into smaller condos.
Nearly 46% of Baby Boomer homebuyers nationwide in 2021 moved to a smaller home than their previous one.
Downsizing appealed for both financial and practical reasons sellers could free up home equity and reduce maintenance burdens.
Lateral Movements
Lateral moves were less common but did occur.
Some buyers sold one property and bought another of similar size due to job relocations or personal preferences.
One notable lateral trend was Oahu residents relocating to neighbor islands.
During 20182023, even as Oahu lost population, neighbor island counties saw net in-migration of older adults.
Regional Patterns: Island-by-Island Differences
Homebuying trends varied significantly by island.
This put most single-family homes out of reach for households under $250K without substantial savings or dual incomes.
Data from 2021 shows that 85% of homes on Oahu were purchased by local (Hawaii) residents.
Retirees and remote workers have been moving to the Big Island for its lower costs and relaxed lifestyle.
Mainland and foreign buyers accounted for roughly 47% of Mauis home sales in 2021 by number.
In terms of dollar volume, outsiders made an even bigger impact (buying high-end resort properties).
This dynamic meant local Maui residents were competing in a tight market with outside wealth.
Urban vs.
Rural Differences
Even within the same island, urban and rural trends diverged.
While our focus is primary residences, out-of-state investment and vacation-home purchases reduced inventory for local buyers.
In 2018, 30-year fixed mortgage rates averaged about 4.5% and hovered around 3.9% in 2019.
By late 2020 and into 2021, rates plummeted below 3% an unprecedented low.
These increases caused monthly mortgage costs to balloon and priced out many marginal buyers.
VA loans were especially significant in Hawaii.
The result was a boom: in mid-2020, VA home loans in Honolulu were up 206% year-over-year.
Veterans capitalized on zero-down financing and low rates to enter Hawaiis market.
The Refinance Boom and Lock-In Effect
The refinance boom of 20202021 swept through Hawaii.
As a result, low-down-payment loans and assistance programs were heavily utilized.
Many buyers put down 510% using conventional loans with private mortgage insurance.
Affordability Gap
Despite these financing tools, the affordability gap remained stark.
These include professionals like teachers, nurses, small business owners, and civil service employees.
Throughout 20182023, such families sought stability through homeownership, especially if they had children.
They often leveraged family networks for childcare and housing.
Millennials and First-Time Buyers
Millennials faced steep challenges; many are first-generation homeowners in their families.
Thus, most millennial buyers targeted condos or townhomes.
They also tended to purchase in more affordable neighborhoods or peripheral regions.
This group contributed to demand for condos in resort-like prefs and helped drive up prices in retiree-friendly markets.
An MCC effectively boosts take-home pay, helping buyers meet debt-to-income ratios.
County-Level Assistance
Each county in Hawaii had its own affordability initiatives.
Maui County and Kauai County have similar down payment assistance loans/grants.
Hawaiis market saw price declines in 20082011.
By around 2013, prices stabilized and began climbing again.
Over that decade, price growth was relatively modest and linear compared to the explosive spike of the 2020s.
Contrast that with 20192022, when Oahu prices jumped ~35% in just three years.
This could indicate that some renters took advantage of the post-recession conditions to become owners.
In contrast, by 2023 Hawaiis homeownership was roughly flat or down (about 5859%).
Furthermore, the 20082017 decade saw Hawaiis population grow (albeit slowly) up until around 2016.
While the 20202022 price boom was a nationwide phenomenon, Hawaiis already high base magnified the impact.
Mainland markets also have more variation buyers priced out of coastal California could move to Texas or Arizona.
In Hawaii, moving to a cheaper state means leaving the state entirely.
Interest Rate Impact
Mainland and Hawaii buyers both felt the squeeze of rising rates in 2022.
One difference is that Hawaiis prices made the monthly payment spikes more dramatic in dollar terms.
Investor Influence
Mainland states also dealt with investor buying during the 20182023 run-up.
In Hawaii, institutional investors are less of a factor, but second-home investors are a long-standing presence.
Many homes are bought as vacation rentals or future retirement homes.
Conclusion
From 2018 through 2023, budget-conscious Hawaii households navigated a rollercoaster housing market.
Regional differences were stark: Oahus dense condo market contrasted with neighbor islands where mainland money loomed larger.
