Rapidly Rising Prices Either a Blessing or a Curse, Depending on Your Role
2020 was a banner year for Hawaii real estate, as the state became a top choice for those relocating amid the pandemic. Thousands left hard-hit major cities instead of seeking out the amenities, lifestyle, and natural beauty that the Aloha State provides. While local sellers and agents alike could benefit from increased home prices, buyers face an increasingly aggressive market moving forward and could potentially be priced out of their local markets.
Hawaii’s Current Housing Market
While Hawaii’s housing market is steadily heating up, the state has long struggled with affordability. The average home price statewide is a whopping $673,344 while the average individual income in 2017 was only $51,594 for males and $41,664 for females. This discrepancy illustrates just how difficult affordability can be for locals, though the state remains a popular choice for affluent transplants. In fact, Hawaii was topping lists of least affordable states even before the global COVID-19 pandemic.
As people spend more and more time at home, their preferences and behaviors have changed. Remote work and a new appreciation for nature have attracted transplants in droves. Many are even purchasing properties sight unseen. While agents and sellers alike have brokered some seriously profitable sales, local buyers are facing an uphill battle.
How to Promote Affordability for Locals
Markets nationwide are struggling with affordability but, with the nation’s highest unemployment rate and a unique reliance on tourism, Hawaii is in an especially precarious position. The state’s Department of Business, Economic Development and Tourism reported that up to 66,000 additional housing units will be needed by 2025, with nearly 70% reserved for households earning less than 80% of the median income. As of 2019, only about 47,650 of those units had been constructed or planned through 2027.
Other proposed remedies include developing affordable rentals, increased emergency shelters, and “bridge” housing. Innovative programs, increased efficiency, and fee waivers are other well-documented tactics that could help. Advocating for equality and affordability in homeownership, however possible, is critical moving forward.
While rising home prices are a sign of opportunity for agents across the nation, it’s important to understand the bigger picture. Healthy supply and demand in the real estate market promotes equity and access in homeownership. As Hawaii’s economy stabilizes, the hope is that the real estate market will continue heating up without erupting into a full-blown affordability crisis.
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