The Hawaii real estate market in 2023 is displaying a relatively strong performance in areas like Maui, Kauai, Big Island, and Oahu. While there are a few positives for buyers, the market is still tilted towards sellers. In most areas across Hawaii, the real estate market is experiencing increasing prices and low inventory. Even though prices are up, home sales activity is down by a considerable amount in Maui and Kauai. Below is an in-depth Q1 report for Hawaii’s real estate market.
Property Sales Have Dropped Compared to Q1 2022
When looking back at the real estate market in Hawaii throughout the first three months of 2023, it’s clear that property sales have dropped across every Island. In Maui and Oahu, sales have declined by more than 30%. Property sales on Big Island have lowered by nearly 42%. The largest drop in home sales is reserved for Kauai, which is where sales declined by around 55%. When property sales drop, the market becomes less competitive. This is an indicator that potential buyers are wary about entering the market at the moment or that listing prices are too high. Sellers are combating this issue by making improvements to their homes that improve property values.
Movement in Sale Price Differs Based on Location
The direction that sale prices moved during Q1 differed depending on the location. In Kauai, the median price per square foot dropped to around $680 for the quarter. A similar year-over-year decrease took place in Oahu, which had an average price of $700 per square foot during Q1. Other areas in Hawaii are seeing relatively sharp increases. Maui residential properties increased in value from $811 per square foot in Q1 2022 to around $955 per square foot in Q1 2023. As for the Big Island, the average price for every square foot rose by nearly 2% to reach a value of $516 during Q1 2023.
Home sales are also down in many areas. In Oahu, there were around 744 homes under contract in Q1 2023, which was a drop of nearly 24% from the same quarter in 2022. As mentioned previously, home sales dropped by an average of 30-50% across the main regions in Hawaii. The most significant downward turn occurred with homes that were under contract. Around 82 homes were under contract in Kauai during Q1 2023, which is a decrease of exactly 50% from the same period last year. Even though there are signs that the Hawaii real estate market is doing worse than last year, it’s important to understand that the market in 2022 was buoyed by low interest rates and a rapid increase in buyer demand that occurred following the COVID-19 pandemic. This hectic sales pace was never going to last forever.
Despite Low Supply, Inventory is Increasing
Even though residential home sales have dropped in recent months, more and more single-family properties have become available across Hawaii during Q1 2023. In Kauai, existing inventory increased by nearly 44% to a total of 115 listings. The jump in inventory was even more significant on the Big Island, which is where residential listings increased by around 54.5%. Because of the notable increase in inventory and the slight drop in buyer demand, the months of inventory that are available to buyers have increased substantially in every Hawaii region. Oahu currently has three months of inventory, which means that this is the amount of time it will take to sell all current listings without new ones being added to the market.
While months of inventory grew by more than 140% in Oahu, the same metric increased by over 216% in Kauai. The available inventory in Kauai will take upwards of 5.7 months to be sold. Despite the small shift towards buyers, sellers continue to have the advantage. In all of Hawaii, the average months of inventory is less than five months, which means that home values may continue to climb throughout the remainder of 2023.
While home values aren’t as high as they were when interest rates were at their lowest, the next quarter will give a clearer picture of how healthy the market is. During the spring and summer seasons, the market is at its busiest, which means that buyer demand and home values should rise. However, the added wrinkle of a recession means that past trends may not be reflected in this year’s market.