Of the 100 largest US metros ranked by forecasted 2018 sales and price growth, the city of Honolulu came in 67th, registering 3.11% price growth, and 1.43% sales growth, rendering the Hawaii real estate forecast for 2018 promising but not overly so. Home prices across the nation are anticipated to increase 3.2% year-over-year after finishing 2017 up 5.5% year-over-year, and existing home sales are forecast to increase 2.5%, in-part due to inventory increases. Unsurprisingly, home prices in Hawaii are higher than most other parts of the country due to its gorgeous climate and location. The Islands continue to represent highly desirable real estate opportunities for many.
Real estate forecast for Hawaii in 2018: tax plan could hurt Oahu
Experts are worried that President Trump’s Republican tax plan could cool off Oahu’s heated residential real estate market. The plan lowers the popular mortgage interest deduction from $1 million down to $750,000. While this may not be a problem elsewhere, $750,000 is the median price on Oahu, so buyers of nearly half the homes sold on the island will stop qualifying for the deduction. The price of a single-family home went from $575,000 in 2009 to $773,000 in 2017. According to real estate expert Ricky Cassiday, “It will make it harder for buyers to buy a house over that price of $750,000.” Meanwhile real estate consultant Stephany Sofos worries that the real estate market could see a slowdown since not having a homeowner deduction can discourage many. But Cassiday said the new tax plan has an upside: by lowering the tax rate for corporations, companies and their executives will have more money to buy second homes in the islands.
Honolulu: outlook positive
The housing market in Honolulu, Oahu continues to be one of the most expensive in the country, with the median home price around $677,000. The value of a Honolulu home is roughly three times more than the average home in the United States. Even with a considerably higher appreciation rate over the last year, the average home in the US is valued just over $216,000. Both supply and demand within the Honolulu real estate market are supported by one of the healthiest unemployment rates in the country; at 4%, Honolulu’s unemployment rate is nearly 2% lower than the national average of 5.9%. With the Honolulu job market being as strong as it is, experts believe the Hawaii real estate forecast for 2018 looks positive. Supply and demand in the real estate sector should remain strong regardless of price appreciation.
Big Island sale prices: Hawaii real estate forecast for 2018
As of Q3 2017, median year-to-date sales prices in Hawaii’s Big Island increased over the same period in 2016 across five of the nine island districts with the highest median price points in North Kohala ($700,000), North Kona ($671,000) and South Kohala ($544,500). The Ka’u District had the lowest median price of $209,500, up slightly from 2016. Puna at $233,000 is up $30,000 over 2016. Meanwhile, North and South Hilo, and South Kona had very slight median price decreases from 2016. The condo market on the Big Island is mostly made up of the population centers of Hilo, Kona, and the Kohala Coast resort areas. All three districts saw seasonal decreases in total condo sales from Q2 2017, but year-to-date sales are up in all three over the same period in 2016. Condo sales have remained strongest in North Kona and South Kohala, as both districts also saw median year-to-date sales price increases.
Big Island real estate forecast for 2018
Hawaii’s Kona market is continuing its recovery from the Great Recession. 2017 was a great year. Cumulative sales have been climbing, and as of the end of November, there were 499 total house sales for the year, 441 condo sales and 113 land sales. Houses and condos had already surpassed the previous year’s total sales in November according to realtor Gretchen Osgood. Inventory of houses in Kona was 194, condos were 155 and lots of land was still available—179 lots, to be precise. However, the numbers change drastically when the high end is capped at under $1 million—with far fewer homes available. The West Hawaii market is reflecting some of the price increases and supply shortages the mainland is experiencing. This is, of course, good news for sellers, but buyers need to work to find the right property while it’s still available.