Home prices around the islands continue to move higher. Overall inflation is part of the picture, but it’s not the only reason.
One interesting detail Pacific Business News learned from a roundtable with residential real estate leaders was how much inflation is biting into new home prices in Hawaiʻi.
According to Garret Matsunami, vice president of residential operations for Castle & Cooke Hawaiʻi, that developer saw its prices for construction materials increase 8% last year.
Castle & Cooke is currently building out its Koa Ridge master-planned community of 3,500 homes. As a result of inflation, its home prices have gone up about $15,000 per unit sold so far this year.
In sales of existing homes, it isn’t inflation so much as demand that has boosted prices.
On Oʻahu alone, home sales increased nearly 40% in 2021 compared to 2020, according to the Honolulu Board of Realtors.
Median Honolulu home prices for 2021 spiked nearly 20% from a year earlier — while condo prices rose more than 9%.
Housing costs are up so much at all price points that even luxury has been redefined, says Patti Nakagawa, global luxury director for Coldwell Banker Realty.
Two million used to be the benchmark for entry-level luxury, now $2 million is a fixer-upper, and turn-key luxury homes start at $3 or $4 million.
Who is buying?
Hawaiʻi home buyers collectively spent $14.5 billion last year. For comparison, homebuyers from California, our largest source of mainland buyers, spent a combined $3.2 billion, panelists said.
For homes priced under $1 million, 90% are purchased by local buyers.
