51-244 Kamehameha Hwy
Kaaawa, HI 96730

A snapshot of Hawaii as a real estate investing opportunity begins with Hawaii as a popular tourist destination that is a highly desired location for people from all around but particularly the Pacific Rim to include California, Canada and Japan who are either looking to buy a vacation home or to relocate to the state permanently.  Historically, the demand for real estate in Hawaii has been high, which has led to relatively high prices for homes and other properties, as shown in the Oahu Housing Inventory Snapshot as of June 27, 2023.

Oahu Housing Inventory Snapshot

The June 2023 Oahu Hawaii Housing Inventory Snapshot represents aggregated values based on Honolulu MLS data as of June 27, 2023. Each inventory category includes a link providing the current Honolulu MLS listings for that particular category. The prices presented in the table are average prices meaning that the presented price includes homes priced well below and well above the average list price.  

At first glance, you may be dismayed at the statistics but there are several good reasons why investing in Hawaii real estate could be considered a good opportunity at this time include:

1. Strong demand: Hawaii is a popular tourist destination with a robust tourism industry, which drives demand for vacation rentals, second homes, and investment properties. The demand for Hawaii real estate is driven not only by tourists, but also by retirees, investors seeking a stable market, and those looking for a desirable place to live.
2. Limited supply: Due to the unique geography of Hawaii, there is a limited supply of land for development, which can drive up property values over time. This limited supply can create a sense of urgency among buyers, which may lead to increased demand and potentially higher prices.
3. Potential for appreciation: Hawaii real estate has historically shown appreciation over time. While there can be short-term fluctuations in the market, the long-term trend has often been positive. Investing in Hawaii real estate with a long-term perspective can potentially provide appreciation in property values, leading to potential profits when selling in the future.
4. Tax benefits: Real estate investments in Hawaii, like in many other places, can offer tax benefits. For example, there may be tax deductions for mortgage interest, property taxes, and depreciation, which can help reduce overall tax liability and increase potential returns on investment.
5. Diversification: Investing in Hawaii real estate can provide diversification to an investment portfolio. Real estate can act as a hedge against inflation and economic volatility, and adding a Hawaii property to an investment portfolio can diversify risk across different asset classes and geographic locations.
6. Lifestyle benefits: Hawaii offers a unique lifestyle that attracts people from around the world. Investing in Hawaii real estate can provide the opportunity to enjoy the natural beauty, culture, and lifestyle that the islands have to offer while potentially earning income from rentals or property appreciation.
7. Low interest rates: Currently, interest rates in the United States are relatively low, which can make financing a real estate investment in Hawaii more affordable. Low interest rates can increase the purchasing power of investors, potentially allowing for the acquisition of higher-value properties or better cash flow.

Investing Risks

Like any investment, there are risks associated with investing in real estate, including Hawaii real estate.  For example, the market could experience a downturn, which could lead to a decline in property values.  Additionally, there are potential risks related to natural disasters, such as hurricanes, volcanoes, and tsunamis.  It is therefore important to conduct thorough research, seek professional advice, and carefully consider your financial goals and risk tolerance before making any investment decisions.  Furthermore, local market conditions, regulations, and other factors specific to Hawaii should be taken into consideration.

Mitigating Risks

Overall, inventory is providing more options to buyers but prices continue to make records despite the rising interest rates. Ultimately the affordability for those who need a mortgage is going to make the market more challenging.  However, no matter the market condition opportunity can present itself. For example, investors may just want out of the market for a variety of reasons and for tax purposes may be willing to list at below market values. Other times a listed investment property comes with a substantial amount of future revenue. Such opportunities only come to those who are actively looking and ready to pounce.