Buying a first home in Hawaii has always been a challenge, but between 2018 and 2023, it became even tougher. Soaring prices, rising interest rates, and stubbornly low inventory forced new buyers to adapt in ways not seen a decade ago. Many turned to smaller condos, expanded their home searches beyond urban hubs, or leaned heavily on family support and creative financing. Despite the hurdles, first-time buyers across the islands are still finding ways to plant roots in one of the country’s most competitive—and breathtaking—housing markets.
Hawaii’s Housing Market Overview (2018–2023)
From 2018 to 2023, Hawaii’s home prices climbed dramatically, reaching all-time highs. Median home values in Hawaii are the highest in the nation, even above California’s. As of 2023, the average home price in Hawaii was around $828,000, about $70,000 higher than in California.
During the pandemic boom (2020–2022), prices accelerated sharply. Before the pandemic, the statewide median single-family home price was roughly $650,000. By 2022 it had jumped about 35% to well over $850,000. Condominiums saw prices jump about 30%, from a ~$453,000 median in 2019 up to ~$587,000 in 2022. By 2023, the median condo price hit roughly $600,000 and single-family medians stayed around the mid-$800,000s. In populous counties like Honolulu (Oʻahu) and Maui, the typical single-family home has hovered around $1 million or more in recent years.
Interest Rate Rollercoaster
This period was a rollercoaster partly because of mortgage interest rates. In 2018, a 30-year fixed mortgage rate averaged around 4.5%, and in 2019 around 3.9%. Then came an unprecedented drop: by late 2020–2021, rates fell below 3%, making home loans unusually cheap. These rock-bottom rates allowed more buyers to qualify for mortgages and afford higher prices.
However, by 2022 the trend reversed – interest rates surged. The average 30-year mortgage hit about 5.3% in 2022 and around 6.8% in 2023, dramatically raising monthly payments. For example, a household that could afford an $800,000 loan at 3% found they could borrow much less at a 6%+ rate. This affordability squeeze in 2022–2023 priced some would-be buyers out and cooled the frenzy, though prices themselves only leveled off slightly.
Housing Supply Challenges
Another key factor was housing supply. Hawaii has chronically low inventory of homes for sale, and many owners held onto their houses. During 2020–2021, a refinancing boom took place as owners locked in those 3% rates. Once locked in, people became hesitant to sell and give up their cheap mortgages. This “lock-in” effect meant fewer starter homes on the market, making it harder for first-time buyers to find options. New construction of affordable homes also lagged demand.
The result was intense competition, especially during 2021 when bidding wars were common. It wasn’t unusual for a desirable home on Oʻahu to get multiple offers above the asking price during that peak.
What First-Time Buyers Actually Purchased
The Condo Advantage
For many first-time homebuyers in Hawaii, condos and townhomes were the go-to option. These types of homes generally cost less than standalone houses, making them a more attainable first step into the market. On Oʻahu, the median condo price was about $453,000 in 2019, and it rose to roughly $587,000 by 2022. In contrast, single-family homes were far more expensive – the median single-family home statewide was over $850,000 by 2022, and on Oʻahu and Maui it was around or above $1 million. This huge price gap made condos the entry-level choice for most first-time buyers, especially younger individuals and couples.
Condominiums (often apartments in mid-rise or high-rise buildings) offer smaller living spaces but come at a relatively “lower” price point by Hawaii standards. Young professionals and small families found condos to be a practical starter home. In fact, condo sales were very strong in the late 2010s – in 2018–2019, condos sold in greater numbers than single-family homes statewide, reflecting their popularity and availability. During the homebuying frenzy of 2021, condo sales skyrocketed (up 58% from 2020) as buyers jumped in while interest rates were low.
Townhomes: The Middle Ground
Townhomes (duplexes or rowhouse-style units) were another common choice. Townhomes are like a middle ground – they usually provide a bit more space (perhaps 2-3 bedrooms, maybe a small yard or garage) compared to a condo, but at prices still below a detached single-family house. First-time buyers with young children liked townhouses because they offer some features of a house (more room, maybe a little yard) without the full cost.
Throughout 2018–2023, many Hawaii buyers “started small,” opting for a condo or modest townhome because it fit their budget. These homes were often “starter homes” that buyers hoped to eventually trade up from once they built some equity or their incomes rose.
The Single-Family Dream
Owning a single-family home remained the ultimate dream for many first-time buyers, especially those planning to grow their families. However, given the high prices, this often required compromises. Buyers who managed to buy a house on their first go-around typically had to either choose smaller/older homes or look in more remote areas where prices were lower.
For example, on Oʻahu, a family might buy an older house on the west or central side of the island (farther from Honolulu) because it was more affordable than a newer house in town. Some first-time buyers teamed up with relatives to afford a house – Hawaii has a tradition of multi-generational living, partly out of cultural preference and partly due to economics. Around 8–9% of Hawaii households are multigenerational (several generations under one roof), the highest rate in the nation.
Upsizing, Downsizing, and Moving Trends
First-Timers Entering the Market
Most first-time buyers were moving up from renting or living with family into owning a home of their own. In that sense, they were “upsizing” – gaining more space and stability than they had as renters. However, upsizing for a first-timer usually meant starting modestly. For example, a young couple renting a small apartment might buy a starter condo as their first home.
In Honolulu, younger buyers (often millennials in their late 20s to 30s) tended to purchase homes a bit cheaper than the market’s overall median price (about 4% lower) because they were seeking out whatever lower-cost options they could find. They often had to settle for less space or less prime locations to make that first purchase affordable.
Growing Families and Upsizing Attempts
Some buyers who already owned a starter home earlier in the decade tried to upsize further during the low-interest-rate years. For instance, a family that bought a condo or tiny house as their first home might, a few years later, look to upgrade to a bigger townhome or a single-family house as children arrived.
The 2020–2021 period of ultra-low rates made these moves more feasible. A lot of families saw their first homes appreciate in value (Hawaii condos saw ~30% appreciation during the pandemic price boom). They could sell or refinance and use the gained equity as a down payment on a larger home.
However, by 2022–2023, upsizing became much harder again – higher interest rates and still-high prices meant that even if they sold their condo for a good price, the next home’s cost (and mortgage rate) might be prohibitive. So upsizing plans were often put on hold toward the end of the period.
Lateral Moves and Relocations
Some buyers made sideways moves – selling one home and buying another of similar size. This was less common, but it happened due to job relocations or personal preferences. One notable trend was some Oʻahu residents relocating to neighbor islands (like Hawaiʻi Island or Kauaʻi) for a different lifestyle.
During 2018–2023, Oʻahu’s population actually slightly decreased, while some of the smaller islands saw a net inflow of people, often older adults moving in for retirement or remote work. For example, a Honolulu family might sell a condo in the city and use the proceeds to buy a comparable or even larger home on the Big Island, where real estate is cheaper.
Regional Differences Across the Islands
Oʻahu (Honolulu County)
Oʻahu is Hawaii’s most populated island (home to Honolulu city) and is the urban hub. Oʻahu has the highest housing demand and a large share of the state’s condos and apartments. Between 2018 and 2023, home prices on Oʻahu soared. The median single-family house price on Oʻahu rose from the mid-$700,000s in 2018 to well over $1,000,000 by 2022–2023.
This put the typical detached house out of reach for most first-time buyers unless they had very high incomes or substantial savings. Consequently, new local buyers on Oʻahu heavily favored condos, townhomes, or older fixer-upper houses on the outskirts of the island.
Data also show the Oʻahu market is primarily local: in 2021, about 85% of homes on Oʻahu were purchased by Hawaii residents. Oʻahu had fewer out-of-state buyers (by percentage) than the smaller islands, because Oʻahu’s sales include many local workforce housing purchases.
Hawaii Island (Big Island)
The “Big Island” of Hawaiʻi is less populated and has much lower home prices in many parts. The median single-family home price on the Big Island has been around $400,000 in recent years – roughly half the statewide median, and a fraction of Oʻahu’s median. This relatively affordable price tag attracted budget-conscious buyers.
Some first-time buyers from Oʻahu or Maui even moved to the Big Island because they could actually afford a house there, trading a longer commute or a relocation for the chance to own a home. The Big Island also drew in retirees and remote workers during 2018–2023 who were looking for a lower-cost, relaxed lifestyle.
Within the Big Island, there’s regional variety: the town of Hilo (east side) has more condos and entry-level homes that locals can buy, whereas more rural districts (like Puna or Kaʻū) have very cheap land where folks might even build their own homes or live off-grid. Government rural loan programs like the USDA zero-down home loan were also utilized on the Big Island, helping buyers in rural areas purchase with no down payment.
Maui County
Maui is known for its resort areas and has seen some of the steepest price increases. By 2022, Maui’s median single-family home price hit around $1,000,000 (similar to Oʻahu’s), and certain parts of Maui like Wailea had sales of ultra-luxury homes well into the tens of millions.
A significant characteristic of Maui’s market is the high influence of out-of-state buyers and investors. In 2021, local residents made up only 64% of home purchases on Maui – meaning 36% were bought by mainland U.S. or foreign buyers. In terms of money spent, about half of Maui’s sales dollars came from out-of-state buyers (since they often buy the expensive properties).
This dynamic made it especially tough for Maui’s first-time buyers, who often found themselves competing with affluent buyers from elsewhere. A local Maui teacher or police officer looking to buy a modest home might be up against a California investor buying a vacation condo.
Kauaʻi County
Kauaʻi, another smaller island, also experienced rising prices and a lot of external buyer interest. The median home price on Kauaʻi was around the high $800,000s by 2022. Kauaʻi’s resort towns (like Princeville or Hanalei) have very high prices and a large share of mainland owners.
In fact, an earlier study (2008–2015) showed that in some Kauaʻi areas like Hanalei, over 60% of homes were bought by mainland U.S. buyers. For 2018–2023, the trend remained that many Kauaʻi sales were not to first-time local buyers but to well-heeled outsiders or repeat buyers.
Urban vs. Rural Divides
Even on the same island, the urban vs. rural divide played a role. On Oʻahu, for example, Honolulu’s urban core is dominated by condos, and first-time buyers there were typically single professionals or young couples buying small condo units to be close to work and city amenities.
Meanwhile, in Oʻahu’s more rural communities (like the North Shore or some Leeward Coast areas), first-time buyers were more likely families who prioritized space over proximity. They might buy an older single-story home further from town, or a townhouse in a suburban development, where they could get an extra bedroom or a yard for the kids.
On the Big Island, there’s a contrast between Hilo (a town with condos and tract homes that first-timers can buy) versus the sprawling rural areas where land is cheap but you might have to build your own house or live with off-grid utilities.
Financing Methods and Assistance Programs
Given Hawaii’s high home prices, financing was a crucial piece of the puzzle for first-time buyers. By 2022, to afford a median-priced home in Hawaii with a standard 20% down payment, a buyer needed an income about 180% of the state median household income (roughly $150,000 a year). That is far above what many families earn. So, new buyers turned to various loan types and assistance programs to make homeownership possible.
Low Down Payment Conventional Loans
Many first-time buyers in Hawaii used regular conventional mortgages (from a bank or credit union) but with less than 20% down. While putting 20% down (to avoid private mortgage insurance) is ideal, in Hawaii 20% of a typical home could be over $150,000 cash, which most young buyers don’t have. Instead, buyers often put down around 5% to 10%.
They would pay for private mortgage insurance (PMI) on a conventional loan, which increases the monthly payment, but that trade-off was necessary to buy sooner rather than later. Conventional loans were popular because they have fewer restrictions on property type and no upfront fees (unlike some government loans).
FHA Loans for First-Timers
The Federal Housing Administration (FHA) loan program was a lifeline for many first-time buyers, especially those who had decent income but limited savings. FHA loans allow as low as 3.5% down and more flexible credit requirements. Throughout 2018–2023, FHA loans were quite common in Hawaii’s entry-level market.
One quirk: because Hawaii’s home prices are so high, the FHA loan limits (the maximum loan size FHA will insure) are set at their upper bounds. On Oʻahu, the FHA loan limit has been around $790,000 in recent years, which shows how expensive the market is (the FHA limit is much lower in most mainland areas).
VA Loans for Military Buyers
Hawaii has a large military presence with bases like Pearl Harbor–Hickam, Schofield Barracks, and Kaneohe Bay. VA loans, backed by the Department of Veterans Affairs, were a huge factor for eligible first-time buyers. VA loans require zero down payment and have no ongoing mortgage insurance, which make them extremely attractive if you qualify.
In 2020, a significant change occurred: VA loan limits were effectively removed for those with full VA entitlement. This meant that a qualified veteran could borrow above the previous county caps with no down payment. As a result, there was a boom in VA-backed purchases in Hawaii. In Honolulu, VA home loans surged – by mid-2020, VA loans in Honolulu were up 206% year-over-year.
USDA Rural Loans
A lesser-known but important program for certain areas is the USDA Rural Development home loan. This federal program offers 0% down loans for homes in designated rural areas to low-to-moderate income buyers. Parts of Hawaii qualify as “rural” – including much of the Big Island, Molokaʻi, Lānaʻi, and even some pockets of Oʻahu.
Some first-time buyers in those areas used USDA loans as their ticket to ownership. For instance, a family buying a home in a rural Big Island subdivision could use a USDA loan to avoid a down payment, which was crucial if they had little cash but could afford the monthly payment.
State and County Programs
Local government programs played a role in helping first-time buyers bridge the down payment and affordability gap. The Hawaii Housing Finance and Development Corporation (HHFDC) administers Hula Mae Home Loans – a program specifically for first-time buyers in Hawaii. Hula Mae offers below-market interest rates on 30-year loans and, in some cases, down payment assistance up to 3% of the purchase price.
HHFDC also offered Mortgage Credit Certificates (MCCs), which are a kind of tax credit. An MCC lets a first-time buyer get a federal tax credit each year (up to $2,000) equal to 20% of the mortgage interest they paid.
On top of state programs, each county had some assistance. For example, the City and County of Honolulu has a Down Payment Loan Program offering up to $40,000 as a second mortgage for qualifying low/moderate-income buyers. Maui County offers up to $30,000 in down payment help, and Kauaʻi County up to $150,000 (in some cases as a deferred loan or grant).
Who Are the First-Time Buyers?
Age and Generation
Most first-time buyers were in their late 20s to 30s, essentially the millennial generation (born roughly 1980s to mid-90s) by the time of this period. Nationally, the median age of first-time homebuyers hit a record high (around 36 in 2022), reflecting how it’s taking longer for young people to afford homes.
In Hawaii, anecdotal evidence suggests many first-time buyers might be in their 30s, simply because it takes time to save money and qualify in such a costly state. Many of these buyers were also first-generation homeowners in their families – meaning their parents might have been lifelong renters or living in multi-generational setups.
Income and Employment
First-time buyers in Hawaii tended to have moderate to high incomes, yet still felt “house poor” given local prices. A rough median income for millennial homebuyers in Hawaii was around $120,000/year in this period. That sounds high compared to U.S. averages, but in Hawaii it was often just enough to buy a condo or small home.
These buyers commonly had dual incomes – for instance, a couple where each person earns $60k-$70k might pool their income to qualify for a mortgage. Many worked in professional jobs or skilled trades: teachers, nurses, engineers, hospitality managers, government workers, military personnel, etc.
Living Situation and Family Support
A sizable number of first-time buyers came from multi-generational household living arrangements prior to buying. Hawaii’s culture and high housing costs mean it’s common for young adults to live with parents or extended family until they can afford their own place. About 1 in 5 Hawaii residents lives in a multi-generational family home – much higher than the U.S. average.
This often provided a springboard: by living at home rent-free or with minimal rent, young buyers could save money for a down payment. Family is a big support system – it was not unusual for parents or grandparents to help with the down payment or to co-sign on a loan for first-time buyers.
How 2018-2023 Compared to the Previous Decade
The 2008–2017 period started with the housing crash and Great Recession. Home prices in Hawaii actually fell or stagnated for a few years around 2008–2011. By roughly 2012–2013, the market stabilized and then entered a recovery and expansion. Price growth in that decade was steady but not extreme.
For example, on Oʻahu the average home price in 2010 was about $630,000 and by 2017 it was around $736,000. That’s an increase of roughly 3% per year – significant, but nothing like the pandemic-era spike. In contrast, just from 2019 to 2022 (a mere 3 years), Oʻahu prices jumped about 35%.
The 2008–2017 period saw rates drop and then remain fairly low and stable. The Fed slashed rates during the recession, bringing 30-year mortgage rates from about 6% in 2008 down to roughly 4% by 2012, and then rates mostly stayed in the 3–4% range through 2017. First-time buyers in that era benefited from these lower rates which kept monthly payments in check.
In contrast, 2018–2023 had a whiplash: rates were around 4% in 2018, dipped under 3% in 2020–21, then shot up to ~7% by 2023. The volatility was unique. So buyers in 2021 had an easier time with payments than any buyers in modern history (super low rates), but buyers in 2023 faced the highest rates in about 20 years.
Conclusion
From 2018 through 2023, Hawaii’s first-time homebuyers navigated a challenging and dynamic housing landscape. They primarily ended up buying condos and modest houses, because prices for single-family homes were out of reach for many. These new buyers often had to make trade-offs – settling for a smaller home or a less central location in order to become homeowners.
The period saw a mix of good fortune and hurdles: historically low interest rates in 2020–2021 opened a brief window where many jumped in, but by 2022–2023 soaring rates and still-high prices closed that window for others. Financing strategies became creative and critical, with heavy use of VA loans, FHA loans, and local programs to reduce down payments.
Demographically, everyone from young professionals to military families to multi-generational households took part in the first-time buyer wave, though all had to stretch their budgets and often rely on family help. Regionally, we saw big contrasts: Oʻahu’s dense urban market with lots of local buyers in condos versus the neighbor islands like Maui, where outside investors made competition stiffer for locals. The Big Island stood out as a more affordable frontier for those willing to move or commute.
Comparing the late 2010s/early 2020s to the prior decade underlines how unusual this period was – more rapid changes and more pressure on buyers than before. In many ways, Hawaii’s experience mirrored national housing trends (like the pandemic price boom and subsequent affordability squeeze), but amplified: when you start with the highest prices in the nation, any surge makes the mountain that much taller to climb.
Yet, through a combination of community support, policy assistance, and personal determination, numerous Hawaii families did achieve the dream of a first home during 2018–2023. Their stories reflect the broader trend that in Hawaii, the dream of homeownership is challenging but not impossible.
References
- University of Hawaiʻi Economic Research Organization (UHERO) – The Hawai’i Housing Factbook
- Home Stratosphere – How Homebuyers on a Budget Are Making Waves In Hawaii
- Hawaii Business Magazine – Mainland and Foreign Buyers had Big Impact on Maui in 2021
- Honolulu Civil Beat – Who’s Buying Hawaii Homes? On Maui, It’s Mostly Out-Of-Staters
