Hawaii’s housing market has always been unique, but between 2018 and 2023, it went through some of its most dramatic changes yet. Before the pandemic, urban areas like Honolulu were cooling off, with prices dipping and inventory building up.
But when COVID-19 hit, everything flipped. Record-low mortgage rates, a rush for more space, and a tight housing supply turned the islands into a seller’s paradise almost overnight. The surge wasn’t just in the cities—rural and suburban areas saw soaring demand too, redrawing the map of where and how people wanted to live across Hawaii.
Urban vs. Rural Property Markets
A key distinction in Hawaii is between urban Honolulu versus the more rural Neighbor Islands and country areas. Urban Honolulu (O’ahu) – home to about 70% of the state’s population – is dominated by city and suburban housing. Here, condos and townhouses are prevalent, especially in Honolulu’s urban core (Waikīkī, Kakaʻako, etc.), where high-rise condominium towers are common. Buyers in Honolulu often seek condos for proximity to jobs and amenities, despite their smaller size. Single-family homes on O’ahu are limited in supply and very expensive, with the median O’ahu house price topping $1 million by 2021. Many urban O’ahu buyers include young local families searching for starter condos, as well as some investors targeting rentals in town.
In contrast, rural areas and Neighbor Islands offer more spread-out living and unique property types. On Hawaiʻi Island (Big Island), Maui, Kauaʻi, and rural parts of O’ahu, single-family homes on larger lots are more common. These areas saw increased interest in off-grid and country homes, such as houses with solar power and rainwater catchment in Big Island’s Puna district. Puna became a hot spot in 2021 for its affordable new homes in the $300k–$500k range, attracting local buyers and even some O’ahu families looking for more space.
Land Investments Surge
Vacant land purchases also spiked – some buyers opted to buy acreage to build later or hold as an investment. In 2021, nearly 70 vacant land parcels (including large commercial tracts) sold for about $924 million total, a record level of land investment. While many of those were industrial parcels, it underscores how even raw land in Hawaii drew heavy interest during the boom.
Condominiums are less common in rural areas except in resort towns. On Hawaii’s Neighbor Islands, condos tend to cluster in tourist hubs like West Maui (Kā’anapali, Wailea) and West Hawaiʻi (Kona coast). These were snapped up in 2020–21 largely by out-of-state buyers seeking vacation homes. Local Realtors on the Big Island noted that while residential and land sales were booming in Hilo and Puna (more local-driven), it was condos selling fast on the west coast to off-island buyers.
Who Is Buying Hawaiian Real Estate?
Local vs. Out-of-State Buyers
Local Hawaii residents remain the majority of homebuyers statewide. In 2021, Hawaiʻi residents bought about 76% of all homes sold statewide. However, out-of-state buyers (from the U.S. mainland or foreign countries) have a strong presence, especially in high-end and rural markets. The share of outside buyers increased during the pandemic. Even with travel restrictions, by 2021 outsiders were purchasing a larger slice of homes (24% of sales, up from 22% in 2019) and an even larger share of total dollars (35% of buyer spending). Mainland U.S. buyers in particular flocked to Hawaii when remote work enabled relocation.
Shifting International Investment
The mix of out-of-state buyers shifted from foreign to domestic during 2020–2022. International buyers (such as from Japan or Canada) largely pulled back in 2020 due to strict travel quarantines. For example, on O’ahu the number of homes bought by Japanese citizens dropped by half in 2020 compared to 2018. By 2021 foreign purchases were rebounding (Japanese buyers bought 211 O’ahu properties in 2021, up from 114 in 2020), but they were still below pre-pandemic peaks. In 2018, Japanese investors had purchased a record 581 O’ahu properties – highlighting how foreign investment was actually more prominent in the late 2010s than during the pandemic.
In contrast, Mainland American buyers surged in 2020–2021. California residents became the second-largest buyer group after locals, doubling their Hawaii home purchases from 1,525 in 2019 to 2,554 in 2021. Many were remote tech workers or retirees taking advantage of low interest rates and Hawaii’s appeal.
The Urban-Rural Divide in Outside Investment
There is a stark urban–rural contrast in where out-of-state buyers focus. On O’ahu (the most urban island), local buyers dominate: only about 12% of O’ahu single-family home sales recently have been to out-of-state buyers. Most O’ahu homes are bought by O’ahu residents, reflecting the island’s large local workforce and population.
But on the Neighbor Islands, outside buyers play a much bigger role – particularly in the condo market. According to research by UHERO, over half of all condo sales on the Neighbor Islands (Maui, Hawaiʻi, Kauaʻi) are to out-of-state buyers, compared to a much smaller fraction in Honolulu. In fact, roughly 66% of condo purchases on Kauaʻi are by out-of-state buyers, as are about half on Maui and Big Island. These tend to be vacation condos or investment rentals in resort communities.
The influx of mainland cash buyers on the Neighbor Islands often outbid local residents, contributing to faster price gains there during the pandemic. Realtors in Hilo observed that people were “selling their homes on the mainland and rolling their money over here,” often paying cash over asking price for Big Island properties.
Evolving Lifestyle Trends
From 2018 to 2023, buyer motivations in Hawaii also shifted in response to lifestyle changes. One notable trend was upsizing – many families sought larger homes, driven by remote work and schooling needs during the pandemic. Suddenly, having an extra room for a home office or a yard for the kids became a priority. This led some Honolulu condo dwellers to trade up to suburban single-family houses (if they could afford it), or for multi-generational households to pool resources and buy bigger homes.
On the flip side, some longtime homeowners (often Baby Boomers) began downsizing during this period. Hawaii actually has one of the highest rates of baby-boomer homeownership in the nation (around 43% of homes owned by Boomers), and as that generation ages, many looked to sell large family homes and move into smaller condos or even leave the state for lower-cost places. This created some inventory of larger homes (often snapped up by those upsizers or outside buyers). Downsizing locals often sought condominiums in urban areas or senior-friendly communities, trading maintenance of big properties for convenience.
The Second Home Boom
Another major trend was vacation home buying and second homes. During 2020–2021, demand for second homes skyrocketed nationwide, and Hawaii was no exception. Wealthy individuals who suddenly could work from anywhere decided to purchase island getaways. National data showed the number of buyers locking in mortgage rates for second homes jumped 128% year-over-year in March 2021. Many of these were “Zoom boom” buyers – remote workers or semi-retirees spending part of the year in Hawaii.
Hawaii’s resort towns saw a flood of these vacation-home buyers, especially in 2021. For instance, Maui County notched a record pace of high-end sales; on O’ahu, sales of luxury homes ($3M and up) more than doubled in 2021. This second-home wave was a double-edged sword: it injected money into the market (boosting prices) but also raised concerns about housing availability for locals.
Urban-to-Rural Migration
Remote work enabled some local residents to relocate from urban to rural areas. Anecdotally, a number of Honolulu-based workers moved to quieter islands like Hawaiʻi or Kauaʻi since they no longer needed to be in the city daily. This intra-state migration boosted rural home sales. One Big Island realtor noted “folks moving here from other islands” in 2021 because it was still relatively affordable in certain districts.
Conversely, a small number of people left Hawaii entirely due to high housing costs, enabled by remote work to seek cheaper locales – but the larger impact was incoming demand rather than outgoing.
External Market Forces
Several external factors heavily influenced Hawaii’s housing trends in this period: the COVID-19 pandemic, swings in interest rates, housing supply constraints, and government policy changes.
Pandemic Impact
The COVID-19 pandemic (2020–2021) was the single biggest catalyst. It created a brief freeze followed by a buying frenzy. Travel restrictions were especially strict in Hawaii early on – for much of 2020, anyone arriving had to quarantine, which temporarily slashed foreign buying by 60–70%. But domestic demand more than made up for it. The pandemic also highlighted Hawaii’s limited housing inventory. Many owners, uncertain about the future, hesitated to list homes for sale in 2020, causing the number of homes on the market to drop by about 10% that year. This lack of supply against surging demand pushed prices up at a record pace through 2021.
Interest Rate Rollercoaster
Mortgage interest rates were another critical factor. In 2018–2019, rates had been moderate (~4–5%) and even ticked up at times, contributing to slower price growth then. Once the pandemic hit, the U.S. Federal Reserve cut rates, and 30-year mortgage rates fell to historic lows around 2.7–3.0% in 2020–21. These ultra-low rates enabled more buyers to afford Hawaii’s high prices, fueling the 2020–2021 boom.
However, the environment flipped in 2022. To combat inflation, the Fed raised rates sharply, and mortgage rates shot past 6% by late 2022. This rise in rates since early 2022 quickly curbed the number of homes sold in Hawaiʻi. Buyers faced higher borrowing costs, reducing their purchasing power. Sales volume plummeted: on O’ahu, single-family home sales fell over 26% in 2023, and condo sales fell 28% year-over-year.
Higher rates also discouraged sellers from listing, since anyone who refinanced at 3% preferred to stay put rather than give up their low rate for a new 7% loan. New listings on O’ahu dropped by about 20% in 2022–2023, worsening the inventory squeeze. Thus, by 2023 Hawaii’s housing market cooled in transaction volume, even though prices remained near record highs (the median O’ahu house price was still about $1.05M at the end of 2023, only ~5% below the peak).
Supply Constraints and Natural Disasters
Housing supply and development constraints have been an underlying issue throughout 2018–2023. Hawaii has chronically low housing inventory due to decades of underbuilding and strict land-use laws. The pandemic didn’t change that fundamental issue – if anything it exacerbated it. By 2023, only about 20% of local households could afford the median single-family home in Hawaii.
Construction of new homes slowed during the pandemic (labor and material shortages), and high interest rates later made new development financing difficult. One acute event underscoring supply problems was the 2023 Maui wildfires. In August 2023, devastating fires in Lahaina and Kula destroyed over 2,000 housing units. This tragic event suddenly displaced thousands of residents and “upended the housing market” on Maui, as an already tight housing supply became even more strained with the loss of homes.
Policy Changes
Government policy shifts also played a role. In 2019, just before the pandemic, Honolulu County enacted a major crackdown on short-term vacation rentals (Ordinance 19-18, formerly Bill 89). This law banned most new vacation rentals outside of resort zones, limiting them to about 1,700 permits for hosted B&Bs and declaring, “Everything else is illegal” outside resort areas. The intent was to return housing units to local residents by curbing Airbnbs.
On Maui, policymakers in 2022–2023 discussed phasing out short-term rentals in apartment zones to preserve long-term housing. Additionally, state and county governments began exploring a so-called “empty homes” tax on vacant investment properties. Honolulu’s City Council introduced proposals to levy a tax on homes left vacant for more than half the year, hoping to nudge more units onto the market for locals.
On the development side, Honolulu passed Bill 7 in 2019 to incentivize small affordable rental apartments by easing regulations on small multifamily projects. While slow to show results, such measures aim to increase housing stock.
Island-by-Island Analysis
Hawaii’s four counties (Honolulu, Maui, Hawaiʻi, and Kauaʻi) saw some common trends during 2018–2023, but also distinctive regional patterns:
O’ahu (Honolulu County)
As the urban center, O’ahu’s market is the largest and was somewhat less volatile than the others. Median prices on O’ahu were the highest in absolute terms (peaking around $1.1M for single-family homes in 2022) but rose at a slightly slower percentage rate than on the smaller islands.
During the 2020–2021 boom, O’ahu’s increase in sales and prices was significant but not as extreme as elsewhere. What did spike on O’ahu was sales volume – 2021 saw about 15,700 homes sold on O’ahu (all-time high), with local buyers accounting for 85% of those transactions. Neighborhoods like `Ewa Beach, Mililani, and Kāne’ohe saw intense demand from local families, often with bidding wars for single-family homes. Condo sales in town also jumped as first-time buyers took advantage of low rates.
By the end of 2023, O’ahu’s median prices had dipped only slightly (~5% off highs), showing resilience due to continued low inventory. Certain O’ahu condo sub-markets even saw inventory increase in late 2023 (for instance, Makiki and Salt Lake had 40%+ more condos for sale than a year prior) as some investors listed units. Overall, O’ahu’s trend was a wild ride up in 2021 and a gentle cooling after, with locals still driving most of the activity.
Maui County
Maui’s housing market is heavily influenced by tourism and luxury buyers. From 2018 to 2019, Maui was somewhat flat, but during the pandemic Maui saw huge price appreciation. By mid-2021, Kauaʻi and Maui briefly had the highest median prices in the state, even exceeding O’ahu. (In June 2021, Kauaʻi’s median hit $1.1M, up 82% year-over-year, and Maui was in a similar range.)
High-end areas like Wailea and Kapalua saw an influx of cash buyers. Maui also had many sight-unseen purchases in 2021 – people buying multimillion-dollar homes remotely. With its beautiful remote work setting, Maui attracted remote tech executives and others seeking resort-style living.
The tragic Lahaina fire in 2023 had a sudden impact, likely tightening Maui’s supply further and shifting some demand to other parts of the island. In late 2023, Maui’s market was in flux: demand remained for resort properties, but there was also uncertainty as the island recovered from the fires.
Hawaiʻi Island (Big Island)
The Big Island is the most rural and had the lowest prices, but it saw some of the biggest increases in sales activity during the pandemic. Many local families who were priced out of O’ahu bought on Big Island, and some mainland remote workers chose Big Island for its more affordable space. In places like Puna and Hilo on the east side, homes under $500k sold quickly to local and inter-island buyers.
Meanwhile, Kona and Kohala on the west coast experienced a luxury boom (e.g. sprawling ocean-view homes, golf estates) with mainland buyers. Big Island’s median home price, while lower than other counties, jumped significantly – e.g. up 26% year-over-year by mid-2021 (to about $472k in June 2021).
One unique aspect was land sales: Big Island has subdivisions with many vacant lots, and there was a notable uptick in vacant land purchases in areas like Ocean View, Puna, and Hamakua as people bought acreage, aiming to build custom homes or farms. By 2023, Big Island’s market cooled from its peak activity, but prices remained elevated relative to pre-2020.
Kauaʻi County
Kauaʻi, though the smallest market, saw outsized effects during the pandemic housing rush. Its natural beauty and limited supply drove prices skyward. Kauaʻi’s median home price broke $1 million in 2021, an astonishing rise given it was in the $600k–$700k range a couple years prior.
Part of this was because Kauaʻi has very few homes for sale at any time (it’s a small island with strict growth controls), so even a slight increase in affluent buyers can send prices soaring. Many Hollywood and tech elites bought Kauaʻi estates in this period. North Shore Kauaʻi (Hanalei, Princeville) in particular saw a lot of high-end activity.
Out-of-state buyers comprised the majority of transactions by dollar volume on Kauaʻi. When travel reopened in 2021, Kauaʻi real estate went into overdrive with bidding wars even on modest homes. By 2022–2023, Kauaʻi’s volume of sales slowed (due to lack of inventory and high rates) but prices did not decline much.
Historical Comparison: 2018–2023 vs. 2008–2017
The 2018–2023 period differed from the preceding decade (2008–2017) in several important ways. The earlier decade began with the Great Recession and housing crash. Hawaii was hit by the 2008 financial crisis with home sales dropping sharply (down 14% from 2008 to 2009). Prices bottomed out around 2010–2011 statewide.
From about 2012 onward, the 2010s were a recovery period: sales and prices climbed gradually as the economy improved. Home values rose steadily but not explosively – for instance, the average sale price in Hawaii increased roughly 26% between 2011 and 2014 (from about $470k to $594k), which equates to moderate single-digit growth most years. The strongest appreciation in the 2010s occurred in 2013–2014, when prices jumped ~10% annually coming out of the recession. By 2015, statewide sales counts had finally surpassed the 2008 levels, marking a full recovery in volume.
In contrast, 2018–2023 was a roller coaster. The later period had an unprecedented pandemic boom followed by a rapid interest-rate-driven cooldown. Where 2008–2017 saw a gradual climb from bust to boom, 2018–2023 saw a sudden boom after a long expansion.
Another difference is the profile of outside buyers: in the 2010s, foreign investment was a bigger factor, with Japanese, Canadian, and Chinese buyers active especially in luxury condo developments. For example, Japanese buyers were purchasing hundreds of Hawaii properties per year in the mid-2010s (peaking in 2018). By contrast, during 2018–2023, mainland U.S. buyers became the dominant external force (as foreign travel waned), and their numbers fluctuated with the pandemic and remote work trends.
Housing supply dynamics also differed. After the 2008 crash, there was actually a surplus of homes in some Hawaii markets (inventory was high in 2009–2011 due to foreclosures and fewer buyers). That kept prices from rising too fast until excess inventory was absorbed. In 2018–2023, however, Hawaii never had a surplus – inventory was tight from the start and only got tighter, except for a brief pause in listings in early 2020.
Affordability worsened more dramatically in 2018–2023 as prices hit all-time highs. By 2023, only ~20% of local households could afford a median home, whereas in, say, 2010, that figure was not as dire (prices were lower and interest rates not prohibitively high).
References
- Comprehensive Housing Market Analysis for Urban Honolulu, Hawaii – U.S. Housing and Urban Development (HUD)
- Locals Are Hawai’i’s No. 1 Homebuyers, But… – Hawaii Business Magazine
- Market Report: December 2023 – Honolulu Board of REALTORS®
- Hawaii Island: The Wrong End of the Real Estate Boom – Hawaii Public Radio
- Caldwell signs ‘historic’ bill regulating vacation rental industry on Oahu – Hawaii News Now
- Remote Work Continues to Drive Record Demand for Second Homes – Redfin News
- Purchases of Hawai’i Commercial Real Estate Rebounded in 2021 – Hawaii Business Magazine
- Number of Homes for Sale Goes Up in Some Parts of O’ahu – Hawaii Business Magazine
- Residential Home Sales in Hawaii 2008–2015 – DBEDT, State of Hawaiʻi
- The Hawai’i Housing Factbook – UHERO (University of Hawaiʻi Economic Research Organization)
- The Hawaii Housing Factbook 2024 – UHERO
- Will Exemptions In Honolulu’s Empty Homes Tax Bill Water Down Its… – Civil Beat
- Honolulu City Council defers final vote on bill to tax empty homes – Hawaii Public Radio
- Remote workers helping to fuel luxury real estate sales on Oahu – Hawaii News Now
