Why Homeownership Feels Out of Reach for Millennials in Hawaii

For many millennials in Hawaii, owning a home feels more like a distant dream than a reachable goal. Soaring prices, fierce competition from out-of-state buyers, and years of slow wage growth have pushed homeownership further out of reach. In places like urban Honolulu, only about a third of millennials own their homes, while many others rent, live with family, or leave the islands altogether. Behind the numbers is a deeper story of changing lifestyles, migration, and the ongoing challenge of building a future in one of the most beautiful—and most expensive—places in the world.

Types of Properties Millennials Are Buying

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The Condo Market: Entry Point for Young Buyers

Condominiums have been a popular entry point for millennial buyers due to their lower prices compared to single-family homes. In 2019, the median condo price on O’ahu (Hawaii’s most populous island) was around $453,000, and it climbed to roughly $587,000 by 2022. In contrast, single-family homes are much pricier – the statewide median house price topped $850,000 by 2022, with O’ahu and Maui island around the $1 million mark. This huge price gap means many young buyers simply cannot afford a standalone house as their first home.

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Instead, condominiums and townhomes have often been the starter homes for millennials. These options offer a foothold into ownership at a relatively lower cost. Townhomes (duplexes or rowhouses) can be a middle ground – giving a bit more space than a condo apartment but still cheaper than a detached house.

The Single-Family Home Challenge

Single-family houses remain the long-term goal for many millennial families, especially as they plan to have children, but achieving that often requires compromises. Buyers have had to trade off location or size – for instance, purchasing an older house farther from the city center, or a smaller “starter” house – in order to make it affordable. In some cases, multiple generations of a family pool their resources to buy a home together. Hawaii actually leads the nation in multi-generational households (around 8–9% of households).

Market Dynamics: Condos vs. Houses

During the late 2010s, condos often outsold single-family homes in number because of these affordability dynamics. In 2018 and 2019, condo sales were very robust statewide – they even outnumbered sales of single-family houses. In 2020 and 2021, record-low interest rates actually enabled some millennials to make a leap: a number of buyers who had started in condos were able to “upgrade” to single-family homes while rates were under 3%.

However, by 2022–2023 the situation flipped again. Mortgage rates spiked to around 5–6% and home prices hit record highs, so monthly payments jumped and fewer could afford houses. Many shoppers were “priced back out” into the condo market in 2022–2023, renewing demand for condos. In fact, 2021 was a frenzied year: the number of condo units sold statewide jumped 58% compared to 2020, as buyers rushed to take advantage of low rates before they rose.

Local vs. Out-of-State Millennial Buyers

Demographics and Motivations

Hawaii’s housing market features two broad buyer groups: local residents and out-of-state buyers (mainlanders or foreign). Local millennials are usually buying homes as their primary residence – a place to live and settle down in Hawaii. Many have grown up in the islands and want to stay near family if possible. In contrast, out-of-state millennial buyers might be purchasing a home in Hawaii for a variety of reasons: some relocate to Hawaii for work or lifestyle (making it their primary home), while others buy second homes or investment properties.

Market Share and Impact

Overall, local Hawaiʻi residents remain the majority of buyers, but out-of-state influence is significant. In 2019, local buyers accounted for about 78% of all home purchases statewide, meaning roughly 22% were by out-of-state buyers. By 2021, the out-of-state share grew – locals made 76% of purchases and outsiders made 24%. In other words, about 1 in 4 homes in Hawaii was being bought by someone from outside the state in recent years.

This trend was even more pronounced on certain islands: for example, on Maui nearly 47% of home sales in 2021 were to mainland or foreign buyers. These out-of-state buyers often come with bigger budgets, and they tend to snap up high-priced properties. In 2021, locals bought 76% of the homes but only about 65% of the total dollar volume – indicating that outsiders disproportionately bought the most expensive homes.

Pandemic Effects on Buyer Demographics

The COVID-19 period brought some temporary shifts. Travel restrictions in 2020 meant far fewer tourists and foreign buyers could come to Hawaii. International buyers (like those from Japan) dropped sharply in 2020, which briefly reduced some competition. But as soon as pandemic rules eased, mainland interest surged.

The rise of remote work during the pandemic allowed many mainland millennials to work from anywhere – and some chose Hawaii. Real estate agents in late 2020 described a “fever pitch” of demand from remote buyers. One incentive program offering free flights to Hawaii for remote workers got 50,000 applications for just 50 spots, showing the huge interest in relocating to the islands. These newcomers, often with high-paying tech or finance jobs, started buying up homes sight-unseen via video calls.

Competition Between Local and Outside Buyers

The influx of outside money creates extra competition for local millennials. When a young local family looking for an entry-level home finds themselves bidding against a wealthy California buyer or an investor, it can drive prices up beyond their reach. State analysts have noted that out-of-state and investor purchases have tightened the inventory available to local residents.

In popular destinations (beachfront areas, resort towns), a significant chunk of homes are purchased as vacation residences rather than housing for local families. This dynamic forces local millennials to compete with outside wealth, contributing to the feeling that they are being “priced out” of their own housing market.

Regional Variations in Millennial Homebuying

O’ahu (Honolulu County)

This is Hawaii’s urban hub, home to Honolulu city. O’ahu has the majority of the state’s population and jobs. It also has the highest housing prices in general. From 2018 to 2023, median single-family home prices on O’ahu soared – from the mid-$700,000s in 2018 to well over $1 million by 2022. Such prices put typical houses out of reach for most younger buyers unless they have very high incomes or savings.

As a result, millennial buyers on O’ahu heavily gravitated toward condos, townhomes, or older fixer-upper houses in less pricey neighborhoods. The urban core of Honolulu is dominated by high-rise condos, which is where many young professionals bought smaller units to be close to work. In suburban or rural parts of O’ahu, millennials with families have bought older single-family homes or townhouses – often preferring more space and affordability over a short commute.

Local O’ahu buyers remained dominant (about 85% of O’ahu home purchases in 2021 were by Hawaii residents), so O’ahu’s market is somewhat more “local-driven” compared to the neighbor islands.

Neighbor Islands (Maui, Kaua’i, Big Island)

The other islands have seen different trends. Maui and Kaua’i are smaller markets but very desirable for second-home buyers and retirees. They have beautiful resort areas (like West Maui’s Kaanapali or Kaua’i’s Princeville) where property prices are extremely high. A significant portion of sales on these islands have been to out-of-state buyers (nearly half on Maui, as noted).

This means local millennials on Maui or Kaua’i often face even tighter inventory and higher prices relative to local incomes. Many homes get snapped up as vacation properties. Maui County actually experienced some of the fastest price appreciation in the state during this period. For example, the median single-family home on Maui was around $780,000 in 2018 and by late 2021 was around $1,000,000 – similar to O’ahu’s level.

Hawaii Island (Big Island), which is the largest island by area, traditionally has the most affordable real estate of the group. The Big Island’s median home price has been around the $400,000–$500,000 range in recent years – much lower than O’ahu’s. This attracted some budget-conscious buyers, including locals from other islands and even some mainlanders who aren’t necessarily wealthy but move to Big Island for a lower-cost lifestyle.

Urban vs. Rural Trends

Even within the same island, there’s a split between urban and rural trends. The urban areas (like Honolulu) tend to have younger buyers choosing condos for convenience and because that’s what’s available. Rural areas (like parts of Big Island or Maui’s upcountry) attract those willing to trade convenience for space and a lower price.

For example, some O’ahu residents even relocated to neighbor islands during this period – selling a small condo on O’ahu and using the money to buy a larger house on a less-populated island where their dollar stretches further. This kind of inter-island move became more feasible with remote work as well.

Mortgage and Affordability Dynamics

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The Interest Rate Rollercoaster

One of the biggest factors influencing millennial homebuying was the rollercoaster in mortgage interest rates. In 2018, a typical 30-year fixed mortgage rate was around 4.5%. By 2019 it had dipped to about 3.9%, helping buyers a little. Then came the pandemic: in 2020 and early 2021, rates plummeted below 3% – an unprecedented low in modern times. Many millennials took advantage of these rock-bottom rates.

However, the tide turned sharply after 2021. By mid to late 2022, interest rates were climbing fast as the economy shifted. The average 30-year mortgage rate hit about 5.3% in 2022, and kept rising – by 2023 it was roughly 6.7% on average. This doubling of interest rates within two years had a huge impact on affordability. A household that could manage a $800,000 mortgage at 3% interest found that at 6% interest, the same monthly payment might only support a ~$500,000 mortgage.

The Affordability Challenge

Affordability in Hawaii has long been challenging regardless of interest rates because home prices are extremely high relative to local incomes. On average, buying a median-priced house in Hawaii costs about 7.8 times the median household income (compare that to ~3–4 times income in many Midwestern states). Millennials, often early in their careers, tend to have below-median incomes, making that gap even larger.

The rapid home price appreciation from 2018 to 2022 made the affordability gap wider. Statewide, median home prices jumped roughly 35% between 2019 and 2022. O’ahu’s median single-family price went from about $790k in 2018 to $1.10M in 2022, while condo prices and neighbor island prices also rose substantially. Local incomes did not increase at anywhere near this pace.

Creative Solutions to Affordability

To cope with high prices, many millennial buyers employed creative financing and family support. It became common for parents or grandparents to help with the down payment – either as a gift or by co-signing loans. One Honolulu program planner noted that a lot of people in their 20s and 30s in Hawaii are “doubling up” with parents longer than in previous generations, allowing them to save money.

Living rent-free with family for a few years enabled some millennials to accumulate the hefty down payments needed. (For example, a young nurse saved nearly $90,000 while living with her mom, then bought a condo at age 29.)

Additionally, buyers increasingly looked at government-backed loans: FHA loans, which require as little as 3.5% down, were a popular choice for first-time buyers who didn’t have 20% to put down. VA loans (for U.S. military veterans) were a significant factor in Hawaii’s market too – Hawaii has many service members, and in 2020 the rules were changed to remove the loan cap for VA borrowers. This led to a boom in VA loan usage; in mid-2020, VA home loans in Honolulu were up over 200% year-on-year as many young military families jumped into the housing market with zero down payment at low interest.

Government Programs and Policies

State and Local Homebuyer Assistance

Various government programs have helped Hawaii residents – especially first-time and younger buyers – purchase homes:

The State of Hawaiʻi offers the Hula Mae Home Loan program, providing qualifying first-time buyers with below-market interest rates on 30-year mortgages, and even offers optional down payment assistance (up to 3% of the purchase price as a deferred second loan).

Several counties have their own assistance for down payments or closing costs. For instance, the City and County of Honolulu has a program offering up to $40,000 as a 0% interest down payment loan for income-qualified buyers. Maui County offers up to $30,000 in down payment help, and Kaua’i County up to a generous $150,000 for those who qualify.

Affordable Housing Initiatives

Local government has also tried to increase the supply of affordable homes. On O’ahu, a “workforce housing” policy in areas like Kaka’ako led to new condo buildings where a portion of units were priced below market for local median-income buyers. State chief economist Eugene Tian noted that the condo construction boom in Kaka’ako around 2015–2018, with ~30–40% of those units set aside as workforce housing, helped bump up the homeownership rate by giving young working families a shot at owning.

Similarly, neighbor islands have been pushing affordable housing plans – for example, Maui County adopted a plan in 2021 to facilitate 5,000 affordable housing units over the next five years. These might include subsidized rentals, but also affordable for-sale homes.

Addressing Supply and Vacation Rentals

Beyond specific buyer programs, the state recognized that fundamentally the housing crunch is due to lack of supply. The Department of Business, Economic Development & Tourism (DBEDT) estimated Hawaii needs 10,000 new housing units per year to meet demand and reduce pent-up need. In reality, housing production has been well below that.

Honolulu County passed stricter regulations on short-term vacation rentals (like AirBnBs) in residential neighborhoods in 2019 and further tightened them in 2022. While not directly a “millennial homebuyer” program, this policy aimed to disincentivize investors from buying up homes purely to rent to tourists, thereby hopefully leaving more housing stock for locals who need a place to live.

Impact of COVID-19 and Remote Work

The Pandemic Housing Boom

The COVID-19 pandemic (2020–2022) had a profound impact on housing and millennial buyers in Hawaii. Initially, in early 2020, uncertainty and economic slowdown led to a brief pause in the real estate market. However, the situation quickly pivoted: by late 2020, Hawaii (like the rest of the U.S.) saw a real estate boom.

As mentioned earlier, the rise of remote work allowed people from the mainland to relocate to Hawaii without giving up their jobs. This created an unusual scenario where demand for Hawaii housing increased despite tourism being down, because remote workers filled some of the gap.

Shifting Priorities and Inventory Crunch

The pandemic also shifted many people’s priorities. Millennials who were renting small apartments in Honolulu, for example, found during stay-at-home orders that having space and perhaps a yard was very desirable. This motivated some renters to accelerate their plans to buy a home with more room.

Remote work made suburban or rural living more feasible (you didn’t need to be close to the city if you weren’t commuting), so some millennial buyers moved farther out – even to neighbor islands – in search of larger, more affordable homes.

The flip side of surging demand was that housing inventory in Hawaii hit very low levels. People were hesitant to list homes for sale during the pandemic. So there were fewer listings, but more buyers. The result: intense bidding wars in 2021. Homes, especially on O’ahu, would get dozens of offers and often sell above asking price. This environment was tough on millennial buyers, who might not have the deep pockets or cash reserves of older or wealthier bidders.

Winners and Losers of the Pandemic Market

Not all millennials benefited; many younger Hawaiʻi residents lost income in the pandemic’s economic fallout, especially those working in hotels, restaurants, and travel industry (which skew towards younger employees). Government stimulus (like enhanced unemployment and direct payments) helped some stay afloat and even save a bit.

In essence, COVID-19 was a catalyst that both helped and hindered millennial homebuyers. It helped those who were ready to buy by giving them low financing rates and making them realize the value of homeownership (security during uncertain times). It also allowed new flexibility in where to live. On the other hand, it hindered affordability by igniting a buying frenzy and price surge, and by inviting more outside competition into an already tight market.

Millennial Homeownership Rates and Outlook

Homeownership rates among millennials in Hawaii have gradually increased, but they remain low compared to older generations and mainland counterparts. Nationally, millennials as a whole finally reached a 50%+ homeownership rate by 2022 – meaning just over half of millennials in the U.S. own a home. In Hawaii, the share is much lower. The Census Bureau’s American Community Survey data showed that in Honolulu, only about 33–34% of householders under age 35 were homeowners as of a few years ago. The majority were still renting.

In 2017, an analysis found that about 64% of Hawai’i’s young adults (ages 18–34) were living with their parents or other relatives. That’s nearly two-thirds, which was almost double the national average of 35% for that age group. By 2020, the trend of “staying at home” likely persisted or even grew with the pandemic.

From 2018 to 2023, as the older segment of millennials (those in their late 30s) progressed in careers and savings, a number of them did manage to buy homes. For millennials specifically, the period of 2020–2022 likely saw some of the biggest gains in homeownership as many rushed to take advantage of low interest rates. Conversely, 2022–2023 likely stalled some of that progress due to high rates and prices.

In plain terms, the majority of Hawaii’s millennials are still not homeowners as of 2023 – they either rent, live with family, or have moved away.

To sum up, millennial homeownership in Hawaii did improve marginally from 2018 to 2023, but it remains relatively low. The overriding issue is housing affordability. Many millennials express that they want to own a home in Hawaii, but they are realistic that it might take longer to achieve. Those who have succeeded often did so in their 30s, through a combination of personal savings, family help, and smart use of programs or low interest windows. Those who haven’t are either still saving, or they might have made the difficult choice to buy elsewhere.