Like many places across the U.S., Hawaii has seen its ups and downs over the course of the pandemic. However, a new report by Hawai’i Life Real Estate Brokers indicates that Hawaii’s luxury market is heating up once again.
The brokerage reports that, as of the end of October, it’s outpaced its 2019 sales volume of $1.6 billion, which bodes well for the state’s luxury market as a whole.
During the first quarter of 2020, the luxury market (homes at a price point of $3 million or greater) got off to a quick start with high-end sales up 10.4 percent year over year.
However, as the coronavirus pandemic began impacting business through travel restrictions and stay-at-home orders during March and April, the luxury Hawaiian market took a hit. Sales transactions above $3 million declined 28 percent from the second quarter of 2019 to the second quarter of 2020, despite relatively low infection rates throughout the state.
Amidst the uncertainty of the pandemic, many sellers pulled their listings off the market or decided not to list at all during the second quarter, contributing to widespread low inventory. However, dedicated buyers attracted by the Hawaiian lifestyle and seclusion from the rest of the world still continued to come to Hawaii.
“We began to see buyers with different goals,” Hawai’i Life’s report reads. “Rather than home shopping with the intent of visiting over the summer and winter holidays, transplants from West Coast urban centers wanted to work from the islands while enjoying clean air, low infection rates, and Hawaii’s healthy lifestyle and climate.”
Beginning in late June, market activity picked up on all the islands contributing to an annual increase in closings on properties above $3 million — during Q3 2020, closings on these properties were up 15.6 percent or $67 million from the previous year.
Despite the thriving luxury market, other parts of the Hawaiian economy have suffered in the wake of the pandemic, particularly with so much of the economy relying on tourism.
“I have to say; it’s bittersweet because Hawai’i is struggling,” Hawai’i Life agent Noel Shaw said in the report. “These business closures are difficult for so many people. It’s interesting to be in a position where luxury real estate is booming when there’s so much peril around you.”
Across the state, unemployment is expected to average 12.4 percent during 2020, according to forecasts by the University of Hawai’i Economic Research Organization (UHERO). However, unemployment rates vary across the state’s islands and will likely be significantly higher than that in some areas. In Maui County, unemployment numbers are expected to hit 20 percent this year, and in Kaua’i County, the unemployment rate is expected to reach 19.1 percent.
A new pre-travel COVID-19 testing program that just rolled out in mid-October, however, aims to boost the tourist sector. Passengers who arrive to Hawaii and provide evidence of a negative COVID-19 test taken within the past 72 hours of their flight arrival will be exempt from the currently mandated 14-day quarantine.
In upcoming months, Hawai’i Life anticipates market demand to remain strong and drive buyers to explore different types of housing options.
“We expect the high-end market to see even more significant activity in the coming months, especially once quarantine restrictions in the state are lifted,” the report reads. “We expect that rapidly declining single-family home inventory will eventually lead to higher velocity in the condominium market. Inventory of newer built condominiums around the state has remained relatively stable. Given that inventory of both single-family homes and condos is finite, prospective buyers will soon be chiefly concerned with availability, if we haven’t already reached that threshold.”
On the island of O’ahu, high-end sales transactions are up by a total of 7 transactions and 3.7 percent in terms of dollar value from last year.
On Hawaii Island, year-over-year figures are up as well , with 15 more transactions than last year and total dollar value of transactions up by 16.7 percent.
On Kaua’i, sales have kept apace with 2019 figures, with total dollar value on high-end transactions up by 39 percent. Maui is the only island to experience an overall decline in market activity year over year, with number of transactions down by 15, and total dollar value of transactions down by 28 percent. However, Hawai’i Life’s report notes that one contributing factor for the disparity in last year’s numbers versus this year’s is that 2019 was an unusually active year for high-value sales transactions, with eight high-end sales closing at $10 million or higher during the first three quarters of the year.