This is a very hot topic within the media and local politics. Back in February, a bill was circulated within the Hawaii State Senate that would ban foreigners from buying real estate in Hawaii. The premise being that foreigners are driving home prices up and pricing local buyers out of the market. Is this true? Do sales statistics support this argument? You be the judge.
First American Title, a national Title and Escrow Company publishes sales statistics at the end of every year. These stats breakdown the top buyers by country, state, and geographic zone within Oahu. The results tell a very different story from what we're hearing on the news.
At the end of 2023 the Top Buyers by Country were:
1. United States (8,253 Properties) ($7,117,988,026 in Total Sales)
2. Japan (211 Properties) ($245,841,410 in Total Sales)
3. Canada (23 Properties) ($12,400,800 in Total Sales)
4. South Korea (13 Properties) ($16,212,790 in Total Sales)
5. Taiwan (6 Properties) ($5,873,000 in Total Sales)
6. Australia (6 Properties) ($3,533,000 in Total Sales)
7. China (2 Properties) ($1,945,250 in Total Sales)
8. Cayman Islands (1 Property) ($27,500,000 in Total Sales)
9. New Zealand (1 Property) ($660,000 in Total Sales)
10. Germany (1 Property) ($132,000 in Total Sales)
Citizens of the United States purchased 8,253 properties out of a Total of 8,519 sales. This equates to 96.87% of all the sales.
All of the Foreign Countries combined purchased 266 properties out of a total of 8,519 sales. This equates to 3.13% of all the sales.
That leads us to the question, are most of these US Citizens that purchase in Hawaii from the Mainland? Here are the stats: Hawaii residents purchased 6,722 properties out of a total of 8,253 sales. This equates to 81.45% of all the sales.
Mainland sales only made up 18.55% of all United States sales on Oahu!
By the numbers, it appears that mainland US buyers are making much more of an impact than foreign buyers.
If Over 80% of Home Sales are by Hawaii Residents, Why the High Cost?
So what does all this mean? It means that foreign buyers are NOT buying up all of Oahu's properties, local Hawaii residents are! It's easy to demonize foreigners when locals are trying to afford the high cost of living in Hawaii.
More than anything, housing prices have just gone up everywhere. On average in the US, home prices have increased 50-100% from 2000 – 2020. On the West Coast – Oregon, California, Hawaii – home prices have outpaced that, rising 200%+. More data at Visual Capitalist
Besides just rising home costs, it’s also the high cost of living that is making it difficult for locals. Since we’re an island with everything needed to be shipped in our cost of living is higher than just about any other place. Data complied from Sperling’s Best Places and put together on Real Hawaii show the real costs as compared to other cities:
It's income tax, gas, utilities, groceries that all add up. Add in inflation and a dollar just doesn’t go as far. But to anyone who’s lived here, this is not news.
Control What You Can
So what can you do as a local resident to afford home prices here? Start small and start with the basics.
1. Know your finances in and out. We all know how much we earn each month, but do we know how much we spend each month, and on what? Saving money is hard to do if we don't know where our money goes.
2. Speak to a mortgage lender (happy to help with recommendations) to know what the current interest rates are, what kind of government programs you might qualify for, and ultimately what you are pre-approved to borrow.
3. When you are ready to start shopping for homes, start small and within your means. We all want our dream homes, but it will take time, sacrifices, and a strategic plan to get there.
My real estate journey followed these steps and I can tell you first hand that it takes time and discipline, but it works. Keep your eye out for my story next month.
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