Priced out of Paradise: Mainland, foreign buyers snapping up Hawaii homes
HONOLULU (HawaiiNewsNow) - U.S. Mainlanders and foreign citizens bought more than a quarter of the homes sold in the islands since 2008, according to a state report. Even more staggering: Nearly 47 percent of Neighbor Island homes were sold to out-of-state residents over the same period.
The report sheds new light on the state's hot housing market, where demand is far outstripping supply and driving up home prices.
It's the first time the state has compiled figures on the residency of Hawaii homebuyers, though onlookers have long suspected that mainland and international buyers have a significant impact on Hawaii's housing market.
"People love Hawaii, and they love to invest in Hawaii," said Eugene Tian, state economist. "Out-of-state investments make our housing demand very strong."
Since 2008, about 16 percent of Oahu homes have been purchased by mainlanders (12 percent) and foreign citizens (4 percent).
The percentage of out-of-state purchases on the Neighbor Islands was much higher.
In Maui County, 52 percent of homes were purchased by mainlanders and foreign buyers; and 45 percent of Kauai homes were sold to out-of-state residents. In Hawaii County, the figure was 44 percent.
Statewide, 24 percent of all homes in the islands sold since 2008 went to U.S. mainlanders, while 4 percent were sold to foreign citizens.
Real estate expert Stefany Sofos said the percentage of out-of-state buyers is likely even higher.
"The foreign nationals come in and they get corporations or LLCs and it's a Hawaii corporation and through that corporation they buy real estate," Sofos said.
She added the most common reason foreign nationals buy in Hawaii is for investment purposes. These types of buyers are diversifying their portfolios globally, she said.
"When people are coming in with $2 to $3 million cash to plunk down for a condo in Kakaako, you're talking big diversification."
The report, compiled by the state Department of Business, Economic Development and Tourism, showed that mainlanders and foreign citizens gravitated toward higher-end purchases.
The average sale price of homes sold to foreign buyers from 2008 to 2015 was $785,604, and the average sales price for mainlanders was $630,390.
By comparison, the average sale price of homes sold to local buyers over the same period was $478,189.
The report showed that some 38 percent of U.S. Mainland buyers were from California, 10.5 percent were from Texas, and 8.5 percent were from Washington State.
Among international buyers, 44 percent were Canadian and 38 percent were from Japan.
Meanwhile, buyers from Hong Kong had the highest average home price – at $1 million, followed by buyers from China, whose average home price was $936,000.
The report comes as the state grapples with a housing shortage that's pricing out many Hawaii families.
Tian said the report is the first step in getting a better understanding about outside forces on Hawaii's housing market. The state also wants to look at state-by-state data to figure out how Hawaii's trends compare to the nation, and break down home sales by single-family and condo sales.
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