The Hawaiian islands have always been a dream destination for many, attracting many investors and homeowners looking to capitalize on the thriving real estate market. However, in recent years, the market has shifted towards renting instead of selling, leaving many property owners struggling to attract buyers. With an oversupply of units and the high cost of homeownership, some are turning to long-term renting as a source of income. Despite the challenges of maintaining rental properties, some owners are finding success in the lucrative vacation rental market. While the reasons for this shift are complex, it highlights property owners’ difficulties in an increasingly competitive and expensive real estate market.
The real estate market in Hawaii is a lucrative business, with investors and homeowners flocking to the islands in search of paradise. However, in recent years, many property owners have struggled to sell their units, leading them to rent instead. According to Duke Kimhan of Hi Pacific Property Management “The Hawaii ROI averages 4-5% of the property value. With the sales slumping, more owners are renting their units long-term—most single-family homes here in Honolulu and Maui average 1M values. Most condos here are over 500K, so the rental market starts at $2000. Few rentals are below that price range. Most town rentals are over $2000 a month. Parking is a huge issue here, and most times, town rentals will not have enough offered. Parking can run $200 per month per stall in town.”
The reasons for this shift are multifaceted. For one, the Hawaii market has seen a surge in new construction, resulting in an oversupply of units. This increase in inventory has created a more competitive market, with sellers finding it increasingly difficult to attract buyers. Additionally, with the rise of remote work and the ability to work from anywhere, some buyers choose to invest in properties outside of Hawaii. Another factor contributing to the rise of renting overselling is the high cost of homeownership in Hawaii. While the state’s natural beauty and desirable climate make it an attractive place to live, the cost of living is also one of the highest in the United States. For some, the cost of maintaining a property, paying property taxes, and covering mortgage payments must be lowered, leading them to rent instead.
Renting, however, presents its own set of challenges. Rental rates in Hawaii are also high, meaning property owners who rent out their units may still need help attracting tenants. Additionally, rental properties require ongoing maintenance and upkeep, which can be time-consuming and expensive. Despite these challenges, some property owners are finding success in renting out their units. Vacation rentals, in particular, can be a lucrative source of income, as Hawaii is a popular tourist destination year-round. However, in recent years, the state has cracked down on vacation rentals, requiring permits and limiting the number of properties that can be rented out. Overall, the shift towards renting over selling in the Hawaii market indicates property owners’ challenges in an increasingly competitive and expensive real estate market. While renting may not be the ideal solution for everyone, it can provide a valuable source of income for those struggling to sell their properties.
