Luxury real estate in Hawaii remains a seller’s market despite higher inflation and interest rates, and the relative absence of Japanese buyers.

On each of Hawaii’s four largest islands, the number of single-family homes sold in May for $1.75 million or more was at least double what it was in the months before pandemic restrictions began. Yet the number of homes in this “luxury” price range available for sale was 40% below average; low inventory generally gives sellers an advantage in a real estate market.

These are two highlights from the luxury market report published in June by Corcoran Pacific Properties. Here’s what the O’ahu Luxury Market Report says:

  • 57 luxury single-family homes sold in May, down from 60 in May 2021. The median price for these homes was $2.38 million, down 6% from May 2021
  • In the condo market selling for $750,000 or more, sales rose 74% in May to 153 units sold, from 88 in May 2021. Interestingly, the median price in this luxury range fell 9% to settle at $890,000.
“Solid first quarter”

Gregg Antonsen, recently appointed senior vice president of luxury sales at Corcoran Pacific Properties, said that although the Oʻahu market is facing headwinds due to economic and geopolitical factors, sales of high-end homes are always strong.

Gregg Antonsen began his real estate career in Hawai’i before moving to the mainland; before joining Corcoran Pacific Properties this year, he ran Sotheby’s International Realty office in Sante Fe, New Mexico for a decade.

“We had a very strong first quarter and May was a continuation of that, but we started to see mixed signals,” he says.

“It’s still a seller’s market and it will remain a seller’s market, but I think we’re going to see the price increases start to come down, sort of stabilize. We will see an increase in inventory, which is actually a healthy thing.

Inventory, the number of homes for sale, has been tight since Hawaii’s real estate market took off a few months after the pandemic hit in early 2020.

Inventory of single-family homes priced at $1.75 million and above on Oʻahu was 145 in May 2022, down 14% from May 2021. However, inventory of condos for sale at 750 $000 or more statewide in May 2022 was 326 units, 8% higher than May 2021.

Fewer offers from buyers

The number of offers is an indication that the market may be shrinking: in the past two years, a real estate advertisement has sometimes received a dozen or more offers.

“We always see a lot of activity, it’s just that instead of getting five or six offers, you can get one or two,” says Antonsen. “You always get offers. I just think the speed and pace will slow down.

He says luxury home buyers are mostly from the mainland – usually from California. Many are cash buyers who may not be as sensitive to higher mortgage rates as buyers of cheaper homes.

Shoppers from Japan are still somewhat absent, who have yet to return to Hawai’i in large numbers since the onset of Covid. Last year, Japanese buyers purchased 211 properties on O’ahu; that’s up from 114 in 2020, but only a fraction of the 581 homes they bought in 2018.

“It’s a big question mark,” Antonsen said. “Are they going to come back with a request or not?”