2021 Luxury Market Report Reveals that Hawai’i Real Estate is More Valuable than Ever

Just released by Hawai’i Life, our 2021 Hawai’i Luxury Market Report reveals that across the island chain, the real estate market has experienced historic levels of sales activity, especially in the luxury segment. 

It’s clear that luxury real estate in the state of Hawai’i is more valuable now than ever before! 

In this post, we’ll look at the highlights from this year’s Hawai’i Luxury Market Report. For an overview of the luxury real estate market data from across the island chain, commentary on what’s driving this market run on each island, and what we expect for the future, keep reading!

Hawaii’s Luxury Market Report at a Glance: Record-Breaking Volume & Velocity

According to the 2021 Hawai’i Luxury Market Report, the volume and the velocity of the state of Hawaii’s real estate market shattered every previous record and historical norm. Statewide, average months of residential real estate inventory saw a dramatic decline from a monthly average of 5.3 months to 1.6 months, falling even more sharply in the state’s most fashionable neighborhoods.

Driven primarily by demand that far outpaced supply, the number of homes on the market dropped to record lows and competition among buyers grew in 2021. In turn, prices rose significantly.

By Q3, the statewide total of 634 sales above $3 million included 466 sales in the $3 million to $5.99 million range, 104 in the $6 million to $9.99 million range, and 64 ultra-luxury sales of over $10 million. And the year isn’t over yet! 

The entire state of Hawai’i saw triple digit growth in terms of transactions and total dollar value. As for the four major islands, Hawai’i Life represented 24.22% of all trades, with $538.7 million dollars’ worth of transactional volume in the first three quarters of 2021. 

Hawaii’s Luxury Real Estate Market Sees Unparalleled Growth

Across the State of Hawai’i, the luxury market is growing at an unparalleled rate, from 215 transactions in the first three quarters of 2020 to an astounding 634 transactions above $3 million in the first three quarters of 2021. More impressive yet, Hawaii’s luxury market experienced a stunning increase of 234.5% over 2020 (by dollar value), with sales in all luxury market segments totaling nearly $3.7 billion in 2021.

The ultra-luxury market (for trades at or above $10 million) increased at an even more astonishing rate, from a mere 10 transactions in 2020 to 64 transactions in 2021. The size of Hawaii’s ultra-luxury market is especially dramatic, rising from $151 million in 2020 to more than $1 billion in the first three quarters of 2021 alone. 

O’ahu’s Luxury Real Estate Market 

On O’ahu, demand has and will eclipse supply, while multiple offers, escalation clauses, and bidding wars have become the norm in 2021. In the first three quarters of the year, O’ahu’s market saw significant growth in transaction volume and average sales price. 

The Island of O’ahu and Honolulu County showed the least amount of growth in the luxury segment, totalling only 28% of the state of Hawaii’s transaction volume and 23% of the dollar volume. In the ultra-luxury segment, O’ahu only accounted for 9% of the transactions and less than 9% of the total dollar volume. 

While the vast majority of the luxury market’s growth occurred on the neighbor islands of Kaua’i, Maui, and Hawai’i Island, O’ahu did have its moments in 2021!

There were nine land sales, 35 luxury condo sales, and 131 residential sales, bringing the sale volumes total to $838.2 million. The first half of the year’s luxury condo market certainly stood out, as one of our firm’s largest sales on O’ahu was a penthouse that sold for $10.25 million in Anaha. 

And on Lanikai Beach, César Giraldo collaborated with architect James McPeak to create a custom, artfully designed home on Lanikai Beach. Featured in Architectural Digest and other renowned publications, the oceanfront estate is slated for completion later this year.

In 2021, O’ahu saw 145 sales at or above $3 to 5.99 million, 24 sales of $6 to 9.99 million, and six ultra luxury sales above $10 million, for a grand total of 175 sales over $3 million. A Lanikai estate staked its claim as the highest-priced luxury sale, selling for $24.38 million. 

As the norms of the luxury market shifted in 2021, more buyers looked further out of Honolulu’s urban core to O’ahu’s North Shore and beyond. O’ahu’s most popular luxury neighborhoods, however, remained in Diamond Head, Honolulu, and the Kahala Coast.

Kauai’s Luxury Real Estate Market 

The Island of Kaua’i received much attention in 2021, thanks in part to celebrities and high-profile tech entrepreneurs who now own property on the Garden Isle. Take famed guitarist Carlos Santana, for instance. After spending $8 million on a home in Kaua’i, he recently purchased an additional $20.5 million dollar Kaua’i estate. 

The transaction is one of 83 sales at or above $3 million (that’s a whole 63 more sales than the same period last year). And of the 83 total transactions, there were five condo sales, eight sales of land, and 70 residential sales. Most transactions centered on Kauai’s North Shore, extending from Kauapea Road in Kilauea to Hanalei Bay. 

Of the four major Hawaiian Islands, Kaua’i had the least amount of transactions, but market data proves that it was hardly slacking when it comes to sales. Considering that in 2020, Kaua’i saw 7 sales above $10 million, it was a pleasant surprise when that number was eclipsed by the 15 sales at or over $10 million in the first three quarters of 2021 alone.

As for the highest sale for Kaua’i, that goes to a North Shore estate in Hanalei that sold for $32.25 million ($11.75 more than Mr. Santana’s purchase).  

At the moment, all-cash deals, multiple bidders, and buyers pushing for quick closings have become increasingly common on Kaua’i. And with only 3% of the island’s 550 square miles available for development, housing stock is scarce. 

As the demand for primary and secondary homes outside of major metros continues to grow, such scarcity will undoubtedly drive value. Based on Q3, it’s safe to say that Kaua’i will remain a seller’s market for the foreseeable future.

Maui’s Luxury Real Estate Market

In the first three quarters of 2021, Maui saw sales above $3 million, totaling $1.24 billion. In fact, the island has the overall largest luxury market size of any island in the chain in 2021, accounting for 34% of the total dollar volume in the State of Hawai’i.

Fueled by pandemic-related economic and lifestyle demands, Maui’s exceptional schools appeared to play an important role in the island’s high-end real estate market. On the Valley Isle, there were 217 sales over $3 million in 2021, for an increase of 352.1%.

Luxury sales included nine parcels of land, 83 luxury condos, and 125 residential properties. And Maui’s high end luxury market witnessed exceptional growth, with the majority of transactions centered around West and South Maui. 

As opposed to only three sales above the $10 million mark in 2020, this year saw 19 transactions of over $10 million on Maui. Among these sales was a beachfront home on Kihei’s Keawakapu Beach that sold for $45 million. It just so happens to be the second-highest publicly recorded sale price in all of Hawai’i.

And of course there are rumors about a celebrity purchasing an estate in South Maui for over $70 million. Speculation or not, transactions like these will continue to extend the pricing considerations in the top tiers of Maui’s residential market.

In 2021, transactions on Maui were defined by radically reduced inventory, rising sales prices, and fast closing times, reinforcing the fact that transacting quickly has become increasingly important for both buyers and sellers in this robust sellers’ market

Hawai’i Island’s Luxury Real Estate Market 

Along with Maui, Hawai‘i Island was the only other island that posted three straight quarters of $300 million+ total sales volume. As inventory on the Big Island continued to shrink, total sales volume in the first three quarters of 2021 remained consistently frenzied. 

This year, there were 94 residential, 43 condo, and 22 land sales on Hawai’i Island, amounting to 159 total sales above $3 million. It all added up to 1.028 billion in sales volume within the luxury segment for the first three quarters of 2021. 

Hawai’i Island experienced the largest growth in both the luxury and ultra-luxury segments, surpassing any other island in the chain with 24 sales above $10 million this year. Compared to two sales in the first three quarters of 2020, that’s a staggering 1,100% jump. Factors that fueled this growth include available luxury inventory, private club communities with an abundance of amenities, and a pre-wired demographic of high-net-worth individuals.

To say Hawai‘i Island led the way in the ultra-luxury market is an understatement. With 24 total sales at or over the $10 million mark in the first three quarters of this year alone, that’s 1100% more than the two sales in the first three quarters of 2020. 

A market with this much buying zeal is inspiring creative buyers. For instance, Hokuli‘a, a private club on the Kona coast that was originally zoned for agriculture, has attracted buyers seeking to enter this hot market by selling private micro-farms along with homes within the private community.

Looking Ahead

In 2021, Hawai’i Life represented more clients in the luxury and ultra-luxury segments than any other firm in the State of Hawai’i.

Our experience in these segments has given Hawai’i Life a front row seat to this new influx of demand, especially in the top tier of the market. As such, we can affirm that this demand is far from running its full course!

On O’ahu, the robust seller’s market remained especially strong, with continued remarkable growth. Although it would be extraordinary for O‘ahu to continue an almost parabolic trend of sales volume into the end of 2021, this year has reminded us that anything is possible! Another round of intense demand should be headed the island’s way, especially as the international markets reopen.

The continued growth of the real estate market on Hawai’i Island in 2021 has been exceptional. Fueled by new wealth, high net-worth individuals, remote careers, and a more mobile world, demand for Hawai‘i Island real estate shows very little signs of letting up. 

Kauai’s North Shore has experienced the greatest influx of wealth during the pandemic than any other locale in the country. Many high-net-worth individuals have purchased homes that they initially intend to use for vacation, only to decide that they would prefer to remain on-island. We anticipate that this trend will continue as more individuals who work remotely choose to make Kaua’i their primary residence.

On Maui, the political pressure to regulate and/or phase out short-term vacation rentals will likely persist. If and when owners of short-term rentals perceive that their prospective rents are at risk, this could produce more inventory for sale. As far as the values of Maui’s luxury real estate, we expect more remarkable trades, especially in the higher price points.

Across the state, demand is showing no signs of fading and more high-priced transactions appear to be looming on the horizon. 2021 just might be setting the stage for 2022 to be the year of all new sale records. 

The Takeaway

2021 has been defined by unprecedented rates of growth for Hawaii’s luxury real estate market. And according to the 2021 Luxury Market Report from Hawai’i Life, statewide high-end sales continue to outpace 2020 in both the number of transactions and total dollar value. For more details on the properties listed in the report, here is “A Closer Look at 8 of the Most Notable Listings from Hawaii’s Luxury Market Report“

For the full 2021 Luxury Market Report, click here.

And for a more detailed, confidential conversation about the market, or the value of your property, reach out now to our Luxury Agents at inquiry@hawaiilife.com.