As we close out the year of 2022, one phrase comes to mind to describe the current luxury real estate market in Hawaii “seeking a new normal.”
While the fast-paced growth seen for this sector of the market was astonishing to witness during the first part of 2022, as the year progressed sales started to stall and inventory levels, while still historically low, began to rise.
In comparison to 2021, the data for 2022 appeared to reflect a downward trajectory of demand for luxury properties, but in reality, it was the pandemic years that created a phenomenon in sales that is unlikely to be experienced again any time soon.
Today’s luxury market seems to be returning to something more resembling a pre-pandemic pace, with buyers becoming more discerning in their choice of property, decision process, and how they spend their money; especially as prices have remained stable and even close to record levels.
During the last two years the growth of savings, equity, and investment portfolios, as well as historically low-interest rates, afforded many existing and new affluent buyers to purchase luxury homes without too much concern about increasing prices. But the last six months have seen a more cautious approach with a focus on purchasing a property for the long-term rather than a quick fix.
We saw this more cautious approach play out as the last few months of 2022 saw a distinct rise in the demand for lower-priced luxury properties and a declining supply of inventory, as compared to the higher-priced properties. This also may signify a return to a more normalized market where vacation-style properties were in higher demand compared to exclusive estates.
Second home purchases by the affluent are forecast to remain a high priority for the affluent in 2023, which together with the return of tourists, both from the mainland and international venues, will drive the luxury real estate market. Hawaii’s property diversity offers the perfect fit for the wealthy’s changing priorities, which are currently focused on amenity-filled, move-in properties in locations that provide access to their preferred
The luxury market may continue to soften for the next few months, but equally, prices are likely to remain at near-record levels as low inventory levels will continue to exert their influence. As in all markets, there are always opportunities and challenges for buyers and sellers for certain property locations, types, and price points. The opportunity to work closely with a real estate expert familiar with local trends is the best resource to navigate the specific and varied markets found within the Hawaiian Islands.