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How to Buy a House in Hawaii

Ever thought of making Hawaii home? It can be an overwhelming process of how to buy a house in Hawaii, but we break it down into manageable, simple pieces. It is about understanding real estate vicissitudes on the island, the legal nitty-gritty, and market trends. Here at Luxury Big Island, we do everything to make your dream of owning a house in paradise come true. We are located at 1003 Bishop St., Suite 2700, Honolulu, HI 96813.

Cost of Living in Hawaii

The cost of living in Hawaii is above the national average owing to its geographical isolation and dependence on imported goods. From housing and utilities to food and transport, basic cost-of-living expenses run high, nudging the mark higher and higher for those planning on settling in. For example, the mean cost of a home is over $900,000, with sales of luxury homes in Hualālai and Kukio exceeding that amount.   

It’s also essential to factor in Hawaii’s General Excise Tax (GET), which applies to goods, services, and rentals. According to the Hawaii Department of Business, in the second quarter of 2024, Hawaii’s annualized nominal GDP grew by $5,218 million (4.8%) compared to Q2 2023, and the first half of 2024 saw a $5,305 million (4.9%) increase. Relative to a year ago, annualized real GDP was revised higher by $1,521 million (1.7%) for Q2 and $1,567 million (1.8%) for the first half of 2024. Knowing these aspects will let you budget for life on the islands.

Fee Simple vs Leasehold in Hawaii: What’s the Difference?

When buying property in Hawaii, you’ll encounter two ownership types: fee simple and leasehold.

What Is Leasehold Property and Should I Buy One?

Leasehold property means you own the structure but not the land it sits on. You’ll pay rent to the landowner, and leases typically last 55 years or more. While leasehold properties are more affordable upfront, they have renewal risks and escalated lease rents. Carefully assess the terms of a leasehold agreement before committing to one.

With fee simple ownership, you own both the land and the structure. This shared property type in Hawaii is favored for its long-term stability and investment potential, despite higher initial costs than leasehold options.

Homeowners Associations in Hawaii and Their Fees

Many properties in Hawaii, particularly in communities like Mauna Kea and Waikoloa, fall under homeowners associations (HOAs). HOA fees can range from $300 to over $1,000 per month, covering amenities, landscaping, and maintenance. Be sure to account for these fees in your budget and review the association’s rules to ensure they align with your lifestyle.

In luxury communities like Kukio and Kohanaiki, HOA fees may encompass unique benefits, including access to golf courses, private beaches, and personalized concierge services, elevating the living experience. While these benefits add value, it’s essential to understand what’s included and whether it aligns with your priorities.

How Much Do Homes in Hawaii Appreciate?

Hawaii Property values have always experienced a steady ascent, which indicates the limited available land and high demand for homes generally. This keeps Hawaii in the spotlight as an attractive long-term real estate investment candidate. Nationally, home prices appreciate between 3% and 5% a year; some high-end homes experience much more significant gains. The same persistent growth can be attributed to limited land availability and high housing demand, which help keep Hawaii an option for investors.

It is interesting to note that varying appreciation rates for property can also be a function of geographical location and type of property. Houses in resort communities often maintain their home values very well due to their appeal among residents and buyers of vacation homes. Meanwhile, external factors, such as economic fluctuations and natural disasters, may also typically dictate values. 

What Are the Landlord-Tenant Laws in Hawaii?

Hawaii’s Residential Landlord-Tenant Code sets forth the relevant laws concerning landlord-tenant engagement. Such laws protect both parties and touch on security deposits, lease agreements, and eviction procedures. A landlord cannot charge a security deposit exceeding a month’s rent. Knowing these regulations will aid in challenging your quarrels.

According to state laws in Hawaii, a key aspect of the landlord-tenant relationship is that landlords must provide sanitary and habitable dwellings fitted with plumbing, electricity, or protection from the elements. The tenant’s obligations include maintenance of the cleanliness of the property and the immediate reporting of repairs. 

Should I Pay for a Home Inspection When Buying a House in Hawaii?

Yes, a home inspection is a must when buying property in Hawaii. Inspection could reveal future problems, termite damage, roof wear, or hazards in a flooding zone. An in-depth inspection makes sure that decisions made will be judiciously considered, which could afford room for negotiations over the sales price or remedial repairs.

This is very important for the tropical climate in Hawaii. Check property in coastal areas for damage from salt or to see if they have been built to withstand hurricanes. The added input will mean saving oneself from horrendous surprises.

How Long Does It Take to Buy a House in Hawaii?

A standard contract to the closing timeline for a home purchase in Hawaii will run 30 to 60 days unless market conditions dictate or processes in financing warrant.

Key Milestones in the Home Buying Process

  1. Pre-Approval: Pre-approval is required to enhance its buying strength.
  2. Property Searching: Search for properties in resort regions such as Mauna Kea and Mauna Lani.
  3. Bid and Negotiation: Bid and negotiate during the process.
  4. Escrow and Closing: Documents, inspection, and finance allow the use of a signature to finalize the sale.

Additional inspections, appraisals, or legal reviews may prolong the waiting time. 

Is It the Right Time for You to Buy a House in Hawaii?

Deciding when to buy depends on your financial readiness and market conditions. Hawaii’s market remains competitive, but low interest rates can make it a favorable time for qualified buyers. Consult a local real estate expert to assess current opportunities.

Remember that the best time to buy may also depend on the specific island or neighborhood you’re considering. For example, properties on the Big Island may be more affordable than those on Mauna Kea, but accessibility and amenities could vary.

Navigating Hawaii’s Unique Real Estate Market

Hawaii is a location where the land supply is scarce, yet demand is always high. That is distinctive of any market globally and thus renders the market competitive, frequently necessitating planned strategies on the part of the buyers. Houses in very sought-after places are bound to go off the market fast; hence, a well-thought-out plan is required. A local agent can assist in finding off-market opportunities and managing a bidding war.

In Hawaii, bidding wars seem to be a fact of life, and thus a buyer must be prepared to take quick and decisive action, sometimes even going above the asking price. Therefore, working with an informed agent will help you position yourself better to compete. 

The Role of a Real Estate Agent in Hawaii

An experienced real estate agent is your best friend in Hawaii. They can share market insight, manage offer negotiations, and guide you through the transaction. Whether buying a luxurious home in Kukio or a condo in Waikoloa, a skilled agent can make the experience easier.

Real estate agents generally have huge lists and deep local connections. They are professionals who will help you find good bargains.

Closing the Deal: What You Need to Know

The closing process involves signing final documents, transferring funds, and officially taking ownership. You’ll also pay a conveyance tax in Hawaii based on the property’s value. Be prepared to review and sign escrow documents thoroughly.

It should also be considered that Hawaii’s Good Funds Act will ensure that all monies are confirmed and cleared pre-closing with regard to the sale of real property. 

How to Make Your Dream Home in Hawaii a Reality

Owning residential property in Hawaii is so much more than a transaction. In your search for an oasis, begin researching the island and, if possible, which community might best serve your needs. From golf to spas, rugged coastlines to Hula—and even an active volcano—resort living at Mauna Lani or Hualalai is second to none and beyond comparison with impressive ocean views.

Hire a Hawaii luxury real estate specialist to find the right one for you. Hawaii is a state that provides plenty of choices, from beachfront villas to mountain retreats.

Ready to Buy? Contact Luxury Big Island Today!

The entire team at Luxury Big Island has your back. We specialize in serving our clients in Hawaii’s unique real estate market, from purchasing your first home to making a luxury investment. Contact us at 808 282 0689 to start managing your quest to own a piece of paradise.