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Residential Department: Spotlight: Hawaii: March 2017


Spotlight: Hawaii

The Aloha State says hello to millions of tourists every year.

There is no doubt that tourism is the major driving force behind Hawaii’s economy, and the tourism business has boomed in the Aloha State over the past four years. The state topped 8 million visitors in 2012, a 10 percent increase over 2011, and that number has been growing ever since. The Hawaii Department of Business, Economic Development & Tourism (DBEDT) projects that more than 9 million people will visit Hawaii in 2017.

The average length of stay for Hawaiian tourists is about nine days, so on average, more than 200,000 people are visiting the state — and spending money there — on any given day of the year. Total visitor expenditures for 2015 topped $15 billion dollars, and that number is expected to reach $16 billion in 2017 and $17 billion by 2018, according to DBEDT forecasts.

Agriculture, another mainstay of the Hawaiian economy, has undergone a recent transition because of declines in the sugar-cane industry. According to a 2013 report from the Hawaii Department of Agriculture, however, agricultural products generated $2.9 billion for the state’s economy in 2012 and — directly or indirectly — supported 42,000 jobs.

Hawaiian crops are more diversified today because the state’s vast sugar-cane lands have been divided up into small farms growing exotic fruits, coffee, macadamia nuts and flowers that are sold to tourists in Hawaiian markets and exported around the world.

Some of those old sugar-cane lands also are being sold to developers for both residential and commercial developments, which has been a boon for the state’s construction industry. The construction sector added 4,400 jobs in third-quarter 2016 alone, according to a DBEDT quarterly report. A report published this past December by the University of Hawaii Economic Research Organization (UHERO), asserts that much of the state’s payroll growth over the past two years was “driven primarily by the construction upswing.”

The UHERO report mentions several troubling signs, however. The report forecasts that growth in visitor days, a measure of tourism, will slow to 1 percent annually by the end of the decade as hotel space maxes out. And, even though Hawaii has the fifth-lowest unemployment rate in the nation, the report states that real hourly wages have not yet surpassed their 2007 levels, and the state’s median family income is still 4 percent lower than it was prior to the Great Recession.

Perhaps most troubling is that consumer prices rose in Honolulu by 2.4 percent year over year in the first half of 2016, after only increasing by 1 percent during the same period in 2015. Much of this increase came from rising medical-care costs, but recreation as well as food and beverage prices increased by more than 3 percent. If left unchecked, this inflation could have a chilling effect on the Aloha State’s booming tourism industry.

skip to 3 Cities to Watch>>  

Home sales and prices

r_2017-03_Spotlight_Chart1Median single-family home prices across the state of Hawaii tumbled in the first few years after the housing crash, dropping from $338,900 in 2008 to $252,913 in 2011, a 25 percent decrease. Sales rebounded before median prices, increasing every year from 2010 through 2015, according to data from the Hawaii Association of Realtors. As of 2015, Hawaii statewide median housing prices had nearly returned to 2008 levels.

The strongest markets in Hawaii are on the islands of Oahu and Maui. The median housing price on the four islands in the county of Maui was $635,000 this past November, up 13.3 percent from the November 2015 median price of $550,000. On Oahu, home to Honolulu, the median price on single-family homes reached $750,000 this past November, up 4.8 percent from November 2015’s median price of $715,500.


Hawaii proved to be much more recession-proof than the mainland over the past 10 years. The state’s unemployment rate peaked at 7.3 percent in May 2009 and stayed above 7 percent for most of 2009 and 2010. During those two years — and for almost another year after that — the U.S. unemployment rate was above 9 percent, reaching 10 percent in October 2009.

The county of Honolulu, which encompasses the island of Oahu, fared even better, reaching 6.7 percent for one month — June 2009 — but hovered around or just below 6 percent during the worst months of the Great Recession. As of November 2016, the state’s unemployment rate was 3 percent, more than 1.5 percentage points lower than the national average.

Delinquencies and foreclosures


Nearly 14,000 homes in Hawaii were in some form of foreclosure (default, auction, or real estate owned) in 2010, according to foreclosure activity estimates from Attom Data Solutions. That number dropped to 7,300 in 2011, and again to 3,700 in 2012. After averaging around 2,600 in 2014 and 2015, however, foreclosure filings inched up to 3,351 in 2016, in part due to a spike in auctions.

Hawaii’s 1.7 percent foreclosure-inventory rate was nearly twice the national rate of 0.8 percent, in CoreLogic’s October 2016 National Foreclosure Report. Only New York and New Jersey, two states with notoriously high foreclosure numbers, had higher inventory rates in the report. Another 3.1 percent of Hawaii mortgages were seriously delinquent as of this past October.

Sources: Attom Data Solutions, CoreLogic,, Hawaii Association of Realtors, Hawaii Department of Agriculture, Hawaii Department of Business, Economic Development & Tourism, Hawaii State Info, Hawaii Tourism Authority, Honolulu Board of Realtors, Realtors Association of Maui Inc.,,, UHERO, U.S. Bureau of Labor Statistics, U.S. Census Bureau

3 Cities to Watch

Pearl City

Located on the north shore of Pearl Harbor, Pearl City overlooks an important part of Hawaiian history. This city of 48,000 people is only 11 miles west of downtown Honolulu, providing easy access to the big city’s amenities, but at a lower cost. The median price of a home in Pearl City is $592,200, which compares favorably to the $824,700 median home prices in East Honolulu.



Nestled around a bay on the northeast coast of the “Big Island” of Hawaii, Hilo is the major seaport for the island. The gateway to the Hawaii Volcanoes National Park, Hilo also boasts the breathtaking scenery of Rainbow Falls and the Liliuokalani Gardens. With median home prices around $300,000, Hilo is one of the most affordable tropical paradises in the state.


Nearly a third of Maui’s population lives and works in Kahului on the north coast of the island. Home to Maui’s main airport and seaport, Kahului also is a retail center for the island. Centrally located Kahului grants easy access to all of Maui’s attractions, while still providing big-city amenities and cultural events. The median price for a home in Kahului is $485,000.

What the locals say

“We just had a shift in a major agricultural company here [on Maui], which is going out of industrial farming of cane sugar. They are releasing lands onto the market, and a lot of other subdivisions are being released by other developers, so the expansion we’re going to see on Maui is going to be quite significant over the next 20 or 30 years.”


Mark Morris 
Coldwell Banker Island Properties 


Will McDermott is managing editor for Ask a Lender. Reach him at or (800) 297-6061.

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