Hawaii real estate

The mantra in real estate has always been “location, location, location.” Hawaii boasts some serious location. All of the inhabitable islands of Hawaii have a great climate, great views and beach access.

In the past year in Hawaii, house prices are up 18 percent while condos have shot up 34.9 percent. While these prices may eventually plateau, it is estimated that they will only continue to go up over the years. For example, real estate prices in Hawaii went up 99.4 percent from 2001 to 2005.

Types of Ownership

There are two types of property ownership in Hawaii – Fee Simple (FS) and Leasehold (LH). Before you buy a property in Hawaii, you should know what the difference between FS and LH is. On this page, we provide you with some useful information about the two types of ownership. We also give you some tips, where to look for your future Hawaii home.

Fee Simple (FS) General Info: With a fee simple property, you own the land and the structures on it. This is the typical form of ownership that you can find everywhere. In Hawaii, it’s possible for foreigners to own land since the late 1800s.

Advantage: You own the land that your home is built on and you don’t have to pay a monthly lease.

Disadvantage: Higher purchase price.

Leasehold (LH) General Info: Buying a leasehold property means that you own the improvements on the land, but not the land itself. In Hawaii, you still find this form of ownership very often for condominiums and also for some beach properties on the North Shore of Oahu. The ground leases are mostly negotiated for a term of 55 years and depending on what is left of it when you buy the property, you will have to renegotiate with the property owners, who are not obliged to extend or renegotiate leases.

Advantage: Initial purchase price mostly lower than with fee simple properties and the lease can be a tax advantage.

Disadvantage: Extra monthly costs through lease and insecurity about future of lease after end of term.

What is Available to Buy?

Today, state, county and the federal government own 39 percent of all Hawaiian land. About 37 percent of the land is up for private individual ownership.

Most of the islands offer a variety of real estate options. These options range in availability and cost from island to island. They include: single family homes, multifamily homes with an “ohana dwelling,” condos, vacant lots and commercial properties and timeshare. Let’s take a look at some of the more popular options:

Single Family Homes: According to Hawaii mortgage brokers, single family is the most popular type of home ownership. There are many new single family homes being built on the islands at this time. As the owner of a single family home you are responsible for all costs to the house and property. Needless to say, this also means the property taxes and mortgage.

Condominiums: Condos are gaining in popularity in Hawaii. The cost of single family properties and homes with ohana dwelling have skyrocketed leaving many would-be home owners with very little feasible options.

With condos you own “the paint in.” They are a group of separate homes or apartments that share common space and amenities like parking lots, pools, BBQ areas, laundry facilities, recreational areas, such as tennis courts, golf courses etc. Condos generally charge owners a monthly maintenance fee that goes to the upkeep of the common areas.

Timeshare: Timeshare has become popular in the U.S. over the past thirty years. Basically, what happens is that you buy the ownership of a piece of property (usually a resort-like accommodation with amenities) for a certain period of time each year for a certain amount of years.

Most timeshares are set up so that you can trade time at different resorts with other timeshare owners. Timeshare may be the right option for you if you are only looking to spend short periods of time in the islands every year.

What is an “Ohana Dwelling”?

An “Ohana Dwelling” is a cottage on the property of a main dwelling. Each county in Hawaii has its own rules and regulations concerning these units. Ohana Dwellings come in very handy when it’s time to pay the mortgage as monthly rental prices for a cottage can bring in up to around two thousand dollars a month.

How much will it Cost?

The average cost for a single family home in Hawaii in 2006 is 625,000 dollars. Condos are going for an average price of 309,000 dollars.

The following is an estimate of what type of properties you can buy for a certain dollar amount based on information from the Multiple Listing Service.

Less than $200,000: There are very few homes in Hawaii that fall in this price range. Those that do generally provide under 1,000 square feet of living space and are often leasehold properties.

$200,000- $400, 000: This price range offers a wide-array of homes that range from 600 square feet of living up to about 1,300 square feet. Most of the houses in this price range are fee simple. The majority of condos in Hawaii also fall into this price range.

$400,000- $700,000: Homes get bigger and relatively newer in this price range, although the size and condition of the properties varies greatly. There are properties that offer less than 700 square feet of living space as well as those that offer over 2,000 square feet in this category.

$700, 000 and up: Considering that $700,000 is the average selling price for a house in Hawaii right now, for this amount you are usually going to get around three bedrooms, 1.5 baths and about 1,500 square feet of living space.

There are also many properties and estates for sale in Hawaii that offer large houses and acreage that sell for well over a million dollars.

What to look for in a Real Estate Agent

There is no lack of real estate agents in Hawaii. To make sure that you find the person who is right for you, look for these qualities:

• Experience
• Patience
• Willingness to help you explore the islands
• Expresses a desire to help you find what you want
• Knowledge of the Hawaiian Islands
• Member of the Board of Realtors

Remember, you should not be charged for the agents’ time – whether or not you decide to purchase the property from them or not. Real estate agents are paid a percentage of the closing price of the property. If you’re being charged to house-hunt, find another agent immediately.

Island Demographics

Honolulu County:
Population: 899,593
Ethnicity of population: primarily Asian
Average annual household income: $51,914

Maui County (includes the islands of Maui, Molokai and Lanai):
Population: 138,221
Ethnicity of population: primarily White and Asian
Average annual household income: $49,489

Hawaii County:
Population: 162,971
Ethnicity of population: primarily White and mixed ethnicity
Average annual household income: $39,805

Kauai County:
Population: 61,929
Ethnicity of population: primarily White and Asian
Average annual household income: $45, 020

Quick Real Estate Tips

Decide which island would best suit your desired lifestyle.

Decide on what type of home you are looking to purchase.

Come to Hawaii prepared with your financial information.

Months before your trip, request a credit report from your bank so you can work out any unforeseen financial problems.

If you have a lender, request a letter stating the amount you are approved to borrow from them.

Median sales prices Oahu for Last Quarter of 2005
provided by www.hicentral.com.