Oahu Housing Inventory Is Low: What It Really Means

Click on Image for Honolulu Board of Realtors Report

Me (realtor): Congratulations on getting pre-approved for $550,000! Tell me your wishlist.

Buyer: We’d like 3 bedrooms (minimum), a 2 car garage, 2 bathrooms or more, a yard, split level, no jalousie windows (we hate those), no popcorn ceilings, preferably ground level, no one above or below us, pet friendly (our sweet boy Bailey is a slobbery 50 lb pit bull mix), and no HOA fees.

Me: (thinking…how do I tell them this just doesn’t exist on Oahu and how many more realtors will they talk to before they believe me and if they do wind up believing me, will they be back or will some other agent have them sign a Buyer’s agreement which they will  because they needed to hear it 3 times to believe it). 

So, yeah. That’s pretty much what it means, but not really. For the buyers who know next to nothing about Oahu real estate, it’s my job to educate and inform them of how little land we have on our beautiful island. When supply and demand are in an inverse relationship, that affects pricing (economics 101). Face masks are currently super cheap because they’re everywhere and no one’s using them anymore (except here in Hawaii…grrr). Oahu real estate is expensive because only 6% of it is fee simple to begin with. Add to that agriculture land, leasehold land that can only be leased to those who are 50% Hawaiian, golf courses, hotels & resorts, commercial space, nature reserves, military land, or land that is simply undevelopable/uninhabitable and you’ve got a supply issue. And don’t even get me started on how difficult it is to get building permits while the state of Hawaii has the highest number of state employees per capita…but I shall pump my brakes and swerve back into my lane. I am a real estate agent. An opinionated, sometimes unapologetic real estate agent who might also be startled awake in the middle of the night by the opinions I’ve shared out loud. Perhaps that will make you, as a client, a little more compelled to work with me as I enthusiastically stand by and communicate what I believe in. 

Inventory is low. Here’s a solid example and hopefully I don’t need to say much more. I have a buyer right now who qualifies for $550,000. They’ve lived here almost all their lives so they understand the scarcity. Their needs:

  • 2 bedrooms
  • 2 bathrooms (but they’ll settle for 1.5 baths. They have 2 boys and mom simply can’t share a bathroom with 3 men anymore)
  • 2 parking stalls – MUST. None of this “But you can find parking on the street.” Yeah. Right.
  • Preferred areas: Kaneohe, Kailua, Salt Lake in Honolulu, might go as far as Aiea, but probably not. 
  • Must be pet friendly. Pets are family! And they’re not willing to lie and say their pets are therapy animals.

In preparation for the weekend, I had my eyes on the MLS all week. It yielded 2 listings. TWO. That’s it. They went to see them. One was a little too small. They loved the other one and were ready to make an offer! The listing agent had 4 offers in hand before the weekend was over and offers were due by Tuesday at noon. She was expecting more and already had offers over the asking price. Prior listings in the building said “pet friendly,” but I verified with resident manager it is not – therapy animals only. Ugh!!!

Inventory is low. Do I need to go on? Okay. Here’s one more example. Economists like to say things like, “There is 1.5 months of remaining inventory.” Translation: if nothing else came on the market today, it would take 1.5 months for everything to sell. Anything less than 6 months is considered a seller’s market. Beyond 6 months shifts to a buyer’s market. 

Inventory is low. 

So what does this mean for you? If you have property to sell, it’s time. How does lack of inventory help you? It’s not only about timing the market and getting the most money for your property. After all, statistics show that real estate on Oahu only goes up over time. So yes, you can wait and probably still make more money in the long run, but as interest rates increase, the amount of buyers willing to jump in now, hard, and aggressively will be less. With inventory so low, you’ll have the choice of cherry picking the buyer who will close fast and easy and with a grateful, cooperative heart. As a buyer, you could wait until the market cools a little and hope prices will come down in this increasing interest rate environment, but the real question is, will you end up paying more anyway? Maybe you won’t have to bid up the price as much to beat out 19 other buyers, but you’ll pay a higher interest rate, higher payment, or will have to settle for less because the interest rate prices you out over the home price itself.

My bottom line will always be this, however: the most important timing is your own. If it’s time for you to let go of a property, do it now. If you want to own a property and you’re in position to do so, do it now. This chick in her mid-40s is finally starting to understand how fast the clock is ticking. Lack of land and inventory has always made Oahu, Hawaii different from other markets like California or Las Vegas. As a buyer, you just have to get in and most only wish they did it sooner and bought more. As a seller, you can’t look back. Real estate on Oahu only goes up, some years more than others, but over time, it just does. 

I write this from a flight over the Pacific back from Seattle in early March. When the pilot announced after take off that the weather is 80 degrees in Honolulu with northeast tradewinds at 15 mph, how do you think most people on this fully packed (fully masked) flight reacted? People love Hawaii. Politics aside, there is much to love about it. Demand is high. It always has been. It always will be. And I suppose that while I’m obviously mad we’re still wearing masks while the rest of the country is not, I’d rather wear a mask living in Hawaii than no mask somewhere else and clearly I’m not the only one who feels this way. 

Inventory is low. 

Who Owns The Beach in Hawaii?

It’s an emotionally charged subject in Hawaii, both for ocean lovers (surfers, fisherman, and people who just plain love the beach) and those who own beach front homes. Good news for beach lovers: NOBODY gets to own the beach in Hawaii. There are NO private beaches. Bad news is, if your only way of getting to it by land is to cross someone else’s property, forget it trespasser. You can certainly boat in, swim, standup paddle, or walk from a public access point, but not if you wind up on vegetation. Step on anything green and again, you will get nabbed for trespassing and believe me, ocean front homeowners are incredibly territorial. Look for hidden cameras in the trees. They are watching and often times, they are totally unafraid to be confrontational. These are not the type of people who will passively call the cops. They will get in your face and ruin your day. They own luxury homes and a whole lot of other stuff. Even though the law tells them they don’t own the beach, they still think they do.

What does the law officially have to say about this? By definition, Hawaii Supreme Court law states the following: “any land below the highest wave line is considered state property and open to the public.” Here’s where it got tricky in the past, however – property owners were watering the vegetation and fertilizing it so it would grow further giving them more manipulated ownership of the beach. DLNR wised up to this and made it a misdemeanor if they catch you manipulating your boundary line. (Nice try people). You can read more about this below:

So how do you access the beach without facing off with a property owner in places like Kailua, Portlock, Diamond Head, Paiko, and Niu Peninsula? Like I said above, you either access by sea or use a public access right of way, but this still won’t guarantee you won’t get the, “What are YOU doing here” attitude. A wise person actually pinned these access points on Google. Notice how Waimanalo has a TON of access points. Paiko all the way through Niu Beach and Aina Haina has just one.

Speaking of Niu Peninsula, it seems they found a major loophole around this. Niu Peninsula is an incredibly charming street of less than 50 houses, but you wanna talk territorial? Ohhhh boy. Perhaps it’s all in love because they love their beloved little nook, but let’s have a moment of silence and remember what was once a Native Hawaiian Fish Pond given to Alexander Adams by King Kamehameha I.

Who’s to say whether or not the king knew what Alex’s intent was, but brother man filled that fishpond in, built homes, and blocked the beach. Then, an association was formed and gates were put up where the beach access is. Even smarter, the Niu Peninsula Association owns those little parcels of beach access. So, if you don’t belong to the association and you happen to have a code to the gate or wander through it somehow, count on getting tattled on, yelled at, made to feel very small, and kicked out in no time. One could argue the enforcement is needed due to pollution, homelessness, and overcrowding while others could argue that such a special place should be shared and enjoyed by all.

This post comes on the heels of an emotional day at my listing on Niuiki Circle. It has beach frontage. It’s in original 1950s condition, but I could feel the mana (Hawaiian for spiritual energy, power, and strength) standing on that lawn. As curious neighbors tracked in and out giving their strong willed opinions about the home, I quieted their noise with visions of that fishpond and thought of Bruce Lee saying, “Be like water.” Check out the listing here:

140 Niuiki Circle, 3 Bedrooms/2.5 Baths, $2,800,000