Summary

Demand for luxury homes in Hawai’i still exceeds available supply.

The steady rise in high-end sales was the most compelling theme in 2022. Statewide, high-end transactions surpasses every year in the past 10 in both number of transactions and total dollar value, with the exception of 2021. Despite the fluctuation of interest rates, the end of 2022 saw real property values continuing to climb in every segment of the luxury market.

Overall, the luxury real estate market was influenced by more than just inventory, interest rates, and absorption rate in 2022. It is and will continue to be driven by the less tangible qualities that our clients value above allexcellence, rarity, value, and other drivers that are di cult to calculate objectively.

Demand for luxury homes in Hawai’i still exceeds the available supply, and we expect that this will continue in 2023. In terms of trades above the $20 million mark that are currently pending, most are private sales. As the year progresses, records will inevitably be broken in terms of the number of luxury transactions.

When compared to the frenetic, pandemicdriven pace seen over the past 3 years, the highend market may slow to a sustainable pace. And looking ahead, a remarkable amount of data still points to fundamental economic strength in Hawai’i.

As international demand has yet to fade, we anticipate that the tale of low inventory is not over. In the coming months, we expect to see investment in real estate bounce back as foreign markets slowly open up and more international buyers compete for luxury property in Hawai’i. According to our partners at Luxury Portfolio International, 20% of international buyers who are looking will consider Hawai’i in the next 3 years. We expect this increased interest in Hawai’i to have a significant impact on the high-end market.

Situations can certainly vary from one market to the next. And for true luxury real estate, there may be a dip, however we are not seeing any sign of the bottom dropping out. Our sense is that luxury market volume may reset to sustainable levels, while remaining above the pre-pandemic years as 2023 unfolds.