Housing affordability in the Islands may have improved slightly last year, but homeownership remains out of the reach of many and there are still plenty of issues driving the state's continuing housing crisis, according to a new report from the University of Hawai‘i Economic Research Organization.
UHERO on Thursday published its Hawai‘i Housing Factbook 2026, the fourth edition of an annual report that analyzes the state's housing market.
"This year, it's an interesting story," co-author Trey Gordner, a UHERO policy researcher, told reporters during a virtual press conference Thursday. "Rents are rising, but pretty modestly, especially once you consider what inflation has done to the rest of the economy. It's certainly not rising as fast as other aspects of people's cost of living in the last year, and prices have leveled out. Sales prices have leveled out as well for both single-family homes and condos."
Here are some of the takeaways from the report, which can be found here:
- Home prices, which surged in the years after the onset of the Covid-19 pandemic, have remained "relatively flat" for the third year in a row.
"In 2025, the gap between the single-family and condominium markets continued to widen," the report reads. "The median price of a single-family home rose 1% statewide, while condo prices declined by 2%."
Demand in the condominium market, however, has been dampened by high insurance costs and HOA fees.
"While condo prices have fallen, putting ownership within reach to marginally more households, any improvements in overall affordability are undercut by higher carrying costs," the report states. "On the supply side, new condominium inventory in Honolulu’s urban core, much of it priced below market through affordability programs, has contributed to some meaningful affordability gains."
(ICYMI: A UHERO report published in March looked at the ripple effect that a new condominium development in Honolulu's Ala Moana neighborhood had on the overall housing market. Read more about that here).
Gordner says the main charts used when talking about affordability are based on prices relative to mortgage rates. That means when rates come down, as they have over the last few years, it'll look like affordability is improving. But to get a fuller picture, you have to include what is happening with costs of maintaining the unit.
"The total picture of affordability is a bit more nuanced, but it probably looks like your cost of financing is coming down pretty significantly, but because your carrying costs, particularly those around insurance and HOA fees are coming up, it eats into that affordability. We still think it's a net gain in terms of affordability, but they could potentially counterbalance, especially in condos." - Statewide, the median sales price of a single-family home was $950,000 last year. There were 6,573 transactions.
Princeville and Kōloa on Kaua‘i and Pūpūkea on O‘ahu were the zip codes with the highest median sales price in 2025, while Mountain View, Discovery Harbour and Hawaiian Beaches on Hawai‘i Island were the lowest-priced zip codes. - Homeownership remains out of reach for most.
To afford a single-family home, a household needs to make just over 180% of the state median income. That percentage has fallen for the second straight year, but only about one in five households earn that much.
Condo affordability, however, has improved more drastically over the last two years — with the income required to afford the median condo dropping to about 110% of the state’s median income from a high of 140%. That makes homeownership feasible for about half of households.
But increases in HOA fees and insurance costs may offset those gains. - Census data shows that 42% of Hawai‘i homeowners pay monthly home owner association or association of apartment owners fees, compared to 25% nationally.
Hawai‘i also has some of the highest HOA fees in the nation, ranking No. 2 with a median monthly fee of $470. Only New York state was higher. Honolulu has the highest median fee of $526 while Hawai‘i County has the lowest with a median fee of $135.
But homes listed for sale often advertise higher fees, UHERO says.
"Newly built condominiums will be overrepresented in listing data and have high fees," the report notes. "While new buildings tend to have uniformly high fees, the highest fees can be found among a subset of old buildings where contingency funds have failed to cover accumulating maintenance costs, necessitating large, sudden increases when maintenance comes due. The numbers here do not capture one-off 'special assessment' fees, which have also become common among aging condominium buildings." - Permit delays across Hawai‘i continue to plague the housing market, with long processing times still a "significant barrier to new housing construction." The state's four counties have all implemented new permitting systems that aim to speed up the process and improve record keeping, but UHERO notes that early evidence of their effectiveness is mixed.
- Nearly three years after deadly wildfires ravaged parts of Maui, destroying much of Lahaina and more than 5,500 housing units, 634 permits to rebuild permanent structures have been issued and 357 are in progress, the report notes.
According to UHERO, owners of single-family homes destroyed in the wildfires, including vacation homes, are filing for and receiving permits faster than other property owners. Meanwhile, 57% of lots damaged in the fires show no permit activity. - In June, the Federal Emergency Management Agency will its update flood maps, adding 3,700 net new parcels on O‘ahu to special flood hazard areas. Homes in flood zones require flood insurance to qualify for federal mortgage programs.
"Owners in newly designated zones can expect higher carrying costs, tighter financing conditions and additional permitting hurdles," UHERO notes. "These changes could weigh on both housing supply and demand, slowing price growth in affected areas while also contributing to broader shifts in the private insurance market." - The number of advertised vacation rentals statewide increased from 33,600 in 2024 to 34,500 last year. Vacation rentals account for 20% of all housing units on Kaua‘i, 15% in Maui County, 9% in Hawa‘i County and 2.5% in Honolulu.
What does that mean for Hawai‘i's housing market?
"Hawai‘i's housing market is affected by outside demand as well as inside demand," Gordner explained. "The inside demand is all of us. We want to live here and we want to keep living here, and we're going to pay rent to do so. The outside demand is what you might be thinking of. It can be second-home type uses or it can be short-term rental uses ... or it can be investment properties of some kind."
It's important to distinguish between the use and the ownership, he continued.
"There are many long-term rentals that are owned by people who live in other states, for example, but those units remain a part of the housing stock," Gordner says. "When it becomes a challenge is when a large proportion of units leave not just the owner-occupied stock but also that long-term rental stock."
In certain submarkets of Kaua‘i and Maui County, he says the proportion of housing units reserved for short-term or seasonal use is "quite high."
"When that happens, it's sort of a standard economic framework. You bring down the supply, increase the demand, the price goes up. But conversely, it would work the other way, too. Where if we increase the supply relative to the demand, then prices can go down."
Maui County's Bill 9, for example, aims to do just that. Under the bill, vacation rentals will no longer be permitted to exist in apartment districts, Aloha State Daily previously reported.
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Stephanie Salmons can be reached at stephanie@alohastatedaily.com.
