Hawaii Real Estate Tips: What You Need to Know Before Buying Property in the Aloha State

Today, I want to share some essential Hawaii-specific real estate tips and insights into the unique aspects of buying property here. These tips will not only help you find the perfect property but also help you avoid costly mistakes that some buyers make when they don’t fully understand the Hawaii real estate market.

Let’s dive right in!

1. Lava Zones: What You Need to Know

Hawaii is made up of volcanoes, and the Big Island is no exception. It consists of five volcanoes: Kohala, Mauna Kea, Mauna Loa, Hualalai, and Kilauea. Both Mauna Loa and Kilauea are active, so understanding lava zones is critical when buying real estate.

Key Points About Lava Zones:

• Lava Zone 1 and 2: These are the highest risk areas for lava flow. Lava Zone 1 is considered too risky for most banks to approve loans. Lava Zone 2 is lendable, but it comes with high insurance premiums and potential penalties.
• Lava Zones 3 and Higher: These are much safer and completely lendable. Kona and Hilo have many properties in Lava Zones 3 and 4, which are more commonly accepted by lenders.
• Waimea Area (Lava Zone 7+): Higher elevations like Waimea often fall into Lava Zones 7 through 9. These areas are much safer, as lava would have to flow uphill, which is extremely unlikely.

If you’ve found a property you love but are unsure of its lava zone, reach out to me. I can provide you with:

• Lava zone maps
• Flood maps
• Sea level risk assessments
• MLS information, including any HOA or CCNR (Covenants, Conditions, and Restrictions) details.

2. Leasehold Properties: A Unique Ownership Model

In Hawaii, not all properties come with the same ownership structure as you might find on the mainland. Here, you’ll encounter leasehold properties, which are very different from fee simple properties.

What Are Leasehold Properties?

• Land Ownership: Someone else owns the land, and you lease the right to use it for a set period, usually 75-100 years.
• Equity Risk: When the lease ends, you lose all equity in the property unless the lessor renews or extends the lease—usually for a fee.
• Affordability: Leasehold properties are significantly cheaper. For example:
  • You could get a large farm with acreage for a fraction of the cost of a fee simple property.
  • Leasehold condos are often half the price of neighboring fee simple condos.
• Loans: You can get a loan for leasehold properties, but only if there are at least 35 years left on the lease.

Pro Tip: Leasehold properties can be great for short-term vacation rentals or as a temporary investment. However, it’s crucial to fully understand the risks before purchasing.

3. The Long Process of Building in Hawaii

Building a home in Hawaii can be a lengthy and challenging process due to local regulations and contractor availability.

Timeline for Building:

• Plan Approval: 12-18 months to get plans approved by the Hawaii County Planning Department.
• Contractor Waitlist: Most reputable builders have a waitlist of around two years.
• Construction Time: Once you secure a builder, expect the construction to take another year or more.

In total, you’re looking at at least three years from the time you submit plans to when your home is move-in ready.

Faster Options:

• Pre-Approved Plans and Kit Homes: Some companies, like HPM Homes and Honsador, offer pre-approved house plans or kit homes. These can cut down plan approval times to 8-9 weeks, but you’ll still need to find an available contractor.

4. West vs. East Side: Weather and Lifestyle Differences

Hawaii’s islands all have distinct wet (east) and dry (west) sides.

West Side (Dry):

• Known for its sunny weather, white sand beaches, and classic Hawaii lifestyle.
• Popular areas like Kailua-Kona offer the iconic tropical paradise experience.

East Side (Wet):

• Characterized by lush greenery, black sand beaches, and rainforests.
• Expect daily mist and rain for about 2-3 hours a day.
• It’s warmer and still beautiful but offers a different atmosphere from the west side.

Elevation Matters: Higher elevations bring cooler temperatures and cloudier conditions. It’s crucial to consider elevation when purchasing property, as it will significantly impact your daily life.

5. Sea Level and Coastal Erosion

If you’re dreaming of owning a luxury oceanfront home or condo, you must consider the risks associated with sea level rise and coastal erosion.

Key Considerations:

• Erosion Risks: Coastal properties are prone to erosion from waves and salt spray, which can damage structures over time.
• Maintenance Costs: Oceanfront homes require more frequent maintenance, stronger retaining walls, and higher insurance premiums.
• New Regulations: Hawaii County is enforcing stricter building codes to ensure new properties are built further from the shoreline.

Hawaii’s real estate market is unique and requires a deep understanding of local factors like lava zones, leasehold properties, and coastal risks. Whether you’re looking for a family home, investment property, or luxury retreat, having a knowledgeable local agent by your side can make all the difference.

Ready to find your dream home in Hawaii?