Hawaii is a dream spot for many because of its beautiful scenery and lively culture, but not all places are the same when it comes to real estate. Real estate agents with a lot of experience say that buyers may have trouble in some Hawaiian towns over the next five years.
Changes in market values, unstable economies, and limited growth potential are some of the main things that affect these forecasts. If you want to invest in Hawaiian real estate, you need to know about places where you might not get the results you expect.
Based on what real estate professionals say, these are the five worst places in Hawaii to buy a home in the next few years.
1. Hilo (Big Island)
Average home price: $450,000.
There is a significant reason why purchasing property in Hilo is not the best investment: volcanic activity has been known to wreak havoc on the town in the past and may do so in the future.
“Hilo is close to active volcanoes, which can pose a significant risk to property and deter potential buyers,” said Colten Claus, an Associate Broker at 8z Real Estate. Claus also mentioned that “insurance premiums are higher due to natural disaster risks.”
“While Hilo offers scenic beauty, it’s prone to volcanic activity and heavy rainfall, impacting property desirability,” stated Justin Godur, CEO and creator of Capital Max. This might also “…hinder long-term investment potential.”
Claus portrayed Hilo as having minimal economic options beyond agriculture and tourism.
2. Kailua Kona (Big Island)
The average home price is $700,000.
Following the terrible fires in 2023, it became clear that Hawaii relies heavily on tourism to keep its economy afloat, which is especially true in Kailua-Kona.
“The local economy is highly dependent on tourism, which can be volatile,” Claus remarked.
Basic living costs are extremely costly, and you may not be pleased with the structural integrity of the house for sale.
“The cost of living is high, which can deter long-term residents and affect the rental market,” observed Claus. He continued: “Limited infrastructure development can hinder property value growth.”
To put it frankly, Godur said, “Despite its tourist appeal, Kailua-Kona’s market is oversaturated.”
3. Lihue(Kauai)
The average home price is $800,000.
Lihue’s isolated location, along with high property costs and a limited job market, makes it less accessible and appealing to prospective purchasers, according to Claus.
“Prices are already high with limited room for appreciation,” Claus stated, noting that outside of agriculture and tourism, “[t]he job market is not diverse” in Lihue.
4. Waimea (Big Island)
The average home price is $550,000.
Claus described how much land on Waimea is allocated for agriculture, which limits residential development and creates an economic silo of isolation.
“Economic opportunities are limited, making it less attractive for long-term residents,” says Claus.
Furthermore, if you’re looking for sunny island days, you won’t find them in Waimea because the area gets a lot of rain, which Claus says might affect property desirability and maintenance expenses.
5. Pahoa (Big Island)
The average home price is $250,000.
Pahoa, located in the Puna District, is prone to lava flows, making it a dangerous investment, says Godur.
While the average housing price is very cheap, Godur suggested that the fear of volcanic activity outweighs possible returns and is not worth the risk of investment or harm.
“…proximity to active volcanic zones makes it a hazardous investment,” according to Godur; “…but the constant risk of natural disasters reduces its long-term attractiveness.”
Bottom Line
While Hawaii’s beauty and culture are evident, not all of its cities are suitable for real estate investment. Volcanic activity, economic instability, and high living costs are among the issues that Hilo, Kailua Kona, Lihue, Waimea, and Pahoa face. These features make them less appealing to home buyers during the next five years.