Are Foreign Buyers Really Buying Up Hawaii? (or at least why it feels that way)

so with housing prices being so high here in Hawaii why don't we just ban foreigners from buying property here I mean they're the problem right and in fact the state legislature heard a bill that would have done such a thing and a lot of people came out to testify and offer comments on how they think that would impact the housing market here yet the data doesn't seem to support that and so I want to take a closer look at the data and dispel this foreign investor meth but I also want to talk about why it seems seems like a lot of people outside of Hawaii are buying property here hello Hawaii so first let's start with the data the data from January 2023 to September 2023 by the Department of Business Economic Development and Tourism shows that 74.7% of homes sold in the state were from local buyers 23.5% were from Mainland buyers and 1.8% were from foreign buyers for foreign buyers that's just 214 homes with Japanese buyers leading the way and by the way the average price for the foreign buyer purchases what $500,000 more than local buyers so clearly we're not in the same Market I mean they're shopping for BMWs and US locals over here we're just trying to get Honda Civics and Toyota Corollas used with 70,000 miles on so if foreign buyers are buying a relatively low number of homes in Hawaii and they're spending over half a million dollars more than locals why do they seem to get the blame and sure foreign buyers do influence the housing market in Hawaii and Hawaii does have a history of not liking people from outside of Hawaii and if you think back to the 1980s when the Japanese economy was booming sure there were a lot of Japanese buyers back then buying up properties here in Hawaii but times have changed I don't know if you've seen the latest yen to dollar exchange rate but it's pretty weak for the Japanese Yen I mean it's the reason why a lot of these aunties and uncles going in Japan right now they want to go shopping and eat cheap and sure there could be straw buyers who are buying property for other people but I think we collectively as locals tend to hold on to this idea that it's all foreign buyers it's all foreign investors that are buying up all the homes and that's what's stopping us locals from buying but the numbers just don't support that but still why don't we just ban All Foreign buyers and investors from buying property here in Hawaii well because it's unconstitutional and by the way that's the reason why we can't stop Mainland buyers from buying here in Hawaii speaking of Mainland buyers let's talk about them with most of the purchases coming from buyers in California where their home prices are also fairly high and 23.5% of homes being sold to Mainland buyers is an impact on the local housing market but that 23.5% is still not close to the 74.7% of homes being bought by locals in fact some people have used this statistic to point out that it's really not the mainland buyers who are at fault for Hawaii's competitive housing market a 2022 Hawaii housing study claimed that really it wasn't the mainland buyers or outside buyers who are to blame but a lot of other factors that contribute to housing problem in fact the study argued that in recent years the percentage of local buyers has actually gone up now I've been W to talk about this study for a very long time for over a year because I want to push back on that claim and some of those figures because ultimately I think they missed something in their analysis and also just to pause here I do recognize that I've used the same set of data to dispel the foreign investor myth and I'm critical of that data to dispel the idea that local buyers and Mainland buyers are not what they seem so I totally get that and in looking at the numbers I do kind of question their validity I really believe that Mainland buyers have a much bigger impact than we're giving credence to because sometimes it just feels like there's a lot of Mainland buyers and I know that term feels is very slippery and by the way I don't want to seem like I'm against out of State buyers buying home that's never been my position on this channel if you can do it legally and you have the the means and you've saved up and you're ready to acclimate to life here in Hawaii by all means go for it and I also understand that we cannot stop commerce between states for United States citizens so that's just something that we can't get around so while the data shows that local buyers make up the super majority of home buyers purchasing homes here in Hawaii it just doesn't seem that way and I didn't understand why and that's purely anecdotal and what I observe and maybe what other people observe so it's not backed by any hard figures but I think it's because we have to look at how we're defining the term local buyer University of Hawaii assistant professor of Economics Justin Tindall stated I think it's important to be clear about what the categories are that you choose to use I think debed and others usually classify Things based mostly on what data is available because the address of the buyer is often available in real estate data it can be easy to classify things into Hawaii resident Mainland resident foreign resident this can miss a lot of the Nuance I'm not aware of anyone who has attempted to collect more Nuance data looking at things like family connections or previous residence locations would be interesting but getting that data would be a challenge in other words it's not as simple as classifying local buyer Mainland buyer and foreign buyer because I think most local people would tend to think a local buyer is someone who is from Hawaii whereas Realtors they're just looking at the previous address and when they check the box I'm sure they're just saying oh okay they got a Hawaii address yeah they're local buyer and before we get into an argument about what it means to be local I do think that we need to recognize the difference between a local buyer and a local buyer in a technical sense because when someone moves to Hawaii rents for a year or two and then decides to purchase a unit I don't know if most people here would consider them a local buyer I mean just because they put down a previous local address wouldn't to me make them a local buyer in the same way that we use that term local and that's okay but I do think that it's worth recognizing that difference and by the way for those who do move here from the mainland and decide to rent for a short period of time before buying I think that's a smart thing to do you don't want to just buy a unit and come here and not know what's happening I mean you want to make sure that you settle down if you have kids or family you want to make sure that they settle down before really planting your roots because it does cost a lot of money but the thing is that type of local buyer is not the same as someone who is living here particularly for a very long time it's just not the same because they're bringing probably income or Equity from properties in other places and they're not having to pay the High Cost of Living that Prov a lot of locals from saving especially saving for a down payment and when you factor in work from home or telea work yeah we're not on the same playing field now it may sound like I'm just complaining and I'm I'm I'm really not but the reason why I think this is important to recognize is because I don't want the numbers to lull us into complacency for us to think wow we have 75% of local buyers we're doing a great job we're building homes for local families but then why doesn't it seem like like that why can't households like mine afford to buy a home so maybe in a lot of ways we just throw out all the data and we just let it go and we start from where the real problem is we just need more housing for local families like I mentioned before I think in Hawaii we need a lot of affordable rentals and those rental prices the rents need to be cheap not cheaply built but the rents need to be cheap and by cheap I mean your average person will be like oh brah that's pretty cheap that might mean $1,500 for a two-bedroom it might mean less I don't know what the exact number is but it's got to be a number where people are like okay yeah I can actually afford to pay for my housing and other expenses here and who knows maybe if the rents are that cheap maybe they won't want to buy and that's a shift that we're going to have to have here in the state because I just feel like Hawaii just needs more housing stock and if if we keep building at this slow pace we're never going to get ahead so for those of you who aren't in Hawaii let me set the stage for how the housing situation here is families are struggling to buy homes when the average median price is over a million doar you can't really save for a down payment and everything else seems to be getting more expensive so what's going to give we live in a one-bedroom condo with a family of four and soon we're going to need to expand our living situation but where are we expected to go because when we look at the market it seems so Out Of Reach for us like really Out Of Reach for us and I think a lot of other local families are feeling a mixture of emotions hopelessness frustration and anger and sometimes out of those emotions someone's got to be blamed it's got to be the foreign investors it's got to be the mainland buyers and if you keep relying on these local buyer numbers we're really just fooling ourselves into thinking that local families local local local families are able to buy homes here because fundamentally the root cause of the problem is still going to be the same we just need to build more housing here and until we do that it doesn't matter how many percentage of local buyers there are it's still not going to be enough so let me know what you think about Hawaii's housing problem in the comments below thanks for watching and Aloha hello hello hello hello hello hello love from Hawaii

Channel: Hello From Hawaii

Views: 8,714

Keywords: living in hawaii, Life in hawaii, what is it like in Hawaii, Moving to hawaii, hello from hawaii, hawaii, oahu, honolulu, hawaii life, life on hawaii, hawaiian life

Id: ZsOu0ZZI2Go

Length: 10min 34sec (634 seconds)

Published: Mon Feb 26 2024