Buying Real Estate on Oahu? Here’s Your Complete Guide!

More people live on Oʻahu than any other Hawaiian Island—right around 1 million, based on recent census data. About 350,000 of those residents live in Honolulu, Oʻahu’s largest “city”—and the largest urban area in Hawaiʻi.

With some of the nation’s highest housing prices, Hawaiʻi can be a challenging place for the real estate—but the tips and insights you’ll find in this article can help make the process easier.

If you’re in the market for a home on Oʻahu, we’ll walk you through everything you need to know, including:

You’ll finish with a solid idea of whether Oʻahu is the right island for you, where you might want to live, and what your next steps will be for finding your home on the Gathering Place, as Oʻahu is known.

Oʻahu’s Unique Home Types: A Quick Tour

Hawaiʻi is a U.S. state, so many aspects of the homebuying process on Oʻahu will feel similar to the mainland. For example, you’ll find both single-family homes and condominiums on Oʻahu.

However, there are a few unique aspects to the Oʻahu real estate landscape. Be aware of these going into your home search so you don’t waste time looking at properties that aren’t a great fit.

Fee-Simple vs. Leasehold Properties

In Honolulu, condominiums tend to dominate. When browsing these listings—especially in Waikīkī—you’ll see some properties listed as “leaseholds.” These listing may catch your eye because their price is often significantly lower than their “fee-simple” counterparts.

Hawaiʻi is one of only a few U.S. states in which you’ll find leaseholds. Here’s the deal:

• Leaseholds are similar to long-term leases—with a few different privileges and responsibilities. The up-front cost for a leasehold is lower, but you’ll need to vacate the property at the end of your term, which can be as long as 30-50 years.
• In contrast, buying a fee-simple property is more like the standard real estate purchase you might be used to. You own your unit in perpetuity and you’re free to sell the property or pass it on to someone else in the case of your death.

Two Not-So-Standard Home Types

In addition to leaseholds, you’ll encounter two more not-so-standard configurations we want to alert you to:

• Condotels
  As you might suspect, a condotel combines features of a condominium and a hotel. Like a condominium, each unit is individually owned. However, these properties operate like a hotel, with a front desk, limited kitchen facilities in each unit (usually), and the ability to rent out your unit through a central management company.If you only want to spend a few weeks (or months!) on Oʻahu and rent, hassle-free the rest of the time, a condotel might be right for you.Financing for condotels can be tricky, and the arrangement isn’t right for everyone. Working closely with a Hawaiʻi real estate agent can help you make the right choice for your circumstances. (More on real estate agents shortly!)
• ADUs / ʻOhanas
  Some single-family homes on Oʻahu come with what’s called an “accessory dwelling unit” (ADU) or an ʻohana. ʻOhana means family in Hawaiian, and you’ll often find family members living in this second dwelling on the property. Other Oʻahu residents rent theirs out, while still others save them for visiting family and friends.ADUs can either be either attached or detached from the main house. They can also be fully legal and permitted . . . or not. A property with legal ʻohana often fetches a higher price. A property with a semi-legal or unpermitted ʻohana may seem attractive initially. But, remember, once you buy the property, those zoning code violations become yours to deal with.A local Oʻahu real estate agent can help you navigate these questions skillfully. And while we’re on the topic . . .

Working with a Local Real Estate Agent on Oʻahu

As you’ve seen, Hawai’i real estate shares some similarities to the mainland. However, as all residents know, things just work a little differently in Hawaiʻi—and on Oʻahu.

That’s why it’s so important to work with a local real estate agent. By that, we mean one who’s not just in Hawaiʻi but also on Oʻahu. Your ideal real estate agent is someone with deep local experience who understands the specific landscape on the island, someone who can answer your questions from personal experience.

Oʻahu Real Estate: Money Matters

The median sale price for a single-family home on Oʻahu hovers around a million dollars, so it’s important to get your finances in order before you start shopping.

If you’re not in the position to make a cash offer, you’ll want to get pre-approved for a mortgage so you 1) know your budget and 2) present yourself as a serious buyer in the competitive Hawaiʻi real estate market.

Below, we’ll give you the lay of the land where the finances of the Hawaiʻi real estate market are concerned.

What Types of Mortgages Are Available for Oʻahu Homes?

Where home loans are concerned, Oʻahu’s options are pretty similar to those on the mainland. You’ll find lenders offering both fixed-rate and adjustable-rate mortgages.

In addition to conventional loans, there are also a few other loan types that Oʻahu buyers will want to be aware of, including:

• FHA loans for buyers who might not qualify for conventional loans
• VA loans for servicemembers and veterans
• USDA loans for eligible rural areas
• Jumbo loans for properties over the Fannie Mae and Freddie Mac guarantee limits

Learn more about available loan types in Hawaiʻi.

Are Home Prices Dropping in Oʻahu?

Market prices for homes on Oʻahu fluctuate frequently. If you’re nursing a long-held dream of owning real estate on the island, it pays to keep tabs on the market regularly.

In addition to browsing current listings, we also like to check in with the Oʻahu Real Estate Report from the real estate firm Locations. Updated monthly, their report offers up to date pricing and statistics on the Oʻahu real estate market. It’s a great place to take a reading.

Is It Cheaper to Live in Maui or Oʻahu?

If you’re looking purely at real estate costs, Oʻahu is cheaper. Recent Zillow figures put Maui’s average home price well above Oʻahu’s. In fact, Oʻahu is often ranked as the second-cheapest Hawaiian Island where real estate is concerned. (The Big Island is the cheapest overall!)

Are Hawaiʻi’s HOA Fees Really the Highest in the U.S.?

According to a recent study, Hawaiʻi’s homeowners’ association fees are the second-highest in the U.S., second only to New York. The study calculated average Hawaiʻi HOA dues at $762.32 a month. Make sure you account for this cost when you put together your Oʻahu real estate budget.

Oʻahu Property Taxes: How Much Will You Pay?

Property taxes are levied at the county level in Hawaiʻi, so the City & County of Honolulu (which encompasses the entire island of Oʻahu) sets the property tax rates for the island.

For Oʻahu residential properties, there are five different property tax rates you may encounter. Rates are currently as follows:

For the most recent rates, make sure you check the Real Property Assessment Division website.

• Residential property tax rates are available to homes that act as primary residences. Those who are registered to vote in Honolulu, file their income taxes as Hawaiʻi residents, and occupy the home more than 270 days or more are eligible for this rate. They can also claim a home exemption that will lower the amount on which you pay taxes. (Additional exemptions are also available for seniors 65+ as well as those who qualify for other tax relief programs.)
• The Residential A category applies to properties that aren’t claimed as a primary residence. Tier 1 applies to the value of the property up to $1 million. The value over $1 million is taxed at the Tier 2 rate.
• Hotel & Resort rates apply to properties considered transient vacation units (TVUs). TVUs are short-term rentals (fewer than 30 days) where the whole home is rented and the stay is essentially unhosted.
• The Bed & Breakfast classification covers properties rented for fewer than 30 days that have a permanent host present on the property. (Example: If you were able to secure a permit to rent a room in your house via Airbnb.)

Your property taxes will impact the overall finances of your new Oʻahu home, so review the rules carefully before making a purchase.

The Best Neighborhoods on Oʻahu

Not sure where to begin? Let’s talk about the best neighborhoods on Oʻahu.

First, our guide to finding the right Oʻahu moving company will take you on a tour of the most popular neighborhoods on Oʻahu, including Honolulu, Pearl City, Kailua, Kāhala, Kaimukī, Kakaʻako, Makiki, Mānoa, Nuʻuanu, ʻEwa, Hawaiʻi Kai, Kapolei, Mililani, and Kāneʻohe. Find the Right Oʻahu Neighborhood. We’ve also got a bunch of specialty guides to help you narrow down your search:

Next Steps for Locating the Perfect Oʻahu Home

Now that you’ve got a good lay of the land for Oʻahu real estate, don’t miss the additional tips and must-knows you’ll find in our Hawaiʻi real estate guide. You’ll get a broader view of the market in the Aloha State so you can enter your Oʻahu real estate search fully informed and ready to go.

And, if you need some help moving into your Oʻahu home, we’d be happy to help! Our Honolulu-based team has executed moves all over the island. Just reach out to us for a complimentary quote to get started. We do mainland moves, interisland moves, local moves, and even international moves.