Quick Answer: While single-family home prices saw a 10.7% decrease in December 2022 compared to the previous year, making them potentially more negotiable for buyers, Big Island condos continued their upward trend with an 18.2% price increase. Condos offer a more accessible entry point and often stronger rental income potential, especially in resort areas like Mauna Lani and Waikoloa Beach Resort.
Key Insights for Navigating the Kona-Kohala Coast Market in 2023
- Single-Family Homes: Median prices are down, and homes are staying on the market longer, indicating more buyer leverage and negotiation room. This is particularly true for properties outside prime luxury resort enclaves.
- Condos Remain Strong: Despite a dip in sales volume, median condo prices are still climbing, highlighting their continued appeal as both primary residences and vacation rental investments due to relative affordability and often lower maintenance.
- Interest Rates Are Key: Elevated borrowing costs will continue to shape affordability and buyer behavior, making cash buyers or those with significant down payments particularly strong in the luxury market.
- Luxury Market Resilience: High-end properties, especially within exclusive communities like Kukio and Hualalai Resort, are less susceptible to interest rate fluctuations and are expected to maintain strong demand.
- Expert Guidance Is Crucial: The shifting market dynamics of 2023 demand a knowledgeable local expert who can provide real-time data and strategic advice for both buyers and sellers.
Over nearly two decades selling luxury homes on the Kona-Kohala Coast, I have worked with hundreds of affluent buyers and sellers, primarily from the mainland, considering Hawaii as a second home or vacation rental investment. One of the most common questions I hear is: “Should I buy a Big Island condo or single-family home in 2023?”
The answer is not magic—it is a system. What I call the Polimino Market Navigation System is the result of years of testing, refinement, and proven results in this unique market. Rather than simply describing the system, here are the five most common questions buyers and sellers ask about the 2023 Big Island real estate outlook, along with clear, data-driven answers.
Is 2023 a Good Time to Sell My Kona-Kohala Coast Vacation Rental?
Quick Answer: While sales volume for both single-family homes and condos dropped significantly in December 2022, the luxury vacation rental market on the Kona-Kohala Coast remains robust, particularly for well-maintained properties in desirable resort locations.
For sellers of luxury vacation rentals, 2023 presents a more balanced market than the frenzy of the past two years, but it is far from a buyer’s market. Properties with established rental histories and premium amenities, especially within sought-after communities like Mauna Kea Resort and Mauna Lani Resort, continue to attract discerning buyers. These buyers are often less sensitive to interest rate fluctuations and focus on lifestyle and long-term investment value.
Market Data: In December 2022, overall single-family home sales were down 30.6% and condos were down 32.5% year over year. However, the median condo price increased by 18.2%. This indicates that while fewer transactions are occurring, demand for well-positioned condo properties remains strong. Correct pricing from the outset is more critical than ever.
Will Interest Rates Keep Rising in 2023, and How Will That Affect My Purchase?
Quick Answer: The Federal Reserve signaled continued rate hikes, meaning mortgage rates are likely to remain elevated, directly impacting affordability and purchasing power for buyers on the Big Island.
Higher interest rates result in higher monthly payments, reducing purchasing power for financed buyers. This effect is more pronounced in the single-family home segment. In luxury communities such as Hualalai and Kukio, the impact is often less significant because a larger percentage of transactions involve cash or substantial down payments.
Example: A $1.5 million mortgage at 3% interest results in an approximate monthly principal and interest payment of $6,324. At 6.5%, that payment rises to roughly $9,481. This shift reduces affordability and contributes to increased days on market, which rose 69.2% for single-family homes in December 2022.
Is a Big Island Real Estate Crash Likely in 2023?
Quick Answer: A major market crash is unlikely due to limited inventory, sustained demand, and the strength of Hawaii’s luxury segment. A stabilization or recalibration of prices is more probable.
The Kona-Kohala Coast operates on different fundamentals than many mainland markets. Inventory remains constrained due to geography and development regulations. Demand from both local residents and affluent out-of-state buyers seeking lifestyle and investment opportunities continues to support pricing.
Market Data: While single-family home sales volume dropped 30.6% and median price declined 10.7% in December 2022, average days on market were 44 for single-family homes and 39 for condos. These figures, though higher than 2021, remain relatively low compared to historical norms. Condo prices increased 18.2%, underscoring continued strength in that segment.
What Does the Market Mean for Buyers in 2023?
Quick Answer: Buyers will find a more balanced market with greater negotiation leverage, particularly for single-family homes, but must account for higher borrowing costs and move decisively on desirable condos.
Inventory has improved slightly, and properties are staying on the market longer, providing more time for due diligence and negotiation. However, prime condos in areas such as Waikoloa Beach Resort remain competitive due to affordability and rental potential.
Market Data: Average days on market increased to 44 days for single-family homes and 39 days for condos in December 2022. Buyers now have more opportunity to conduct inspections and negotiate terms, though limited inventory continues to support pricing.
What Does the Market Mean for Sellers in 2023?
Quick Answer: Sellers must price realistically and focus on presentation and marketing strategy, as automatic bidding wars are less common.
Strategic pricing, professional presentation, and targeted marketing are essential. Overpricing leads to extended market time and potential price reductions. Sellers should prepare properties thoroughly and rely on data-driven pricing strategies.
Market Data: With single-family home sales down 30.6% and median price at $625,000 (down 10.7% year over year), buyers are more price-sensitive. Condo median prices rose to $520,000, though sales volume declined 32.5%, reinforcing the importance of strong positioning and execution.
The Bottom Line: Navigating the Market with Confidence
2023 represents a more balanced and nuanced year for Big Island real estate. Buyers and sellers alike benefit from understanding local market data, setting realistic expectations, and implementing a strategic approach. Established resort communities such as Mauna Kea Resort may continue to outperform the broader market due to strong demand and limited supply.
Frequently Asked Questions
How much does a vacation rental in Kona cost, and what is the rental income potential?
In December 2022, the median sales price was $625,000 for single-family homes and $520,000 for condos. Rental income varies by location, amenities, and occupancy rates. Resort properties in areas like Waikoloa Beach Resort and Mauna Lani Resort often generate strong returns when professionally managed.
What questions should I ask when interviewing a Kona realtor?
Ask about experience within your specific community and price range, marketing strategy, professional media, pricing methodology, and data-backed analysis of current market conditions.
Can I manage a Hawaii rental property from the mainland?
Yes, but most owners hire local property management companies to handle bookings, maintenance, regulatory compliance, and guest services.
What are the hidden costs of owning a vacation rental in Hawaii?
Beyond the purchase price, owners should budget for property taxes, HOA fees, utilities, insurance (including hurricane and flood coverage), maintenance, management fees (typically 20–35% of gross rental income), and applicable state taxes such as TAT and GET.
Is Waikoloa or Mauna Kea better for rental income?
Both offer strong potential. Mauna Kea Resort typically represents a higher-end luxury segment with higher purchase prices and rental rates. Waikoloa Beach Resort offers a broader range of price points and attracts a wider demographic of renters. The better option depends on investment goals and budget.
