Steady Second-Home Market Extends Hawaii’s Real Estate Boom

In an already diverse real estate landscape, there is perhaps no market more unique in the United States than Hawaii.

Fueled by wealthy out-of-state buyers, the demand for second-home properties outpaces any other part of the country. According to Hawaii’s chief economist, roughly a quarter of Hawaii’s homes were purchased by non-residents.

This continued interest in Hawaii’s real estate by mainlanders and foreign buyers has, in part, driven the luxury sector to new heights. Year-to-date high-end sales across the state have surpassed the previous year, according to the latest Hawai’i Luxury Market Report from leading brokerage Hawai’i Life.

As a result, many Hawaii real estate agents are experiencing unprecedented sales volumes, outshining those from much larger markets and placing them among the top real estate agents in the country. One such agent, Neal Norman, regularly ranks as the top-producing agent in Hawaii and was recently named #29 on Real Trends’ The Thousand, a national ranking of the top 250 individual agents in the U.S. ranked by sales volume.

Having moved to Hawaii as a surfer more than 25 years ago, Norman has since become one of the most sought-after agents in the state, specializing in luxury properties on the island of Kauai. As a director at Hawaii Life, Norman and his team have amassed over $3 billion in sales, including more than $385 million in sales volume in 2021. Recent transactions of note include the $11.9-million sale of Carlos Santana’s vacation home.

In my continued coverage of the global real estate scene, I spoke with the Kauai expert about his successes and how he thinks the market is changing on the “Garden Isle.” His comments have been edited for clarity.

How has the market changed in Kauai over the last few years?

Fortunately, and unfortunately, the north shore of Kauai has been discovered by buyers, so everything is continuing to appreciate at a rapid rate. It’s such a small rural area and there’s a super-scarcity but a high demand. There was more tourism here from the pandemic and people discovered they didn’t have to be at work anymore and that they could live in this place they’ve always dreamed of living in. There’s quite a bit of transference between places like Aspen, Jackson Hole or Telluride, where it’s the same idea only that, instead of snow, we have waterfalls.

Is there any concern that the spike in popularity will subsequently lead the area to lose some of its charm?

There are stringent zoning and building regulations together with the only way in and out being a two-lane road, so it’s quite protected, and I don’t think that will change. The reason people come to Kauai vs. Maui is that it’s more laid back. There are really no multifamily condos, and there are almost no hotels―it’s a raw, natural beauty here.

How does the luxury market in Hawaii differ from those stateside?

There’s very little speculation in our market. People don’t come here and build homes to sell. Many people come here and they can’t find a beautiful new home—I’ve only sold a handful of new homes in the 35 years of doing this. A lot of the market is buying a vacant piece of land and building something that fits exactly to the buyer.

For the most part, I’m in a second home market. So, I sell people things they don’t need, I sell people things they want. In markets like California, there are often necessities tied to purchasing a house, like living near where you work, and necessities can mean more money. For a beach community like Malibu, if you want a few acres on the water or near the water, it’s going to be $50 to $100 million. Now, to get something like that here, you’ll be paying half, if not a quarter less than that and what you get is going to be amazing.

You have repeatedly been the top-producing broker in Hawaii. What do you attribute to your success?

I think I have a skill set that really works for what I do. I have an eye for site planning or for renovation—having been a hands-on builder myself—and I also love to negotiate. There have been projects that have complicated sites and entitlements issues and I have long-time experience with navigating those and negotiating for someone to find their dream spots, and I love that I get to do that.

I also have an amazing staff. We work tremendously hard to find our clients the right place and that hard work is how we keep getting referrals.

Any spot recommendations for surfing?

Needless to say, Kauai is a world-class surfing location—but Fiji, Indonesia, Central America and South America will always have a special place in my heart.

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