A Transition Toward Stability?
The U.S. and Hawaii Real Estate Markets in July 2025
by Bherin Brown
As we move into mid-2025, the U.S. housing market is experiencing a fundamental shift. Nicholas Godec, head of fixed income tradables & commodities at S&P Dow Jones Indices, captures this transition perfectly: “We’re witnessing a housing market in transition. The era of broad-based, rapid price appreciation appears over, replaced by a more selective environment where local fundamentals matter more than national trends.” Despite market concerns, several key indicators suggest the market remains stable and a crash is improbable:
Strong Financial Foundation: Homeowners maintain significant equity, with the national average exceeding 40% according to CoreLogic. This substantial buffer reduces the likelihood of distressed sales or sharp price declines.
Sustained Demand: High interest from remote workers and second-home buyers continues to drive market activity, while mortgage rates remain elevated but not prohibitive.
For those of you interested in Hawaii real estate, specifically the Big Island in North Kona and South Kohala regions, Hawaii’s real estate landscape tells a tale of two markets:
Single-Family Homes: Inventory sits at 4.5 months’ supply—slightly below the 6-month balanced market threshold but significantly more stable than many mainland markets. Sales data from North Kona and South Kohala reveals the ongoing impact of reduced inventory: prior to COVID and in the years leading up to 2020, these regions saw approximately 1,500 residential homes and condos sold annually. Post-COVID, sales have dropped to around 1,000 homes per year, reflecting a 33% reduction that continues to indicate low inventory levels. Sales are tracking even slower this year, with only 361 residential homes and condos sold from January 1st through June 30th.
Condominiums: A different story emerges here, with inventory now exceeding 6 months’ supply and trending upward, signaling a shift toward buyer-favorable conditions.
For those of you wondering what it will take to recover, two primary factors will determine when the market achieves better balance:
Interest Rate Normalization: Lower mortgage rates, dependent on Federal Reserve policy changes, will enhance affordability and stimulate both buyer activity and new construction.
Inventory Growth: While Hawaii’s inventory is slowly recovering, substantial increases are needed to reach the 6-month supply that typically indicates market equilibrium.
As of now we are safe, but due to the political landscape of the world which is uncertain none of us truly know where we are headed for the end of 2025. I’m a strong believer that in any market there are opportunities for both sellers and buyers. If you are thinking of selling, here are some tips that are more important than ever…
Tips for Strategic Selling in Today's Environment
Success in the current market requires a data-driven approach:
- Price Competitively: Use recent comparable sales and local market data rather than aspirational pricing
- Maximize Appeal: Strategic staging and upgrades—modern fixtures, fresh paint, enhanced landscaping—can significantly impact both interest and final sale price
- Focus on First Impressions: Strong curb appeal attracts more buyers and supports asking price justification
Looking Forward
While the rapid appreciation of recent years is cooling, market fundamentals remain sound. Hawaii’s inventory levels reflect a gradual move toward balance, though full recovery depends on continued interest rate moderation and inventory growth.
In this evolving landscape, patience and strategy are essential. Buyers should remain selective and well-informed, while sellers must focus on competitive pricing and property presentation to achieve optimal results. The market’s stabilization trajectory suggests that those who adapt to these new conditions will find the most success.
If you are thinking about selling or buying or investing in real estate, please reach out to me at 808-818-8127 or livealoha@kw.com and we can discuss more about your individual needs.
