Why this Hawaii Real Estate Market Isn't Selling 2026 Red Flags

Lately, my Instagram algorithm has been showing me things like, why isn't my house selling is coming up trending high on Google by people. And then at the same time, Koa and I just had a closing today that closed $100,000 over the asking price and went under contract in six days. But there are neighborhoods that seem to be frozen. Today, we're coming to you from a neighborhood called Hau'ula on the windward side of O'ahu. And we're going to look at the three biggest reasons why this coastline seems to be frozen. Is this a buying opportunity or are homeowners subject to something called a managed retreat? I'm Myla Gibson-Bandman, by the way, realtor on O'ahu along with my partner Koa Cassidy, Yasu behind the camera. If you'd like to be a part of this conversation, go ahead and leave us a comment, but you can also get in touch with us at info at dwellhawaii.com. We're going to break it down into the three T's traffic, terms and tides. I figured it would be important though, first to say exactly where we are. Hau'ula is located about 30 miles from Honolulu. It's just outside of Kaneohe town. It's actually in the Kaneohe region. It's on Kamehameha highway as you head north towards the North shore. It gets a lot of rain. It's very rural. It's green. It's beautiful. It's a small town of about 4,000 people. It is said to be a bit like a desert and I'm not talking like weather desert, but like a job desert or a service desert. It's hard to get to convenient things. It's also very slow, which by itself isn't necessarily a bad thing, but it's a great segue into traffic. Aloha, how are you? Good, thank you. I like these. My sister is like crazy obsessed with jewelry right now. I don't know what's going on with her, but she would have a ball with all of that. So speaking of convenience, you know, this probably isn't like a convenience store. It's a gift shop, which there's kind of a lot of those on this coastline. And we'll get into like the Airbnb nature of what's happened out on this side in a bit, but you can see like this stuff was built mostly for visitors or for tourists. And so as a local living here, you know, more than likely you wouldn't step foot in this store, although it's super cute and very colorful and I don't have anything bad to say about anything that's in there. It's just, you know, if you were to live out here, the likelihood of you actually going in there is slim to none. We'll talk about traffic a little bit more. So usually traffic is like, we talk about it a lot when we talk about Kapolei or Ewa. You're looking at 60 to 90 minutes of a commute in and out of town during work hours. But this section here is arguably probably the most isolated corridor on the island. You're along Kamehameha Highway. People say Kam Highway for short, but I refuse. And this road is kind of like a ribbon. So it winds, it's narrow. I mean, we were parked on the side of the road just a bit ago and I could see cars like almost hitting my car. Like they had to correct themselves. So not that convenient of a roadway. It does sometimes get overtaken by water, not necessarily by streams, although it is wet and there are a lot of streams out here. The king tides will come up and actually start to erode the highway away. If you get stuck in traffic because there's a downed utility pole or lately there's a project actually happening out here where they're doing some road work. And I mean, you're talking, you could get stuck sometimes for an hour and a half. I mean, poor Yasu coming out here was like, am I going to be back home by four o'clock? Because I've got something to do then. And I'm like, yeah, sure. But honestly, sometimes you don't really know for sure. There's no rail out here. So Ewa used to be a place I would, and I still do, caution people about traffic. But now that the rail is in Ho'opili and connects to the airport, that's actually a game changer. You don't have anything like that out here. Being able to get to the doctor, to Costco, to big box stores. I mean, you've got 7-Eleven out here. You've got Tamura's. You know, there's like really cute mom and pop things, but actually not many of them. And a lot of them are like this store that you see here. So that's one of the deterrents for people buying out here. OK, for some context on the island of Oahu, homes are taking roughly 20 days to go under contract from the time that they're listed. That's a little higher than normal. But is it something to panic about? It's not. It's still a seller's market in the single-family home market island-wide. But there are these neighborhoods that are performing otherwise. Now, if we look at the national average, homes, we're being told, are taking about 78 days. That's across the United States. And I know that there's a bit of media panic out there with regards to what's going on in real estate. Hawaii, in general and historically, is a seller's market. But again, we're seeing different behavior in different neighborhoods, this being one of them. Out here, there's 25 active listings currently. And the average days on market is going up every day that it sits. But right now, it's about 160 days. And there's various reasons for that, which we're talking about. But I want to get into the second T, which is terms. And so I'm going to read them because these things are very detailed and highly nuanced. And I want to make sure that I don't get them wrong. So one of the things to be concerned about with an oceanfront home is the deed restrictions and the shoreline setbacks. That's a really, really big deal. Bill 41, or Ordinance 23-3, as of 2024 and 2025, states that Honolulu's shoreline setbacks have increased. So before, it was 40 feet from the high wash of the waves, and now the minimum is 60 feet. But in erosion-heavy areas like this, like Hau'ula, it's been increased up to 130 feet. And you're going to see some of the drone footage that Yasu has collected today. Like even when he was filming it, he was like, whoa, those houses are right up on the ocean. And these things are not just something, they're not only tangible, but they're things that will potentially work on your mind, right? And they could create like this paralysis by analysis. Like, what if this happens? And what do we do about that? And what can we do about, you know, impeding the erosion? And are we going to have to rebuild our house and move it back? Well, that's another thing. There's something called the unbuildable lot. Many oceanfront lots are really narrow. If a 100-foot setback is applied, the buildable area might actually shrink to a tiny sliver or disappear entirely. The other thing that I mentioned at the beginning of this video was the idea of the managed retreat. It's not something that's totally definable at this moment, but there are talks floating around about moving everything inland. So, I mean, gosh, that's a whole other consideration. There's also a 50% rule. If an older home is damaged by fire, flood, or rot, and the repair cost exceeds 50% of the structure's value, the owner is often forced to rebuild according to the new setback rules. So, again, the unbuildable lot. This makes homes uninsurable and also un-mortgageable for many buyers. And so, again, perhaps if you're a cash buyer and you're like, hey, there's an opportunity here. I'm just going to grab that beachfront home. You know, that's one thing. But for most buyers that are in the market, they're looking to get a mortgage and they're going to have to carry insurance. You would probably want to carry insurance if you got a house on the ocean. So, those things are really tough considerations. Here's another term to be aware of, and potentially why we are seeing a lot of homes come up for sale. But the short-term rental law was gutted. And this area used to be a haven for these unhosted type of vacation rentals. We actually had someone call us last year. They were interested in selling their beachfront haula home. I came out, assessed it, looked at all the data, looked at the days on market, talked to them about their goals, the results that they were looking for, how quickly they wanted to be able to sell that house, gave them a price that would get them to that goal and the timing that they were looking for. And they were like, absolutely not. There's other homes that are listed for $2.6 million. We want our house listed there. And I was quoting something like under $2 million. So, we walked away from listing that property altogether. But they also were doing short-term rentals. And so, we saw a lot of people grab these homes back when interest rates were low, like 2021-ish, thinking that, hey, a 30-day vacation rental is still doable. And it was, and it is. But those laws have now shifted to 90 days. They're pretty fluid. I mean, even on Maui, short-term rentals are disallowed altogether. So, that's been a really big factor in real estate sitting here on the market. Because most people, again, this area is beautiful. And it's a place to come and retreat. And but to live out here, you're going to have to look for more of a pioneer lifestyle. You're going to want to be a part of a pioneer lifestyle. And they're saying that 2026 buyers are actually more convenience-driven than before. So, yeah, that's a big impact on pricing. A lot of people bought these homes, factoring in the income that they were going to get, you know, the pro forma, the performance, the rental, how much they're going to get per night. And now that those laws have been gutted, that's no more. Here's something else to consider, and that's cesspools. This is an area that's been heavily reliant on cesspools. But now there's a requirement for cesspools to be converted to septic by 2050. So with that deadline at play and coming down the pipe pretty quickly, everybody's going to have to convert. If you're buying a home that's on cesspool and hasn't already done a septic conversion, you can factor in like $30,000 to $50,000 in order to purchase and to be able to get any permits. And just know that that's coming. I'll read this to you. The Hau'ula Ka'a'awa Corridor has been officially designated as a priority one area by the state, meaning these cesspools pose the highest risk to our reefs and groundwater and must be converted first. This isn't just a future problem for 2050, because these homes sit on high water tables and near sensitive shorelines. But buyers are facing mandatory $30,000 to $50,000 upgrades just to get a renovation permit or secure traditional financing today. Essentially, every deal in this neighborhood comes with a hidden infrastructure tax that most buyers simply aren't prepared to pay. By no means are we trying to like rain on anybody's parade or cast a negative light on Hau'ula. This is a very special neighborhood to a lot of people. I've got really good friends that have roots out here, that have family out here. My mother-in-law actually grew up in Hau'ula, so it's a wonderful place. But our reason for doing this video is just to make sure that you understand that there are questions you should be asking. There are conversations you should be having. And these are conversations that we're willing to have with our clients, not only willing, but that we find are really important conversations to have, especially for those that have the dreams of moving to Hawaii or owning an oceanfront property. Or also just the question of how come those properties aren't selling and how is that impacting the rest of the island? I think that's the biggest reason why we're doing this video today. I was feeling a little bit negative Nelly in that last scene. And these are conversations that we have with our clients typically, but doing it on a video is far different. So I thought, okay, let's get a little bit happy. Let's lighten the mood a little bit on our way back out of Hau'ula. We're stopping at the Crouching Lion, which I've actually never been to. I know a lot of people that have visited O'ahu have been here. They've asked about it before. It was closed for some time. I had a friend that visited recently that came to it. And so we're going to check it out for my very first time. This is the hibiscus lemonade. It's good. So Crouching Lion, I've never been to. I had to look up the history a little bit. I know it was a very significant place. This was a retreat for a man named Ferdinand or somebody. I don't know. He wanted the retreat away from the hustle and bustle of Waikiki and Honolulu. This mountain was known by Native Hawaiians as looking like a dog, but then Westerners are known to have come by and they were like, oh, it looks like a lion. So then this became known as Crouching Lion. It was closed for a number of years and then it reopened. And now it's like this izakaya restaurant, which was very surprising to Yasu and me. I ordered a ceviche. He ordered a spicy ackee crunchy roll or something like that. So beautiful setting and location. I mean, totally worth stopping in if you're doing this long drive out to the North Shore and on the windward side. But I wanted to just step into a little bit about our third T and that's tides. So we're not referring so much to like streams flooding. And although there was some significant flooding in Kaneohe recently that we were getting a lot of calls on, there was a lot of footage on Instagram and whatnot. But here on this coastline from Ka'a'awa to Hau'ula, even like Punalu'u, all of this area is known for flooding, but mostly due to the ocean and to the king tide. So when the king tide comes in, the ocean actually comes over the road and erodes it. And so then therefore it's subject to a lot of roadwork as of lately. But more importantly, we want to talk about homes that are in flood zones. And again, going back to why so many homes are on the market in Hau'ula, currently there's 25 active listings, 14 of which are in high risk flood zones. Now flood zones, I wouldn't say are a complete deal breaker. There's nuances to it. Oftentimes you can get an elevation certificate. A home might be built a little higher up on its slab to take it out of the flood zone. And again, these are just conversations that we have. And this is research that we do when we have clients that are interested. But in comparison to Kaneohe and Kailua, that same house that's listed at like two and a half million might go under contract far quicker than homes that are in Hau'ula. And just for reference, there's 65 active listings on the market in Kaneohe and Kailua that are close to the ocean. And only 14 of those are in the flood zone. So we're talking like a quarter of the active listings are in a flood zone, as opposed to Hau'ula where over half of them are in flood zones. And then if we look to Hawaii Kai, about seven out of 36 homes are in flood zones. So that's just another really big consideration. Another reason why homes in this area tend to be sitting on the market longer than others. This video is an interesting one because it started with a why question. And that's a question we always get from our clients. Why is this person selling? Why aren't homes in this neighborhood selling? And then it really turns into the what and the how. What's happening in the area? How are these things going to be taken care of? What do I need to do to make sure that it's safe? How much is it going to cost me to do all X, Y, and Z? How much should we offer on this? How much should we list our house for? And so hopefully this was an example of just the questions that we get into with our clients and really what we're thinking in helping you to accomplish your goals as well. I'm Myla Gibson-Bamm in real Toronto, O'ahu with Dwell Hawaii, along with my partner Koa Cassidy. If you have any questions for us, reach out to us at info at dwellhawaii.com. Thanks for watching.