New houses averaged $106,400 here in October, topping San Francisco's average sales price of $94,200, highest on the mainland.
Realtors who were here for a convention recently learned that new housing averages nearly $100 a square foot, almost double the cost of most houses in the Washington area. New condominium apartments with good views of Honolulu go for$130 a square foot. In Washington, even the most elegant condominiums cost considerably less.
A naval officer encountered on an airplane flight said he had paid $130,000 for a typical resale house overlooking Honolulu. "If I hadn't made a nice profit on a house I had sold earlier in San Francisco, buying in Honolulu would have been impossible," he said.
October figures from the Federal Home Loan Bank Board showed that housing resales here averaged $78,000, lower than in Washington and San Francisco but $32,500 above the national average. New house prices in Honolulu were $39,400 higher than average.
Why are prices so high in the 50th state's capital?
The total population of the Hawaiian islands is not expected to hit 1 million until 1985. More than half of Hawaii's citizens live in this city, once overbuilt with condominiums but currently alive with new construction.
While land is scarce, the reason for high housing prices in Hawaii lies with its No. 1 industry, tourism.
More than 3.5 million visitors are expected to spend a week or more here this year. When a whopping 28,000 realtors and others arrived for the convention of the National Association of Realtors, it was recognized that location was a principal attraction.
Like visitors from Canada, Japan, Australia and many parts of the U.S. mainland, the realtors were drawn by "aloha allure" -- a combination of a gentle climate, Pacific beaches, friendly people and pleasant accommodations.
Hideto Kono, director of planning and economics for Hawaii, said that Honolulu has 47,000 hotel rooms, a figure that is expected to double by the year 2000.
Hawaian real estate developers also recognize the economic impact of affluent visitors who fly to the islands from almost all parts of the world. A spokesman for the developer of Century Center, a new residential and office building, said that half of the buyers -- who are paying $150 a square foot for space in the 41-story structure -- are based outside the islands.
Developer Bruce Stark, 43, a former Navy officer who stayed in Hawaii and became a millionaire, said his real estate firm has sold $83 million worth of condominium properties this year.His newest venture, the twin-building Royal Iolani, has an unobstructed view of the ocean, a mile away. Two-bedroom, two-bath units on the top floor sell for up to $159,500 and come with monthly maintenance fees of about $172. At those prices, Stark said, an unobstructed view is almost mandatory.
A more conventional subdivision is Waipio, near Pearl Harbor, where Gentry Pacific is building contemporary, single-family houses on small lots. Prices for the larger houses range from $120,000 to $140,000, while a smaller one sells for $96,000.
While many new house sales include land, higher-priced condominiums are often built on leased land, a feature of the island's unusal residential property leasehold system, which is expected to be phased out within the next 20 years.
Albert Vincent, president of the Hawaii Association of Realtors, said that the leasehold system is related to Hawaii's history as a former kingdom. Individuals were not allowed to own land until 1848 and after that, most land was parcelled out to a small number of owners, Vincent said.
A land reform act, passed in 1967 and amended in 1975 and 1976, allows homeowners to buy the lots on which their houses are located as land leases expire. Applications to purchase are filed with the Hawaii Housing Authority and the lessor and lessee negotiate a price. If unsuccessful, they go to arbitration.
An estimated 30,000 houses are still located on land that is leased. Vincent said that scarcity of developable land in the Honolulu area -- 150,000 acres out of a total of 4 million acres -- has made land costs high. Beachfront property in the Waikiki area costs up to $200 a square foot. It was available for $5 a square foot after World War II.
In a recent report on real estate in Hawaii, the Real Estate Investment Journal (published by Century 21 Real Estate Corp.) reported that a slowdown is anticipated in the the islands as mortgage rates increase. But the long-term prognosis remains strong.
The world has discovered Hawaii and beats an airborne path there. Almost all visitors vow to return and many do. And those with money to support their tastes show a disposition to buy condominiums on the islands.
If the real estate bug bites visitors to Honolulu, you can blame the good weather. But also give a nod to the cab and bus drivers. At least three of them know the names and square-foot prices ofintown condominiums and suburban houses.