Buying a home in Hawaii is an exciting but complex process. While most buyers are prepared for the sticker price, many are caught off guard by the hidden costs that come with homeownership in the Aloha State. Here are some expenses to factor into your budget before making the leap.
1. Higher Closing Costs
Hawaii’s closing costs can be higher than the national average due to state-specific taxes and fees. These can include:
- General Excise Tax (GET): Unlike most states that charge sales tax, Hawaii imposes GET on nearly all business transactions, which can affect service fees associated with your home purchase.
- Title Insurance & Escrow Fees: These costs are generally split between buyer and seller, but they can add up quickly.
- Recording Fees & Notary Fees: These vary depending on the county and complexity of the transaction.
2. Hawaii’s Conveyance Tax
The state imposes a Conveyance Tax on real estate transactions, paid by the seller in most cases. However, in competitive markets, buyers may be asked to cover part of this tax.
3. Homeowners Association (HOA) Fees
Many properties, especially condos and homes in planned communities, come with HOA fees that can range from $100 to over $1,000 per month. These fees cover amenities like security, landscaping, and maintenance but can significantly impact your monthly budget.
4. Hurricane & Flood Insurance
Hawaii is prone to hurricanes and flooding, and standard homeowner’s insurance does not cover these risks. Most lenders require additional coverage, which can be expensive, depending on your location.
5. Property Taxes & Special Assessments
While Hawaii has relatively low property tax rates compared to the mainland, certain areas and condominium associations may impose special assessments for repairs or upgrades, such as seawall reinforcement or community-wide improvements.
6. Utility Costs & Solar Considerations
Hawaii has some of the highest electricity rates in the nation. If your home doesn’t have solar panels, your electric bill can be significantly higher than what you might be used to. Some communities also have mandatory solar agreements that may require you to use specific providers.
7. Cost of Living Adjustments
Beyond your mortgage, everyday expenses in Hawaii—such as groceries, gas, and maintenance services—are higher than the mainland due to shipping costs and limited availability.
8. Maintenance Costs for Island Living
The tropical climate and salty ocean air can lead to accelerated wear and tear on homes. Roof replacements, termite treatments, and mold prevention are common expenses homeowners must budget for.
9. Leasehold vs. Fee Simple Properties
Some homes in Hawaii are leasehold properties, meaning you don’t own the land, only the structure. Buyers need to be aware of lease rent payments and the lease expiration date to avoid financial surprises.
10. Commuting & Parking Expenses
If you’re purchasing a home outside of Honolulu but work in the city, fuel costs and traffic congestion can add up. Some condo buildings also charge separate parking fees that aren’t included in HOA dues.
Final Thoughts
Understanding these hidden costs can help you make an informed decision when buying a home in Hawaii. It’s essential to work with an experienced real estate agent who can help navigate these expenses and ensure you’re financially prepared for homeownership in paradise.
Have questions about buying a home in Hawaii? Reach out—I’d love to help you find the right home while staying within your budget!