The History of Hawai‘i: The Real Estate Buying Mania of the 1980s

The History of Hawai‘i From Our Files: The Real Estate Buying Mania of the 1980s

HONOLULU Magazine emerged from predecessor Paradise of the Pacific, which began in 1888, fulfilling a commission by King Kalākaua. That makes this the oldest continuously published magazine west of the Mississippi, with an enviable archive worth diving into each month. Here’s a look back at May 1987.

After the real estate buying mania of the late 1970s spurred a recession in the early ’80s, the economy’s on the rise again, thanks to declining interest rates and “the confluence of stable prices, growing incomes and favorable mortgage rates,” writes Mike Sklarz, the director of research at Locations Inc. “Home buyers are now basing their purchase decisions primarily on the utility and attractiveness of a single-family home or condominium rather than on how much more the next buyer may be willing to pay.” Plus, there isn’t much construction going on, leading to a single-family housing shortage for Baby Boomers who are now settling down with families—and willing to spend above asking price so they don’t miss out.

“The nationwide owner-occupant rate is approximately 64 percent of all housing units; in Hawaii, it’s less than 50 percent,” Sklarz continues. “Because of this circumstance, until recently new home buyers were able to tap an unusually large pool of investor-owned units for purchase.” These days, the nationwide percentage is just about the same as it was back then: 64.4%, according to census numbers for 2015–2019. But in Hawai‘i, it’s increased to 60.3%.

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Another interesting shift in local real estate has to do with the influx of Japanese investors: “Between 1983 and 1986, the Japanese have purchased no less than 14 hotels, five golf courses, three office buildings and 13 large land parcels on Oahu and the Neighbor Islands. Barely a week goes by without a story of another major Japanese purchase,” such as the Hyatt Regency Waikīkī, Holiday Inn Waikīkī, Hyatt Regency Maui, Maui Marriott and the Hawaiian Regent. “They control nearly two-thirds of all the hotel units in Waikiki and almost one-fourth of all hotel units in the state.”

It’s not just corporations, but individual investors—the most notorious being Genshiro Kawamoto—who began buying property in Honolulu during this time. According to our January 2014 issue, Kawamoto bought 78 homes and apartments in the last four months of 1987 and owned more than 170 properties by the end of 1988, including the former Portlock estate of Henry Kaiser. Kawamoto paid $42.5 million for it—at the time the highest price paid for a house in the U.S. Pax Realty says it sold 47 lots on Hawai‘i Loa Ridge in one week, and then-Mayor Frank Fasi proposed a bill banning foreign ownership of residential properties because of the crazy inflation. In 2020, the state Senate unanimously passed a bill to that effect, but it died in the House.

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