Did you ever say, “Coulda, Woulda, Shoulda”? when the prices for homes in Kona were skyrocketing in 2021-2022?
Well, the market has softened and now may be the time to look again.
What the Current Inventory Signals for Buyers
More active listings can create real negotiating leverage for many buyers. Those with financing in place now have time to conduct proper inspections, obtain insurance quotes before removing contingencies, and walk away from properties that don’t clear due diligence without losing their only viable option. This shift doesn’t mean the market is soft across all districts: Kona’s most desirable subdivisions still move with purpose. But for a prepared buyer, 2026 is a genuinely workable moment to enter the real estate Hawaii Island market. (We create monthly updates on both our 365HawaiiRE.com blog and our 365 Hawai‘i Real Estate Market YouTube channel)
The Lifestyle Advantages That Keep Demand Strong
Kona offers a combination that other districts can’t replicate: reliable sunshine on the leeward coast, a walkable downtown, marina access, strong restaurant and coffee culture, and a thriving community of retirees and second-home owners who have already built their lives here. Based on firsthand experience with our clients, mainland buyers continue to prioritize Kona because the lifestyle case is backed by real infrastructure. The team at 365Hawaii has built an entire platform around helping buyers understand this lifestyle before they commit, including a 17,000-subscriber YouTube channel covering life on Hawaii Island and a dedicated real estate channel with 5,000 subscribers focused specifically on the Kona market (figures as of August 2026).
Investment Upside: Rental Income and Long-Term Appreciation
Kona condos and acreage carry strong short-term rental appeal. The Kailua-Kona short-term rental market averaged 50.7% occupancy across Airbnb listings in 2026, and legal STR-eligible properties consistently command higher nightly rates than comparable units in Hilo or Puna. Buyers should note that county STR registration is now required under Ordinance 25-50, with fees of $250 for hosted rentals and $500 for unhosted, and a compliance grace period running through December 31, 2026. Not every Kona condo qualifies for short-term rental use: understanding which buildings are zoned for it before you make an offer is non-negotiable, and a local specialist who knows the zoning by complex will save you from a costly mistake.
Big Island Buying Risks Every Serious Buyer Must Understand
Lava Zones, Insurance, and Financing Complications
The USGS has mapped Hawaii Island into nine lava-flow hazard zones, with Zone 1 carrying the highest risk and Zone 9 the lowest. Properties in Zones 1 and 2, concentrated in Puna and parts of the East Rift Zone, face real challenges with insurance availability, premium costs, and lender willingness to finance. In those zones, the primary insurer option is often the Hawaii Property Insurance Association (HPIA), which caps coverage at $450,000, a real constraint on a $500,000-plus purchase. Buyers must confirm the exact lava zone for their specific parcel, not just the neighborhood name, and get insurance quotes in hand before removing contingencies.
Water Access, Title Type, and Permit Records
On rural parcels across the Big Island, water is not guaranteed. Buyers need to verify whether a property is served by county water, a private system, or a catchment setup, and whether any catchment infrastructure was properly permitted. The Hawaii County Department of Water Supply publishes service area maps and permitting guidance that every rural buyer should review before making an offer. Title type is equally critical: fee simple means you own the land outright; leasehold means you own use rights for a fixed term, which complicates financing and limits your resale pool considerably. All improvements, additions, decks, septic systems, and outbuildings, should have closed permits before you close. Unpermitted work creates problems with insurance, future renovations, and resale that are expensive and time-consuming to resolve after the fact.
What Closing on a Big Island Property Actually Costs
Closing Costs and Property Tax Rates in Hawaii County
Plan for 2% to 5% of the purchase price in closing costs, covering lender fees, title and escrow, appraisal, and county recording charges. Hawaii County’s property tax rate for owner-occupants sits at $5.75 per $1,000 of net taxable value for fiscal year 2026-27, roughly 0.575%. That rate is low relative to most mainland markets, but at North Kona price points, the annual tax bill on a $1.2 million home still comes to approximately $6,900. Investors and non-owner-occupied properties face a tiered residential rate starting at $11.10 per $1,000, and vacation rentals are taxed at the hotel and resort rate of $11.55 per $1,000. Both are significant carrying costs that belong in your investment analysis from day one.
Planning Your Total Cash-to-Close Number
On a financed purchase, your cash requirement includes the down payment, total closing costs, two to three months of property tax reserves held by the lender, and the first year of homeowners insurance paid at closing. Buyers who focus only on the down payment routinely underestimate their cash need by tens of thousands of dollars. Getting a full cash-to-close estimate from your lender before you begin touring properties gives you a realistic picture and prevents the friction that comes from discovering a gap late in escrow.
How to Find Current Listings and the Right Kona Specialist
Why Kona Buyers Need a Local Specialist, Not a Generalist
Lava zones, water rights, leasehold structures, short-term rental zoning, and unpermitted additions are not issues a mainland agent or a generalist Hawaii agent encounters regularly. These are Big Island specifics that require local knowledge built over years of actual transactions. The 365Hawaii team has been working the Kailua Kona market for more than a decade, with an audience of over 22,000 followers across YouTube and social channels who rely on us for straight, detailed information about this market. Big Island realtors with that depth of local experience are the most effective protection against the risks that routinely catch outside buyers off guard, whether you’re a retiree, a second-home buyer evaluating rental income potential, or an investor tracking Kona homes for sale.
The Bottom Line on Real Estate Hawaii Island in 2026
Each district on this island serves a distinct buyer profile. Kona stands out on lifestyle, investment liquidity, and community infrastructure. South Kohala and Waimea compete at the top of the price range but with a narrower appeal and longer days on market. Hilo and Puna serve buyers willing to trade resort amenities for more land and a lower entry price. The real estate Hawaii Island market offers genuine diversity, but Kona remains the most well-rounded choice for buyers who want to live here fully rather than simply own here on paper.
The 365Hawaii team is available for direct consultation on any of the districts covered here. Start with the resources above, current Hawaii Island property listings, our YouTube channels, and our active communities, or reach us directly to get the honest, detailed picture that turns interest into a confident purchase.
Julie Ziemelis – Realtor Real/RE-Max
365HawaiiRE.com
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