It is estimated that – in general – things cost about 30% more on Hawaii than they do on the mainland. Shipping the food over the ocean in boats (or planes) is one reason, but another is that the grocers have to maintain huge stocks of food in warehouses to keep food on the shelves all the time, especially in the case of some emergency.
This requires a lot more money to pay the rent and people for running the warehouses.
Another reason is Hawaii’s 4% excise tax. Which is added to just about everything business related.
Of course the main issue factoring into the high cost of living in Hawaii is the cost of housing – owning and renting homes. In 2006 the average single family home in Hawaii was $625K. Condos were $309K.
Rent on Oahu for a studio is very high – $700+. One bedroom apartments in Waikiki start at 900+ for even the most basic accommodations. If you have a family, you’re looking at $2,000+ for a decent place with enough legroom to move around in.
The reason land and homes are so expensive is because land is not a renewable resource. What is here on the islands is all you have to work with. With the rugged terrain there is a lot of land it isn’t possible to build on. Most of the land in Hawaii is prohibited from being built on.
Want to know the big reason prices are so high?
Demand. There are many people who are willing to pay $600-900K USD for a regular sized home on Oahu or Maui. In most cases they are moving from Japan or California and have sold their home there – and received about the same amount. It’s a rather affordable move for them.
The number of people that would answer ‘yes’ if you asked them, ‘if you could, would you live in Hawaii?’ is astounding.
I don’t know many that would answer ‘no’ – do you?
Why is the demand so high for housing and rental units in Hawaii?
Well, there is a whole lot to like about the islands! Personally I rate it as one of the two top places to live in the world. Krabi, Thailand is one, and somewhere on Maui is another one. It’s a tough call to label one as better than the other – there are vast differences between them. Hawaii is, without a doubt, the best place to live in the USA. Hands down – the winner!
Hawaii has clean air, clean water, what I’d call perfect weather, a wide range of environments – forest, desert, beaches, a great group of people, great restaurants, and decent nightlife.
If you’ve already lived in Tokyo, Japan; Seoul, Korea; Hollywood, California, or New York City, New York you’ll think Hawaii cost of living is reasonable and won’t be affected by it. If you’ve lived anywhere else you will probably become very cost-conscious once you start living on Oahu, Maui, Kauai, or Big Island.
For two people living in Waikiki or downtown Honolulu on Oahu you would spend $850-1000 for a studio or sketchy 1-bedroom. Sketchy is an Aussie word I’ve been using for a little while, hope it doesn’t put you off. It means same thing as “dodgy”.
Car insurance, health insurance, fire insurance, every insurance, is more expensive in Hawaii. If you ride a motorcycle, be prepared to sign away a good portion of your monthly income to insurance. The whole living in Hawaii experience is outrageously expensive and it may go against your common sense to live here – but, you may not be able to resist!
Many Hawaii residents have 2 and 3 jobs to keep up with expenses. It’s safe to say you’ll meet more people working 2-3 jobs in Hawaii than you have ever met anywhere else in your life.
I was grocery shopping on Oahu the first time after I returned to Hawaii. To my astonishment, everything in my cart was over $5. Everything. I had trouble finding something to buy that was under $5. I had to actually look.
Add to that the cost of gas, renting apartments that are very small and with pay for parking issues all over Waikiki if that’s where you plan to stay, and it gets expensive. Auto and health insurance is expensive too. Can you live in Hawaii making $25,000 per year? Yes, probably. But, be prepared to be really frugal and live in a manner you may not be accustomed to (slumming).
High Electricity Costs
Hawaii’s electrical generators are run on petroleum for the most part. When the price of gas went through the roof – so did electricity in Hawaii. The islands now boast the highest cost for electricity per unit – in the USA. It’s about 300% of the national average.
As of 9/2008 Oahu residents were paying 32.5 cents per kilowatt-hour! Your average bill for a home will be over $200 and probably more like $300.
Water, Gas, Gasoline, Sewage, Garbage are all very expensive.
Going out to movies (cinema) or other entertainment is not any more expensive than in most big cities, for the most part. I think most people on a budget rent movies from Netflix or some other online provider. Amazon and Apple’s iTunes store have downloadable movies you can buy or rent for a fee.
There are activities at the beach – sometimes “Movies on the Beach” in different locations. Waikiki had a long-running activity like this for a long time, then it went away, then it came back. Not sure what the status will be by the time you arrive, but look for it – it’s fun to watch a movie while sitting on a blanket on the sand of Waikiki Beach.
Island Fever and Hawaii’s High Cost of Living
One thing that few visitors or residents initially take into account is that there is a cost associated with being stuck on an island of 40×60 miles for a long period of time. Many folks feel the need to travel somewhere. Anywhere! They feel trapped or held-in, claustrophobic to be living in a place where you can’t drive for 100 miles straight in any direction.
Living on the mainland USA one never experiences this, or even considers it. Arriving on Oahu, or worst, Kauai or Maui, you are forced to face it. Once you have driven to your heart’s content and explored all that there is to explore you’re going to start thinking about a trip away from the islands. Where to? California? Tonga? Fijian islands? Tahiti? Australia?
Everything is far away and it costs a lot of money to go anywhere. Of course you can start with the other islands, and there is a lot of driving to be had when you combine them all together. Still, you’re going to want to go elsewhere after some amount of time. Maybe you last a year. Two? You’ll have to have some sort of extra savings for long trips. Don’t think you won’t – nearly everyone has to “escape” at least temporarily, every so often.
Living Like a Local?
Is it possible to live like a Hawaiian local on the islands and save money? Sure it is. Start asking people where they go to save money on food, snacks, fruit and veggies, shirts, shorts, surfboards, cars, and everything you spend money on. There are plenty of very poor people living on the islands, and there are stores that serve them. There are flea markets on the islands during the weekends. There are local produce markets in hideaway spots on all the islands where you can get freshly grown vegetables and fruits. Maui’s upcountry has an incredible selection of delicious vegetables that is worth the drive to go get. You can often just pick produce directly off the farms for a fee. How cool is that?
Before moving to live in Hawaii do be certain to give budget your highest consideration. Lack of money is one of the biggest reasons for the high numbers of people that bail out of living on the islands within the first year or so. I don’t foresee, and I don’t think anyone is predicting dramatic (or any) drop in prices for housing, utilities, food, or anything else in Hawaii. Hawaii is one of the most perfect places to live on the face of the earth. As more and more people figure that out, there will only be more people trying to do what it takes to get there. Those that can afford to move will be the ones that make it work for themselves and their families.
Will you make it work for you?