When most people from the US mainland visit our beautiful state, they experience “sticker shock” on their first grocery store visit. The reason why the cost of living in Hawaii so high is due to three simple reasons: we have some of the highest costs (if not THE highest cost) of land, transportation, and fuel, all of which underlie the cost of nearly everything we buy.
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.
How home expenses affect the cost of living in Hawaii
Of course the main issue factoring into the high cost of living in Hawaii is the cost of housing – owning and renting homes. As of 2016 the median price for a single family home in Hawaii was $720K. Condos were $389K.
Average rent in Hawaii (Oahu) for a studio will vary based on location but expect to pay around $1,000 with Waikiki studios going from $1,000 to about $1,400. Average rent for one bedroom apartments in Hawaii (Honolulu, Oahu) is $1,931. Of course you can find cheaper apartments with more basic accommodations. If you have a family and need more space, the average rent for 2 bedroom apartment in Honolulu is $2,730 for a decent place with enough legroom to move around in.
The reason land and homes are so expensive is simple supply and demand economics. 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. Only a very small percentage of our total land mass is zoned for housing and there are a lot of people (like you!) that want to live here. High demand and limited supply drives prices up.
Want to know the big reason prices are so high?
Demand. There are many people who are willing to pay $700-$1M 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 if you can afford the high cost of living in Hawaii.
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 could spend $1,000 for a studio or maybe a 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.
For most folks living in the US mainland, grocery shopping will be a shocking experience. In 2016 you simply can’t spend less that $50 for even a few items and the regular weekly trips will run you between $150-$200. How much does a gallon of milk cost in Hawaii? Be prepared to pay 6-$8.
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 earn $50,000 per year and survive Hawaii’s high cost of living? Maybe. But, be prepared to be really frugal and live in a manner you may not be accustomed to (slumming).
In the end, living in Hawaii is not about a quantity of life but a quality of life. If you need material things to be happy, you better be rich in Hawaii. If you need natural things to be happy, Hawaii could work for you, but you will be tested.
How much does kilowatt of electricity cost in Hawaii?
Hawaii’s electrical generators are run on oil and coal for the most part. When the price of oil went through the roof – so did electricity in Hawaii. The islands “boast” (if you can call it that!) the highest cost for electricity per unit – in the USA. It’s about 300% of the national average.
As of 2016 the average cost per kilowatt of electricity is 37.34 cents! When you consider that most residences in Hawaii use electric stoves and dryers, not to mention air conditioning, the usage can get quite high. 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 high cost of living in Hawaii
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 by 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?
Hawaii’s high cost of living is formidable. 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?