With its diverse culture and beautiful beaches, Hawaii definitely has charm. But despite its sunny appeal, a lot of the Aloha State’s residents decided to say goodbye last year.
The state lost about 8,609 people from July 2019 to July 2020, according to recent data from the U.S. Census Bureau. That’s the third-highest rate of population decline per capita across the United States, the Grassroot Institute of Hawaii points out, and quintuple the number that the Economic Research Organization at the University of Hawaii (UHERO) had previously projected.
“Even though people might love living [in Hawaii], having 8,000 residents leave means it’s becoming too expensive for many to stay,” says Ben Reynolds, chief executive officer of Sure Dividend.
Hawaii’s housing costs: Apartments and homes
A major reason people leave Hawaii is because of the high cost of housing. It’s one of the priciest places in the country to settle down, regardless of whether you rent an apartment or buy a home.
Renting in Hawaii is much cheaper than buying. The national average rent for a one-bedroom apartment is $1,610 per month, according to Apartment Guide’s April 2021 rent report. In Honolulu, Hawaii’s capital and most populous city, the average rent for an apartment of any size is $1,725, says RentCafé.
Kailua-Kona, on the Big Island, is about the same, with an average one-bedroom rent of $1,700, according to Zumper. Cheaper digs can be found in Kahului, Maui’s most populous city, where Zumper says the average one-bedroom rents for about $1,300.
Homeownership in Hawaii is very expensive: The typical home value statewide is about $708,300, according to Zillow, way above the national figure of $281,400.
“You can still find homes averaging at $350,000,” says Reynolds, but “it might mean not living in popular areas.”
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Taxes and the cost of living in Hawaii
Hawaiians are fortunate when it comes to property taxes. They pay an effective property tax rate of just 0.28%, the lowest in the country, per WalletHub. Over 20 states pay 1% or more. New Jersey has the highest rate at 2.49%.
When taking income and sales tax into view, though, Hawaii residents pay a lot. WalletHub reports that the island’s 12.19% total tax burden is the second-highest in the country, behind New York. Alaska, by contrast, has the lowest rate, at 5.1%.
Everyday life can be quite expensive in the Aloha State, whose geographic isolation makes it heavily reliant on imported food and fuel. In Honolulu, the cost of living is 88% higher than the national average, notes PayScale. Utilities cost 89% more than average, groceries 62%, and transportation 35%.
“Always think of the costs of transportation, utilities, and state taxes before moving,” Reynolds notes. “Don’t just give in to [the] impulse and move without considering ways” to pay for it.
Why Hawaii’s population is decreasing
A population decrease is more than people leaving: It also includes “natural change,” which accounts for births and deaths and migration from foreign countries, says the Economic Research Organization at the University of Hawaii. But neither of these factors have contributed to what’s now the fourth straight year of negative growth for the state.
Between July 2018 and July 2019, Hawaii’s population decreased by 4,721. While the cycle of birth and death added a net 4,130 new inhabitants and foreign migration added 5,014, a staggering 13,817 more residents moved to the U.S. mainland than the other way around. (Note that the figures do not add up exactly, says UHERO, “due to a residual that cannot be attributed to any specific demographic category.”)
Even though people might love living there, having 8,000 residents leave means it’s becoming too expensive for many to stay.
Ben Reynolds
SURE DIVIDEND
Hawaii’s tourism-reliant economy was rocked by the pandemic: The unemployment rate soared from 3.9% in 2019 to 12.8% in 2020, according to U.S. News and World Report. That exacerbated the state’s existing cost-of-living issues.
“This isn’t a new problem for our state,” Keli’i Akina, president and chief executive officer of the Grassroot Institute, said in a statement. “For some time now, our neighbors, family, and friends have been moving away to states such as Idaho, Arizona, Nevada, Utah, and Texas, which have lower taxes and fewer regulations, and offer residents more freedoms and opportunities. It’s a matter of the state’s high cost of living, and better job opportunities in other states.”
Hawaii can be a great place to live — but budget carefully
As full-time remote work becomes more of an option, Hawaii is hoping to lure professionals who want to combine Zoom meetings with sun and sand. During the pandemic, the state partnered with local leaders to launch Movers and Shakas, a temporary residency program that paid for 50 working professionals to fly to the state and work remotely. The program also offered discounts on accommodations, food, and co-working spaces, in exchange for some local volunteer work by its participants.
“This is the opportunity for someone interested in learning what makes Hawaii special, and enabling them to participate in that firsthand,” data analytics CEO and Movers & Shakas leader Richard Matsui told CNBC last year.
As the Movers and Shakas effort underlines, if you’re moving to Hawaii, it’s best to have work already lined up. The state isn’t getting any cheaper: Home values have gone up 7% in the past year and could increase more, according to Zillow.
If your heart is set on a move to Hawaii, experts discourage tapping into your retirement money or your emergency fund to relocate, since that could hurt you down the line if you lose an existing job, can’t find a new job locally, or need to make expensive repairs to a home. Instead, focus on saving steadily.
“Cut down your discretionary expenses to save money for [a] down payment and emergency funds,” says Reynolds. “Moving might mean living more minimally, so limiting your discretionary spending beforehand might help the transition to a higher cost of living.”
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