Examining the high cost of living in Hawaii in 2023
Hawaii is One of the Most Expensive Places to Live in the World, is it Worth it?
Hawaii is so much more than the tourist dream of white sandy beaches and blue waves dotted with surfers. Everyone loves to watch hula dancers swaying to the sounds of the ukulele, and who can forget the green mountains towering over lush valleys streaming with rushing waterfalls? The culture is mesmerizing and the feeling of aloha permeates daily life. Not to mention, there’s the oh so ‘ono food you can treat yourself to everyday.
While this all sounds like paradise, you may wonder, what is the cost of living in Hawaii? Can this beautiful dream become a reality for a future homebuyer?
The truth is, Hawaii is consistently ranked as the most expensive state in the United States due to high housing, energy, transportation and food costs. Don’t be discouraged—that doesn’t mean it’s completely out of reach for a buyer looking for their slice of paradise. Like any other state, there are areas of the islands that are pricier than others. The state also offers tax incentives for homeowners looking to renewable energy sources and food costs can be mitigated if you know where to look. Let’s break down the details of how much it will actually cost you to live in Hawaii.
What is the average cost of living in Hawaii?
A study this year found the “living wage” in Hawaii, meaning a salary that would allow you to feel comfortable is just under $200,00, which is double the national average. Of course, it’s important to keep in mind that “comfort
is subjective. The least expensive state, according to the study, by comparison is Alabama at just $91,655.
Another study by the Missouri Economic Research and Information Center (MERIC) study broke out six categories that contribute to the high cost of living; grocery, housing, utilities, transportation, healthcare and miscellaneous. Hawaii far outpaced its peers in the categories of grocery, housing and utilities, explaining why the cost of living in Hawaii is so high. The median home price in Hawaii is currently $834,583, compared to Washington, DC at $627,314 and California at $728,134. In terms of groceries, a gallon of milk in Hawaii will cost you more than $5, compared to $2.76 in California. Household utilities in Hawaii are also the highest in the nation averaging $1,000 to $1,200 per month – the average energy bill is $393.87, compared to the national average of $146.80.
Below are some breakdowns of a few states so you can see how Hawaii differs from other popular places to move.
Cost of living in Hawaii versus California, Texas, New York and Colorado:
Are there more affordable neighborhoods or areas in Hawaii?
Honolulu, on the island of Oahu, is regarded as extremely pricy. To start out, rent is considerably more expensive than the national average. According to a recent study by U.S. News, Honolulu is the seventh expensive city to live in nationwide. The cost of living in Honolulu for a family of four is about $7,980 a month, while a single adult will have to pay on average $2,457. Housing in Honolulu will set the single adult back about $1,331 a month, while food will cost around $556.76 for the month.
The good news is that Honolulu is spread out. The County of Honolulu actually covers the entire island of Oahu. That means even though the average price seems a little daunting, you can always find a more affordable place to live. Each neighborhood on Oahu is incredibly diverse with restaurants, views and beaches. You can find different combinations of what you are looking for, while still sticking to a budget. For example, the town of Kailua has a median home sale price of just over $1.3 million. Downtown Honolulu’s median home sold for just half of that at $370,000. Just outside downtown Honolulu, the neighborhood of Aiea, with its sweeping views of Pearl Harbor, has an average list price of $665,000.
Homes in the beautiful windward town of Hauula are selling for $990,000, while the median home value in the North Shore town of Haleiwa is at $1.5 million. Both are beachfront locations with stunning views. While Hauula is a little more rural, it is minutes away from the Polynesian Cultural Center, the world renowned food trucks of the North Shore, and the famed Kualoa Ranch, a 4,000 acre nature preserve and cattle ranch where they filmed dozens of movies including Jurassic Park and Jumanji.
You could also live away from the more populated island of Oahu and break out to the neighboring islands. While Maui has a fairly high cost of living with housing prices topping those of Oahu, the Big Island of Hawaii has more affordable options with a median house value of just $550,000. Homes in the historic and charming town of Hilo have an average list price of an affordable $463,000. Lanai homes are at $850,000 for its median home price.
Median Home Price for Hawaii’s Islands
Big Island (Hawaii):$550,000
Breaking down some other costs:
Beyond housing costs there is the price of groceries, utilities, and even taxes and in the rankings of those categories, Hawaii takes the cake for winning the highest in the county.
Why is food so expensive in Hawaii?
I heard a joke from a Marine biologist while watching whales this winter. He said, “Do you know why whales come here to Hawaii during the winter, but they never eat?” I played along and asked him, “Why?” He replied, “They can't afford it.”
It’s scientifically true, as humpback whales don’t eat off of Hawaii’s shores. But Hawaii’s food prices can seem pretty outrageous. A 2020 University of Hawaii study estimates food and goods in Hawaii are 11% higher than average on the mainland. Other estimates from the MERIC study show groceries can be as much as 64% higher in Hawaii than the average in the mainland US.
Economists blame Hawaii’s high-priced food on a combination of factors. 85% to 90% of the food in the state are imported. In addition, shipping containers of food for 2,500 miles does lead to spoiled food, especially when it arrives in a humid climate like Hawaii. One-third of all the food that arrives in Hawaii’s ports are thrown away, according to the Hawaii Agricultural Foundation. Due to the waste of potential products, retailers have to take into consideration that a certain portion of their inventory will arrive unsellable, which factors into the final price.
Economists also point out that because Hawaii is remote, competition between retailers is low, leading to little incentive for stores to drop their prices. Retailers also face high real estate prices and expensive energy costs, which means that at the end of the day, the consumer will take the hit.
The reality is that on average, you are going to be spending more on all food and goods in Hawaii, but there are ways to avoid $20 hotel Mai Tais and $100 dinners. Costco has locations on all the major Hawaiian islands, which make wholesale purchases easy no matter where you are. Local farmers markets are great places to find affordable fresh produce, which will last a whole lot longer in your fridge compared to goods that have been in a container for thousands of miles.
Opting for fast casual dining spots can cut down your eating out budget. Downtown’s Kakaako area is an epicenter for new trendy restaurants popping up with affordable food options. Hawaii’s plate lunches are another thrifty option. An average plate lunch in Hawaii costs around $10 or less. For that price, you will get a massive plate of food including a protein like katsu chicken, mixed BBQ, kalua pork, or teriyaki beef or chicken with a big scoop or two of rice and mac salad. Poke counters offer some more affordable eats. For around $10, you can order fresh local raw fish marinated in a variety of flavors including shoyu, limu, or spicy tobiko and mayo served with steaming rice. The possibilities are endless.
Hawaii's High Energy Costs Explained
Hawaii’s energy costs are also the highest in the country and it’s not just because people are cranking up the air conditioning. Hawaii homeowners actually use the least amount of electricity in the country, yet our bills tower over every other state. The average electric bill in Hawaii comes in at $203, which is almost 90% higher than the national average. If you boil it down to the base cost, the price per kilowatt hour (kWh) in Hawaii as of February 2023 was 44.24 cents per kWh, compared to the national average of 15.96 cents per kWh. The next closest state was Connecticut at 34.32 cents per kWH. North Dakota homeowners have the cheapest rates at just 9.97 cents per kWh.
Why is the cost for energy so high? The vast majority of electricity generated in Hawaii, about 63.2%, comes from oil that is shipped in. Coal is burned on the island, but that share is lower at only 12% of electricity generated. Because of the reliance on oil, the price of energy in Hawaii mirrors that of oil prices, according to a study by the Economic Research Organization at the University of Hawaii (UHERO).
Hawaii homeowners have been proactive about their energy bills by looking at solar energy options. Hawaiian Electric reported this year that in 2022, the percentage of power generation coming from renewable sources are at 32%, with a total of 4.2 million solar panels currently in use. The company reports that 37% of single-family homes now have solar on their roofs. By adding solar, you can drastically cut down on your power bill, but UHERO economists also say that in Hawaii with state tax incentives and lower bills you can break even with the investment in just 2.5 years.
The Hidden Costs of Living in Hawaii
There are some hidden costs that contribute to a high cost of living in Hawaii. While household incomes are on par with some of the more expensive states to live in, taxes on income in Hawaii are some of the highest in the country. The median household income in Hawaii is $88,005 with an average tax rate of 11.67% and a marginal tax rate of 22%.
Transportation costs, high gas prices and parking also add to the cost of living. Current gas prices on the mainland average $3.53, while in Hawaii they are $4.78. Daily parking rates top even those of New York city’s midtown at $30 a day.
Is the High Cost of Living in Hawaii Worth it?
Despite the hidden costs and the high cost of living in general, Hawaii is consistently rated as the happiest state, the state with the highest wellbeing, and one of the healthiest states in the country.
The beach is your backyard no matter where you are on the islands and being active in the water or off is imbued in the culture of Hawaii. All beaches are public and some are even national or state parks. A day of snorkeling could mean a run in with a honu (sea turtle) or schools of brightly colored fish. Hiking trails abound on all islands with a variety of both easy and difficult routes. The majority of outdoor activities in Hawaii can be enjoyed with little to no expense.
If you want a sneak peek into why the cost of living is still worth it, check out the Instagram hashtag #luckywelivehawaii, which has more than 2 million posts. It’s a visual testament to how people who grew up, have lived for decades, or just moved to Hawaii love the islands with their whole hearts.
Top 5 States with the Lowest Tax Burden
- Alaska: 5.06%
- Delaware: 6.12%
- New Hampshire: 6.14%
- Tennessee: 6.22%
- Florida: 6.33%
Top 5 States with the Highest Tax Burden
- New York: 12.47%
- Hawaii: 12.31%
- Maine: 11.14%
- Vermont: 10.28%
- Connecticut: 9.83%
What do the Locals Think?
Have a look at what local vlogger @HBGOODIE on YouTube thinks about the cost of living in Hawaii.
What do the Locals Think?
Have a look at what local vlogger @HBGOODIE on youtube thinking about the cost of living in Hawaii.