6 Hawaii Properties You Should Reconsider: Investment Risks That Real Estate Experts Want You to Know

Dreaming of owning a piece of paradise in Hawaii? Before you commit your capital, there are several locations on the Big Island and beyond that carry significant investment challenges you need to understand. Real estate professionals have identified specific areas where market conditions, natural hazards, or economic limitations could undermine your long-term returns.

Understanding the Real Estate Landscape in Hawaii

The Hawaiian real estate market presents a paradox: stunning natural beauty coupled with very real constraints for property investors. Some areas on the Big Island to live in have become particularly problematic for buyers, with challenges ranging from geological risks to economic volatility. We consulted with experienced real estate professionals to identify the most problematic markets over the next five years.

Natural Disaster Risk Zones

Pahoa (Big Island) — Average Home Price: $250,000

Among the highest-risk investments, Pahoa stands out due to its location in the Puna District. This area faces persistent lava flow threats, making it fundamentally hazardous regardless of current pricing. Real estate specialists warn that while the entry price point appears attractive, the geological dangers make any potential appreciation meaningless compared to the actual risk of property loss.

“The constant threat of volcanic destruction overshadows any financial benefits,” experts note, emphasizing that this represents a threat to both investment and personal safety that far outweighs the low purchase price.

Hilo (Big Island) — Average Home Price: $450,000

Proximity to active volcanic systems presents ongoing challenges for Hilo property owners. Beyond the direct risk of volcanic damage, insurance costs escalate significantly due to natural disaster exposure. The combination of volcanic hazards and heavy rainfall patterns creates a difficult maintenance environment that depresses property values and deters serious buyers seeking stable, long-term appreciation.

Economically Constrained Markets

Lihue (Kauai) — Average Home Price: $800,000

Lihue exemplifies the problem of remote island economies with limited diversification. The $800,000 average price point reflects scarcity rather than fundamental value, leaving minimal room for appreciation. Employment opportunities remain concentrated in agriculture and tourism sectors, with little diversity for professionals in other industries. This narrow economic base restricts the buyer pool and rental demand.

Waimea (Big Island) — Average Home Price: $550,000

Agricultural zoning restrictions severely limit Waimea’s residential development potential, creating an economically isolated pocket with few diversified employment opportunities. Additionally, the area receives substantial rainfall, which increases maintenance expenses and impacts property desirability. These combined factors—restricted development, limited job diversity, and climate challenges—make Waimea an unattractive long-term investment.

Tourism-Dependent Markets With Infrastructure Gaps

Kailua-Kona (Big Island) — Average Home Price: $700,000

The 2023 fires exposed Hawaii’s dangerous dependency on tourism revenue. Kailua-Kona exemplifies this vulnerability, with an economy almost entirely reliant on visitor spending. When tourism falters, the entire local economy contracts, directly impacting property values and rental income potential.

Adding to these concerns: the cost of living far exceeds most mainland comparables, underdeveloped infrastructure constrains property appreciation, and market analysts note the area has become oversaturated with inventory. The combination creates challenging investment fundamentals despite the destination’s aesthetic appeal.

Wailuku (Maui) — Average Home Price: $650,000

Wailuku faces a distinctive challenge: extreme cost of living coupled with unpredictable tourism-driven property value fluctuations. Infrastructure deficiencies—including aging buildings and deferred maintenance projects—compound the problem by limiting long-term appreciation potential. Property values here swing with tourism cycles rather than following stable market fundamentals, making this an inherently speculative investment.

Key Takeaway for Property Investors

Whether facing geological hazards, economic fragility, tourism dependency, or infrastructure deficiencies, these six locations represent the most problematic areas for real estate investment in Hawaii over the next five years. Understanding these specific risks helps investors redirect capital toward more stable, diversified markets where appreciation potential aligns with manageable risk profiles.