When people talk about the Hawaii real estate market, the focus is usually local: inventory, pricing, days on market, mortgage rates, and policy. Those are still the core variables. But in the context of Hawai‘i, local real estate does not move in isolation.
The world feels smaller than ever. A conflict thousands of miles away can still shape affordability here in Hawai‘i. We saw that after the invasion of Ukraine. We saw it again last year through tariffs and supply chain disruptions. We certainly lived through it during COVID, when different government responses in the United States and Japan changed travel patterns, buyer behavior, and the flow of capital.
My own business does not look the way it did before Covid. It has become much more U.S.-based, and that shift was not accidental. It was shaped by global events.
That is one reason I pay attention to geopolitics, while I try not to get too emotional about things I cannot control.
How Global Events Reach Real Estate
My academic background in political science trained me to look for the larger transmission belts that connect global events to daily life. In real estate, one of the most important transmission belts is inflation.
propmodo.com
A recent Propmodo article, Middle East Conflict Exposes Real Estate’s Inflation Vulnerability, made this point clearly. The article points out that as tensions in the Middle East escalated, oil prices moved higher and mortgage rates pushed back above 6% after briefly dipping below that level in late February. Propmodo noted that renewed energy shock risk could interrupt the momentum many had expected for the spring housing market.
Why does that matter here in Hawai‘i?
Because when oil and energy prices rise, the cost of moving goods, running businesses, traveling, and simply living goes up. Inflation becomes harder to contain. And when inflation stays stubborn, the Federal Reserve has less room to cut rates. That matters directly to homebuyers, because mortgage affordability depends heavily on where rates go next.
ING’s analysis, War in the Middle East – implications for markets and macro, captured this central bank dilemma well. Their framework is straightforward: energy shocks can keep inflation elevated even while uncertainty slows growth. In other words, global instability can pressure the economy in two directions at the same time, making the rate outlook less predictable.
This is not an abstract issue for Hawai‘i. We are more exposed than many mainland markets to shipping costs, imported goods, and travel-related demand. In a place like Kona or along the Kohala Coast, global developments can reach the housing market through several channels at once.
While Emil and I primarily work with non-financing buyers, interest rates and expected returns are always part of the conversation. When borrowing costs remain elevated, some buyers pull back or recalibrate their expectations. That is true in Hawai‘i just as it is elsewhere.
Why Hawaii Can Still Benefit
But there is another side to the story.
When global uncertainty rises, people do not only rethink portfolios. They also rethink where they want to travel, spend time, and eventually put down roots. I am already hearing more stories of travelers reconsidering destinations they previously viewed as routine. In periods like this, Hawai‘i can become more appealing as an alternative.
After all, Hawai‘i is part of the United States, and for many people it remains one of the most familiar, comfortable, and secure places in the world to visit. That matters more than many analysts admit.
In the Big Island market, many second-home buyers do not begin as buyers. They begin as visitors. A vacation becomes a connection. A connection sometimes becomes a purchase.
That pattern is especially relevant in Kona and along the Kohala Coast, where lifestyle, climate, privacy, and long-term desirability carry unusual weight. Unlike many mainland markets, real estate demand here is not driven only by local employment or commuting logic. It is also shaped by emotion, safety, travel behavior, and long-range lifestyle decisions.
That does not mean every geopolitical event is positive for Hawai‘i real estate. Higher energy costs still hurt affordability. Elevated rates still create pressure. Construction and operating costs can remain stubborn. Those are real constraints.
Keeping a Broader Perspective
But both sides can be true at the same time.
Global instability may delay rate cuts on one hand, while also making Hawai‘i more attractive as a safe and desirable destination on the other. That is why a broader perspective matters.
The local market is always local in its mechanics. But the forces shaping buyer behavior are increasingly global.
For buyers, waiting for a dramatic rate drop may not always be the best strategy. That decline may come more slowly than expected. For sellers, this is a reminder that demand for Hawai‘i can remain resilient even when the broader global picture feels unsettled. Safety, stability, lifestyle, and long-term appeal still matter deeply to people.
I try not to dwell emotionally on the macro picture. But I do believe we need to stay flexible, realistic, and creative. Over the past decade, one lesson has become clearer to me: crisis and opportunity often arrive together, even if they do not look that way at first.
So yes, geopolitics matters, even here in Hawai‘i.
Not because we should panic, but because understanding the bigger picture helps us make better local decisions.