Oahu residents opening their property assessment notices this week are experiencing sticker shock as valuations soar to unprecedented levels. One homeowner reported their property assessment jumping from approximately $1.3 million last year to just under $2.4 million – an 85% increase that exemplifies the dramatic changes hitting the island.
The sharp increases stem from KITV reporting on the city's annual assessment process, where properties are evaluated so the City and County of Honolulu can determine tax assessments for the year. Some properties, including a Hawaii Kai waterfront villa, saw nearly 50% increases in assessed value.
City Points to Uncaptured Improvements
According to KITV, the city often explains dramatic increases by citing previously unrecorded property improvements. One homeowner was told the increase reflected "the number of renovations that had been done since 1965 that had not been captured."
Real estate professional Dan Madden, who tracks the city's assessment patterns, told KITV he has "helped dozens of homeowners appeal their property tax assessments, because they felt they were high." His analysis reveals systemic accuracy issues with the city's process.
Widespread Assessment Inaccuracies
The problems extend beyond isolated cases. According to Honolulu Star-Advertiser analysis, about 20% of properties had assessed values exceeding sale prices by at least 10%, suggesting roughly 60,000 residences were overvalued for tax purposes.
Paradoxically, assessments were also 4% under market value on average, as reported by KITV. This means "the city is giving up about $50 million they were losing because of their inaccurate assessments," according to Madden's calculations.
High Hurdles for Appeals
Property owners hoping to challenge their assessments face significant barriers. As reported by KITV, homeowners "have to prove to the city that the assessment is 10% or more over market value," essentially allowing the city to maintain assessments up to 10% above market rates.
Those wishing to appeal can file between December 15, 2024, and January 15, 2025, according to Hawaii News Now. Appeals must be submitted in person by 4:30 p.m. HST on January 15, 2025, with a $50 deposit required.
Recurring Problem Hits North Shore Hard
This assessment volatility isn't new. In 2022, Hawaii News Now reported that retiree Connie Irwin was shocked when her Haleiwa home assessment jumped from $2.585 million to $3.337 million, with many residents seeing 20 to 30% increases.
The North Shore continues to bear the brunt of assessment swings. As detailed by Honolulu Civil Beat, property assessments on Oahu's North Shore increased by an average of 20.4%, with Honolulu City Council member Matt Weyer noting the changes are particularly challenging in an area with an already tight housing market.
Major Revenue Source for City
Property taxes represent the city's largest revenue source. Last year, according to data from Honolulu Star-Advertiser, the city raised $1.7 billion in property tax revenue, including $985 million from residential properties alone.
The City and County of Honolulu's Real Property Assessment Division is sending more than 300,000 assessment notices for the 2025-2026 tax year, as reported by Hawaii News Now. The Honolulu City Council will set tax rates for each property classification in June 2025, with property owners receiving their first-half tax bills in July.
Long-Term Residents Face Displacement Risk
For many longtime residents, particularly those on fixed incomes, these dramatic assessment increases threaten their ability to remain in their homes. As Council member Weyer told Honolulu Civil Beat, "If it keeps going up at the rate that it is, people will not be able to afford to live here."
The ongoing assessment volatility highlights the challenge of balancing accurate property valuations needed to fund essential city services with the reality that dramatic year-over-year increases can displace long-term residents from their communities. Property owners concerned about their assessments should prepare documentation early, as the appeal window is narrow and the burden of proof falls on homeowners to demonstrate significant overvaluation.
