The high cost of housing and construction is due to the following factors:
1. High labor costs, partially because of a lack of available skilled employees, exacerbated by socialistic mandated medical insurance requirements for all employees working 20 or more hours per week.
2. Almost all construction materials have to be shipped from the mainland or Asia, not to mention the pyramiding effect of the 4.16% excise tax on each transaction - wholesaler to retailer to end user.
3. Lack of buildable, inexpensive land ($100K for a building lot, due to restrictive land use zoning. The Hawaii government still thinks that agriculture can be economically viable here, but costs of labor and shipping to the mainland are too high. Nevertheless, most of the land here is zoned for agricultural uses, and cannot be split into small house-sized parcels.
4. Enviro-whackos and anti-development politics prevent rezoning for high-density residential uses. Everyone wants low-cost housing, but nobody wants apartment buildings.
All of the above factors limit the supply of available housing for the locals. And when people from the mainland come in and want to buy 2nd or 3rd homes, or like me, semi-retire here, the dollar-driven demand drives the costs out of sight. My condo in Princeville is worth something like $600 to $700 per square foot in the present bubble/cycle - paid about $175 for it. I think it's time to cash in.
In Hawaii as you know you have to get a permit before you can dig a hole in your own backyard...stuff like that extends construction times out for months on end...
That good old boy network is set up so there is a steady flow of business for the local contractors...