Kaua‘i residents waiting to buy affordable housing units will have to wait a lot longer, thanks to more home purchases by Mainland buyers and lack of such units under construction, says a Honolulu research and survey specialist. “Affordability is at
Kaua‘i residents waiting to buy affordable housing units will have to wait a lot longer, thanks to more home purchases by Mainland buyers and lack of such units under construction, says a Honolulu research and survey specialist.
“Affordability is at an historic low,” James Dannemiller, executive vice president of SMS Research and Marketing Services, said after a Wednesday meeting of the Kaua‘i County Council. ”There are more people wanting to buy now than there were in 2003.” At that time, there was a near-zero inventory of affordable housing units.
And those types of units aren’t likely to be built in the near future because the market demand is for expensive homes, Dannemiller said.
Councilwoman Shaylene Iseri-Carvalho said the information he presented will play an important role in creating an ordinance establishing an affordable housing policy for developers.
Councilman Ron Kouchi said some of the data may not be relevant at this point, as the county can only assess affordable housing requirements during the zoning of new lands, and, as far as he knew, no such action has occurred in the past five years.
“I am of the impression that the answer to (that question) is zero,” Kouchi said.
Without incentives offered by government, Kouchi said developers will continue to build what is in demand: high-priced housing.
“There needs to be an incentive to make (the building of affordable housing units) happen, and so I don’t know how useful the data is,” Kouchi said.
While noting that his company had difficulty culling information from county records, Dannemiller said fewer developers asked for rezoning of lands beginning in 1985.
Dannemiller didn’t debate the value of the data but said corrected market conditions may spur developers to build more affordable housing units in the future.
Ken Rainforth, the county’s housing expert, said options do exist, including formulating the county’s housing policy, initiating land trust projects and establishing affordable housing requirements during the subdivision and building permit process for projects undertaken by developers.
While Mainland communities commonly use such processes for the building of affordable housing units, Hawai‘i has yet to employ them on any grand scale, although Maui County has done so in some cases, Rainforth said.
Dannemiller said developers and government agencies built affordable housing units throughout the state in the 1980s and early 1990s, when Japanese buyers invested heavily in high-priced properties in Hawai‘i.
But when Japan’s economy fell flat, the demand for that type of housing fell, too, triggering the demand for the building of affordable housing units, he said.
With low interest rates and a desire by Mainland buyers to invest in Hawai‘i today, developers have resumed building the same type of high-price homes sought by the Japanese nearly two decades ago, he said.
“With more and more Mainland people coming to buy, the (house) prices may stay the same,” he said. “And if the developers built at the same pace, the prices should stay the same statewide.”
Heavy taxing of high-priced homes is one way to discourage the building of such homes, but even that tactic may not work, Dannemiller added.
Bynum said he would favor language in the housing policy that would require developers to build affordable housing for “working-class people.”
But the opportunity to become homeowners today seems to have passed them by due to inflated home prices, he said. While buyers could have relied on family or wages from a second job to buy a home in the past, buyers today are looking at homes that are up to $300,000 beyond what they could afford, Bynum said.
But options exist that can be helpful, he added, as the state and county are working on a process to build affordable housing on state lands on Kaua‘i, including a parcel by Mahelona Hospital in Kapa‘a.
Dannemiller said there exists a current need for 1,600 affordable units on Kaua‘i, and of that number, 900 should be for households that make 80 percent of the county’s median income of $60,000. He said the other 700 units should be for households between 80 and 140 percent of the median income.
Those in the latter category could be able to buy homes in the $300,000 range, Rainforth said.
Councilman Jay Furfaro emphasized that there’s a need for homes selling at $360,000. If a buyer can pay a 20 percent deposit, the county could help with third-party financing, which will allow government to use the unit for affordable housing purposes for a long time.
Kaua‘i resident Barbara Elmore objected to the government offering such help, saying the county “should not be in the business of making home loans.”
Bynum, who didn’t comment on that issue, said the lack of affordable housing has created a crisis on Kaua‘i that is bringing an increasing number of non-Kauaians in.
Dannemiller said Kaua‘i distinguished itself from the other counties by having the largest number of homes — 11 percent — owned by people who are not full-time residents. And according to a survey of 1,041 Kaua‘i households that his company conducted in September and October last year, the lack of affordable housing was identified as a reason to leave the island.
• Lester Chang, staff writer, can be reached at 245-3681 (ext. 225) or lchang@kauaipubco.com.
