I have been asked if it is better to buy an affordable housing unit or a market-priced unit, in consideration of future property values.

Of course, not many people are in a situation where they have a choice.

A market-priced property requires a large cash down payment and income to qualify for a large loan.

A subsidized affordable property is limited to first-time homebuyers, has income limits, and there is usually a lottery to obtain a unit. And the intent is for housing and homeownership, not maximum capital gain. I am using the term "investment" for comparison purpose.

The current real estate market, Kakaako in particular, is presenting much interest and debate, not to mention an opportunity to participate in the current and planned activity. The official definitions of "reserved housing" and "workforce housing" come into play. Reserved housing is what we think of as "affordable units" because of the lower price and restrictions. Market-priced is the majority of real estate available to the general public, and workforce housing is somewhere between the two.

I have come across a reserved-housing unit, after a holding period of 5.8 years, that was recently sold for a profit of $274,570. Now that I have your attention, let us analyze the situation, as it is not necessarily good or bad for the future of housing.

The unit in question is in Keola Lai, a large high-rise condominium in Kakaako completed in 2008. After completion, the project suffered about a 10 percent decline in resale values in the following years, and came back up in the past two years. My files show that 63 of the total 352 units were described as a "gap group" program, with eligibility requirements, income limits, a lottery for prospective purchasers and equity-sharing after a two-year sale restriction period.

For this recent sale, the shared equity amount was $190,000 to the Hawaii Community Development Authority, and the owner kept 31 percent of the profit, $84,500. Comparing recent sales of similar size market units in the same building for the same time period, four market-priced units had an average profit of $45,000.

How did workforce housing compare in other projects? There were four other projects by the same developer as the current 801 South development. Two were built in the 1990s, and it is not fair to compare them since, due to the real estate boom for that time period, they pretty much doubled in price.

There are two other projects, 215 N. King and Country Club Village 6, which have a more similar time period for comparison. Recent resales of original developer units had an average profit of $78,000, after an average holding period of 5.4 years.

For comparison purpose, the annualized percent return per year resulted in 3.9 percent for reserved housing, 3.4 percent for workforce housing, and 1.4 percent for market-priced. This may provide ammunition for both sides of the argument, and it also may be an indication that developers have indeed provided below-market pricing for first-time homebuyers.

In a commentary last year, Sam Aiona pointed out that the pricing for workforce housing is not affordable and buyers can "flip" them almost immediately ("801 South St project is not workforce housing,’" Star-Advertiser, Island Voices, Nov. 27). There has not been a lot of turnover of reserved housing and workforce housing in the other projects; most of the sales may be due to personal reasons.

In a separate commentary, Allan Lock pointed out that due to timing, costs and real estate cycles of about 10 years, the next affordable housing opportunity could be 10-20 years from now ("Now is the best time to build more affordable housing in Kakaako," Star-Advertiser, Island Voices, Nov. 17). This statement can be true for all real estate in general.

For those who are in a position to make a choice in buying their first home, remember to always look at location first, affordability, and your personal utility needs and tastes; future capital gain should not be an immediate consideration.