‘Reasonable’ condo prices affirmed

Detractors have called it unaffordable housing, but a planned second tower of the 801 South St. condominium project in Kakaako has attracted an overwhelming number of buyers with moderate incomes.

The project’s developer, Downtown Capital LLC, said that about 85 percent of the units in the tower known as Building B are being bought by local residents who meet moderate-income qualifications set by a state agency that approved 801 South in December under a workforce housing incentive program.

To date, buyers meeting income limits have signed purchase contracts for 347 of the tower’s 410 units, according to Downtown Capital, a firm led by local affordable-housing developer Marshall Hung.

The results validate a claim by the developer that prices in Building B, which range from $352,000 to $699,000 for one- to three-bedroom units, largely are within the reach of moderate-income residents.

Some opponents of the project claimed that most units weren’t affordable to households earning no more than 140 percent of Honolulu’s median annual income, which equates to $84,574 for a single person, $96,656 for a couple or $120,820 for a family of four.

Ryan Sasaki, a single 25-year-old high school math teacher, got some financial help from his grandparents to buy a two-bedroom unit in Building B so he can become a first-time homeowner.

"I was looking for a place in town,"said Sasaki, who rents an apartment in Makiki. "The prices are reasonable."

Jason Nishikawa, 801 South’s lead broker and a vice president of real estate firm Marcus and Associates, said all buyers in Building B are local residents who intend to live in the building, and most are first-time homebuyers.

Downtown Capital began sales efforts March 15 and said about 600 individuals and families with qualified incomes submitted applications that were selected through lotteries on March 29 and April 12 to determine the order in which prospective buyers could select a unit and sign a purchase contract.

Nishikawa said about 30 units, in addition to the 347 under contract, have been reserved by income-qualified buyers who are expected to sign contracts.

That leaves about 30 units that are unreserved by folks meeting income limits and will soon be made available to a list of interested buyers who applied but didn’t meet the income restriction.

Under the workforce housing program rules of the Hawaii Community Development Authority, at least 75 percent of units must be "set aside for purchase" by buyers under the income limit. The definition of "set aside" is not spelled out, allowing developers to offer 75 percent of units to lower-income buyers for only a limited period of time and then open up the sales to any buyer. However, Downtown Capital agreed to sell at least 75 percent of units in Building B to buyers meeting the income restriction, regardless of how long it takes.

In the first phase of 801 South, Downtown Capital offered studios to two-bedroom units priced between $250,000 and $500,000 to income-qualified buyers exclusively for 60 days. That limited-time preference resulted in about 65 percent of Building A units — roughly 400 out of 635 — being sold to buyers under the income ceiling.

A bigger ratio of moderate-income buyers for Building B where unit sizes and prices are higher than Building A was a great response, according to Nishikawa.

Hung said in a statement that Building B sales demonstrate that significant unmet demand exists for such workforce housing.

"There is a tremendous shortfall in the supply of housing on Oahu that’s affordable to middle-class families,"he said.