Hawaii needs up to 66,000 homes if it expects to satisfy demand for housing over the next decade.
That’s the conclusion of a new report, "Measuring Housing Demand in Hawaii, 2015-2025," by the state Department of Business, Economic Development and Tourism.
The study — which projects a demand of between 64,700 and 66,000 additional housing units over the next 10 years, with more than 25,000 needed on Oahu alone — describes an unbalanced housing market with a constrained housing supply on one hand and increasing demand on the other.
Housing prices reached new all-time highs in 2014, surpassing the previous records set in 2005, according to the report. In theory, high housing prices should boost residential construction, but that’s not what’s happening, the study said.
State Economist Eugene Tian said authorized building permits actually declined in 2014 and have averaged only about 3,000 a year since the economy tanked in 2008. That’s about half of what they should be, he said.
"Our housing supply has not kept up with the demand," said DBEDT Director Luis P. Salaveria in a statement. "We need to find solutions to increase Hawaii’s supply of housing so residents at all income levels can afford a home."
While an analysis of the housing supply was not included in the new report, it will be found in a Hawaii Housing Finance and Development Corp. study expected later this year, Tian said.
Hawaii real estate analyst Ricky Cassiday said the report’s findings are hardly surprising. In fact, Cassiday conducted his own rental housing study for the state six months ago that indicated similar results.
"This is the most overstudied subject in the history of mankind," Cassiday said by telephone. "You don’t need a study to know what the numbers are. It’s time to stop studying housing and start doing housing."
Agreeing was Kevin Carney, vice president of EAH Housing in Honolulu, a company that builds affordable rental projects. EAH Housing has 18 properties on three islands — Oahu, Maui and Kauai — and there are waiting lists for many wanting rental homes.
Carney said his company wants to build more projects but that there just isn’t enough state and federal tax credit money to support the demand for affordable housing.
"We’re just chipping away," Carney said of the housing shortage. "There’s always going to be a need for affordable housing, but there’s no way we’re going to catch up on the deficit."
Most of the income growth is taking place among those in the state’s top 1 percent of income distribution, according to the report. But incomes have not been growing as fast as housing prices, making it harder for residents in middle- and lower-income groups to afford to buy real estate in Hawaii and to rent.
Bob Bruhl, president of D.R. Horton Hawaii, said the city has a great opportunity to cut into its housing deficit by approving Horton-Schuler’s 11,750-home Hoopili project in West Oahu.
Bruhl said the development — located between Ewa, Kapolei, Makakilo, Kunia and Waipahu — is ideal for first-time buyers and local families, with prices geared toward those earning 50 to 100 percent of median income, or $82,400 for a family of four.
The only other place where officials can make a significant dent from the housing shortage is developing in Honolulu’s urban core, he said, but housing there is generally offered at a higher price.
Cassiday said one solution to Oahu’s housing shortage is to build affordable developments at every rail station, allowing residents to take advantage of the Honolulu Rail Transit Project and easy access to town.
"I never saw rail as a transportation solution. It’s a housing solution," he said.
While Oahu is expected to experience the greatest demand for homes, the neighbor islands are projected to grow in population significantly faster than Honolulu, and most of the demand for new housing units — 60 percent — will be on the neighbor islands, the study said.
Honolulu is expected to grow by only 8 percent, while Hawaii County’s population will increase by 29 percent, Maui County by 25 percent and Kauai County by 19 percent.
The forecast demand for additional housing units by county is 25,847 for Honolulu, 19,610 for Hawaii island, 13,949 for Maui County and 5,287 for Kauai during the 2015-2025 period.
According to the study, housing demand projections were made by looking at the historical trends and future growth in households by age groups, vacant units for sale and for rent, and the demand for second and vacation homes.
The continued decline in the number of younger households will also influence housing demand, the report said, while the number of older households is expected to continue increasing as life expectancy rises in the state on average. These demographic trends will affect demand and choice of housing.
The report noted that unpredictable variables could alter future housing demand, too. These include a downturn in the state’s economy, which could result in a greater number of people leaving the state. State and federal policy changes regarding housing could also increase or decrease demand.
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