DARLENE HIGA (RA), MPM, RMP
Property Profiles, Inc.
President, Oahu Chapter
National Association of Residential Property Managers
Q. I have been hearing a lot about a housing crisis in our state. Can you let me know your thoughts on this?
A. Right now we are facing a housing crisis. There is a lack of inventory, a pent up demand, and no real solution in sight. Our state and city officials know this and are fearful that if we don’t do something soon, our homeless population will only increase as more and more families get priced out of the market. Affordable housing will become more of a problem due to the lack of affordable housing inventory (especially rental inventory from the private sector) and as demand for housing continues to increase.
Think about it, with the price of construction going through the roof, and land prices soaring, it will be difficult for any investor to build new apartments, homes, or even remodel units for rental housing and make the numbers work. Along with that, all other costs are increasing such as water, sewer, electric, materials, labor, & especially property taxes (e.g. Residential A property on Oahu).
Tenants are beginning to feel the pressure as landlords pass those costs on to them in the form of higher rents. Last year, we tracked rentals around the island of Oahu and saw a 5% to 10% increase in prices. We project the same increases for 2016. Incomes have not risen at those same percentages, thus tenants are spending more of their income towards housing.
The median household income in 2014 was around $69,592 per DBEDT’s last publication. Today, you could assume it’s a little higher, but not by much. An ideal family budget should have no more than 25% 35% spent on housing. That factors out to around $1,450 $2,040 a month. Right now in Honolulu, the average rents are way above those prices with some neighborhoods commanding averages well over $2,000 to $4,000 a month. This disparity and gap are only growing larger and the lower price ranges are being eliminated. $600 to $800 rent prices are for the most part being phased out.
I commend those landlords who are keeping their rents low –without you, there definitely would be more homeless living on our sidewalks. For those landlords who are raising rents, I would caution you to be aware of the average household income, and be aware that there is only so much one can pay for housing. Yes, there is a demand, but if you just don’t have the money, you can’t pay it even if you wanted to without jeopardizing your budget.
There is some relief in sight with a few affordable rental projects soon to be built, and with Hoopili and Koa Ridge now cleared for development. But even with those projects coming online, we are nowhere close to meeting the housing needs of this state.