New Construction A Boon For Oahu
BY LISA SCONTRAS
Soaring production of multi-family condominiums pushed nationwide housing starts beyond the million-unit mark for the first time since March 2008, according to newly released figures from the Housing and Urban Development and the U.S. Census Bureau. The data shows that multi-family starts surged 31.1 percent nationally – the fastest rate of growth since January 2006.
On Oahu, an increase in high-rise development is particularly apparent from Honolulu to East Oahu.
“The increase in high-rise condominiums in Honolulu is really due to the lack of available land in the area,” says Leonard Fernandes, vice president and manager of the Residential Credit Center at First Hawaiian Bank. “It has been about a decade since this pace of new condominium construction has taken place.”
Fernandes talks about several local new projects in different phases of construction:
* ONE ALA MOANA. 1-, 2- and 3-bedroom floor plans in this tower will be built over the Nordstrom parking garage. The project has already sold out, with prices ranging from $500,000 to $3.6 million.
* WAIHONUA AT KEWALO. Sales are underway and construction started earlier this year on this 43-story high rise on the Ewa side of Ala Moana Center.
* THE COVE. This project is sold out and construction began in March. Prices started at $350,000 and the project features 1- and 2-bedroom units in a low-rise, L-shaped building off Hobron Lane in Waikiki.
* HOLOMUA. Located in Makiki on Kalakaua Avenue, these 1- and 2-bedroom pet-friendly units, all with city views, are priced from $320,000 to nearly $500,000. Construction is complete and buyers are moving in, on schedule.
* 801 SOUTH STREET. Located at the former site of The Honolulu Advertiser, this very popular (being sold by lottery) and affordable housing project is open to owner occupants through Wednesday and then will be open to investors. Scheduled for completion in mid-2015.
Elina Grugier-Bell, assistant vice president and manager of the Mortgage Banking Department at First Hawaiian Bank, has some insight as to the demographics behind the appeal of living in town.
“We find that the younger workforce is able to walk to work and forego purchasing a car – that savings is pretty substantial and they can put a portion of that savings into owning real estate,” says Grugier-Bell. “We are also seeing retired people who own homes in other parts of the island wanting to move into town, perhaps because hospitals, medical clinics and activities are much more accessible and they no longer want to drive.”
Some local experts are calling the rebound in multi-housing starts the beginning of the next real estate boom.
“All of this new construction is certainly a positive sign that the local economy is strengthening,” says Fernandes. “The consumer demand for high-rise condominiums in Honolulu has opened a lot of eyes and has drawn more attention to our city. ONE Ala Moana sold out on the first day it went up for public sale.”
The steps to buying a pre-construction condo are slightly different than buying a preexisting home. Usually, the purchase begins with a deposit from the buyer.
“Upon contracting, the buyer will be given a time table to be qualified by a lender, who is one of the project lenders,” says Fernandes.
The buyer will be told when the project is nearing completion, when deposits are required and when the down payment is to be submitted to escrow. The sales teams normally will be in close contact and guide buyers through the entire process. It is important to have a lender such as First Hawaiian Bank, who is familiar with the project and can help guide the buyer through to closing.
Rick Judson, chairman of the National Association of Home Builders (NAHB) and a homebuilder from Charlotte, N.C., says that the rise in strength in the multi-family segment is a growing trend.
“(April’s) report is a reflection of the solid demand that many areas are seeing for rental apartments as young people take that first step into the housing market, which is a very positive development.”
And after a strong run-up through late 2012 and early 2013, the number of improving markets (around the country) is holding steady at a high level, says David Crowe, NAHB chief economist.
“In Honolulu, we are seeing strong signs of a healthy real estate market,” Fernandes adds. “Inventory and rates are low, and the market is showing signs of improvement. Another project, The Symphony Honolulu is being proposed for the corner of Kapiolani and Ward avenues, with 400 residential units, retail shops, recreational facilities and open space.”
“We know of several more projects that are in the planning stages in Honolulu that will continue to offer the convenience of living in urban Honolulu, possibly opening up for sales as early as later this month or next, and further out in 2014 and 2015,” says Grugier-Bell.
For more than 154 years, First Hawaiian Bank has been contributing to the economic well-being of Hawaii by investing in its customers as well as the communities throughout the 50th state. “We enjoy participating in the purchasing of new homes in the Hawaii market,” says Fernandes. “Our residential lending products offer a variety of competitive options to buyers looking to buy a new home.”