The cancellation of Vida was a shock to the real estate community. This is not the beginning of the end for Hawaii’s real estate boom. I believe there’s just a larger demand for housing at a lower price point.
As a REALTOR®, many of my clients are millennial first-time homebuyers. As young professionals, it’s challenging for my clients to enter the market when the median single family home price (in 2015) was $700,000. Now, add student loans to the mix.
As its constantly stated over-and-over again, Hawaii is experiencing a housing crisis. According to a 2014 study, Hawaii is 60,000 units short of housing everyone over the next 5 years. It’s obvious that building more affordable housing is the solution to this problem. However, it isn’t that easy.
With land being scarce, there’s only so much buildable space. Sumner La Croix, an economics professor at University of Hawaii, stated that the land share value for Honolulu housing prices were 70+% in 2014. This means that 70+% of the value in a home purchase is the value of the land. To put this in further respective, Hawaii’s land share value in 1960 was 38%.
Hawaii has one of the highest construction costs in the nation.
Hawaii has a height limit for its buildings. Maybe if this restrictions were removed, developers could build more units vertically.
The reserved housing requirements should be revised. The requirements set by the HCDA makes it difficult to prequalify for a reserved housing unit. Plus, with many of these affordable condos being years away from completion, you don’t know how mortgage rates will change. This can definitely affect a prospective buyer.
It’ll be interesting to see if more condo developments get delayed or cancelled.
-RO
Sources: Pacific Business News. Honolulu Star Advertiser. Professor Sumner La Croix.
Disclaimer: This is a personal blog. Ryan Oda (#RS-75450) is a licensed real estate salesperson with Benn Pacific Group, Inc (#RB-19423). The opinions expressed here represent my own and not those of Benn Pacific Group, Inc., its agents, and or its affiliates. My thoughts and opinions can change over time. This blog is intended to provide a semi-permanent snapshot of a selection of various thoughts and opinions that may not be the same, or even similar, to those I may hold today.
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