Facing the Housing Shortage
It’s well known that Hawaii faces a critical housing shortage. As Pacific Business News reports, different challenges exist at all price points. PBN editor-in-chief A. Kam Napier has more.
Last month, the Building Industry Association of Hawaii held its second annual conference on the housing shortage. One of the themes that emerged was that of the housing ladder. That is, people need different types of housing as they move through different stages of their life, from renter to homeowner to empty-nester.
Developers speaking at the conference point out that there are different challenges to adding the housing we need at every price point. For example, even though Honolulu has very high rents, it’s nearly impossible to build a dedicated rental apartment building at a profit unless the land is free. The margins are narrow, construction costs are high, and the permitting process is slow. As a result of these factors, developers find it difficult to secure financing and new rentals simply don’t get built.
This means the current supply of rental housing is locked up by people who would prefer to buy, but can’t, because of the shortage of housing at the next levels, affordable housing, workforce housing and market-price housing. And so it goes, up the rungs of the housing ladder, all the way to luxury condos in town. Projects like those developed by The Howard Hughes Company or Alexander & Baldwin in Kakaako attract local empty-nesters, who are getting out of four-bedroom homes in Mililani or Hawaii Kai they no longer need. In the absence of new home construction, this is one of the only ways suburban homes become available to younger people just starting their families.
Developers at the conference weren’t looking to government for handouts but they did have specific recommendations on how government could help them reduce the housing shortage. The state and counties have land they could make available, cheaply, for example. They could also back financing for projects that traditional investors see as too risky.