HONOLULU (KHON2) — The newly unveiled Cost of Housing Index (CHI) by the National Association of Home Builders (NAHB) and Wells Fargo has revealed a significant housing affordability crisis in the United States, particularly in Hawaiʻi.
Overall, in the U.S. in the first quarter of 2024, the typical family needed to allocate 38% of their income to afford a mortgage on a median-priced new single-family home. Meanwhile ow-income families faced even greater challenges that required 77% of their income for the same home.
For existing homes, the situation is similarly dire. A typical family needed 36% of their income for a mortgage on a median-priced existing home, while low-income families needed 71%.
Impact on Hawaiʻi
Hawaiʻi, particularly Urban Honolulu, is one of the most severely cost-burdened markets.
According to the new study in Urban Honolulu, a typical family had to use 73% of its income to cover a mortgage on an existing home. This ranked Honolulu second in the U.S. only to San Jose-Sunnyvale-Santa Clara, California.
For low-income families, the situation is even more critical where they are requiring between 138% and 168% of their income to afford a mortgage.
Hawaiʻi is attempting to mitigate the impending disaster that mass mortgage debt brings to an economy.
On Tuesday, May 28, Governor Josh Green, M.D. signed new legislation that will “empower homeowners to build accessory dwelling units on residentially zoned lots and to increase affordable housing construction and decrease homelessness statewide.”
“Housing has been and continues to be a top priority for my administration. This afternoon, I signed several bills that are aimed at tackling the severe housing shortage in our state,” said Gov. Green. “It’s a pretty exceptional day when we can move the needle on unlocking more housing across the state through permitting reform and by increasing financing for more affordable projects.”
United States Senator Brian Schatz, state Senator Stanley Chang and state Representative Luke Evslin were in attendance to support this initiative.
“We are finally doing something meaningful to make it easier for families, workers and local people to live in Hawai‘i and afford a place to call their own,” said U.S. Sen. Schatz, Chair of the U.S. Senate Appropriations Subcommittee on Transportation, Housing and Urban Development.
With the median scenario being that Hawaiʻi families are spending 73% of household income to pay for mortgages, that leaves only 27% of families total income for:
Electricity;
Water;
Food/groceries;
Landline and/or cellular phones;
Clothing, shoes and accessories (professional and recreational);
Fuel;
Household and home maintenance;
Motor vehicle maintenance,
Motor vehicle payments;
Motor vehicle insurance;
Motor vehicle yearly inspections and registrations;
Home insurance;
Health insurance;
Healthcare;
Keiki education-associated expenses including extracurricular activities;
Childcare and after school and summer programs;
Federal and state income taxes;
Personal care;
Family pet care and veterinarian bills;
Debt (student loans, etc..) repayments;
Employment memberships;
Entertainment and recreation (i.e. streaming services, movie tickets, playrooms, etc…); and
Health and fitness expenses.
Of course, this allows no space for putting away money for savings or emergencies. This also does not include condominium fees that many homeowners in Hawaiʻi must pay.
The Aloha Challenge has been set up to evaluate where Hawaiʻi families stand with regards to obtaining a mortgage loan. It is trackable in real time.
As of Tuesday, May 28, out of a possible score of 100, which is where a family has to be in order to qualify for a loan, Hawaiʻi has reached 58.8. Not a good score.
In addition to Gov. Green’s legislation, Mayor Rick Blangiardi has launched an $8 million grant initiative meant to spur the creation of affordable housing.
Mayor Blangiardi in collaboration with the City and County of Honolulu’s Department of Land Management is inviting nonprofit organizations and government agencies to apply for funding from the City’s Affordable Housing Fund (AHF) for affordable rental housing projects.
“Established by voters in 2006, the AHF allocates half a percent of the annual real property tax revenues to support housing for low- and moderate-income residents,” said a spokesperson for the Mayor’s Office.
“Affordable housing is our most pressing need and highest priority,” said Mayor Blangiardi. “Providing these funds underscores our commitment to creating more housing units.”
The mortgage report underscores the urgent need for policy changes to address housing affordability, improving zoning rules and access and fixing building material supply chains. With a nationwide shortage of approximately 1.5 million homes, addressing these issues is crucial for mitigating the housing crisis.
This is particularly true here in Hawaiʻi where houseless numbers are skyrocketing amongst families, Native Hawaiians, Pacific Islanders and Filipinos.
You can click here to read the study. You can click here for more information regarding the AHF grant opportunities and here for more information on the program.
The CHI data shows a stark picture of housing affordability in the U.S., with Urban Honolulu being one of the hardest-hit areas, making it clear that both national and local efforts are essential to provide more affordable housing options.
As we continue down the path of wanting the humans who are without stable shelter “cleaned up”, Hawaiʻi families are in a dire situation. And as more and more become unable to pay their mortgages and rent, where will that leave the initiatives targeting affordable housing?
This is a list of the legislation Gov. Green signed:
Senate Bill 3202: Requires counties to adopt or amend ordinances by December 31, 2026, to allow for at least two accessory dwelling units (ADUs) on all residentially zoned lots. The bill also prohibits private covenants from including certain restrictions, supporting the efficient use of limited residential lands and making housing more attainable for residents.
House Bill 1760: Enables the Hawai‘i Housing Finance and Development Corporation and counties to implement a bond volume cap recycling program, utilizing prior years’ tax-exempt private activity bond volume, while preserving the current volume cap to support affordable housing development.
House Bill 1925: Establishes and funds the Hawai‘i State Planning Act Phase II Task Force, continuing the work of the previous task force to guide long-range state development and housing policy solutions.
House Bill 2090: Directs counties to allow adaptive reuse of existing commercial buildings through their ordinances, increasing housing inventory by repurposing underutilized commercial spaces and office buildings.
Senate Bill 2066: Provides an alternative pathway for housing projects to seek exemptions from certain state laws and rules, expediting the regulatory process to increase affordable housing units.
Senate Bill 2133: Authorizes the Hawai‘i Housing Finance and Development Corporation to issue bonds for housing project infrastructure, financing the development of regional state infrastructure projects, particularly in transit-oriented development areas.