HONOLULU (KHON2) — Priced out of paradise is a phrase that Hawaii residents hear quite a bit and experts say a prime example of it is homeowners in urban Honolulu spend nearly three quarters of their monthly income on mortgage payments.
The National Association of Home Builders said 73% of a typical family’s income in urban Honolulu is needed to make a payment on their mortgage. The Grassroot Institute of Hawaii said that is simply not sustainable.
“If you have to spend 73% of your income just to get a home, it’s unlivable here,” said Grassroot Institute of Hawaii president and CEO Keli’i Akina, “and for those who are of lower income, they are priced completely out of the housing market.”
An Ewa Beach homeowner said he spends about 40% of his income on his monthly payment.
“Honestly, I don’t know how people are surviving paying the majority of their income just to live in their house,” Carlos Villarreal said.
Hawaii’s Building Industry Association said a major reason behind the housing affordability crisis is a shortage of available homes, which is something that Gov. Josh Green hoped to address by signing an adaptive use bill for commercial spaces on Tuesday, May 28.
“It’s a huge breakthrough. It allows old buildings to be refurbished, these are commercial buildings and now used for housing,” Akina said. “Over 20% of Downtown office space is now vacant and that number is growing.”
The president and CEO of Avalon Group said the new law opens up lots of opportunity for an increased housing supply that could trickle down to lower monthly payments for residents.
“Well, just by having more supply and more competition for those dollars, what ends up happening is that it reduces price,” Christine Camp said. “And when you have a glut of supplies, the idea would be that the prices would go down.”
Mortgage lenders agreed that adaptive reuse will help with supply, but Hawaii’s market is tough to overcome.
“Hawaii has always historically held its value in home prices and rarely ever do we depreciate in value,” Element Mortgage loan officer Nicky Cruz said.
The report shows urban Honolulu is only second in cost burden to one market in California where families pay 84% of their income on monthly payments.