2016 Hawaii Housing Planning Study

Home

I IFigure 4. Building Permits & Added Units, State of to the development of housing in Hawaii Hawaii, 2000-2014 including the lack of "reasonably priced", 12,000 developable land; lack of major off-site Ie 10,000 infrastructure; high development costs; d \ government regulations; community opposition; a 8,000 and growing environmental requirements.13 We I C D 8,000 • • __ briefly recap the major sources of the supply o problem below. d 4,000 a jr� N" I Geographic Limitation: Hawaii lacks sufficient z 2,000 land near its major population centers. Consider 0 a fifty-mile circle around the central business I p0.�O^Q0'Oe?O0'cps)Ooh 0O1 Oc,a O^%O^^O^ry O^b O^a district of the largest cityin each of America's ti ti ti .1ti % ti .1 ti I. .i° ti i ti .1 g Year fifty states. Now subtract all open water or —Housing Units Added --Total Residential Permits wetlands within the circle and all lands with I slopes in excess of five percent (Rose, 1989). Source: Permits from Census Table 2au: New Privately As an island state, comprised of mountains rising Owned Housing Units Authorized. Added units from ACS from the ocean floor, Hawaii ranks lowest in housing unit data and Housing Model 2016 estimates. terms of the percentage of remaining available I land (Saiz, 2010). Geography becomes more b. Impediments to Production constraining over time. As an area is developed, there are ever fewer acres of undeveloped land. I We briefly recap some major barriers to housing Supply is attenuated and prices rise. (Hilber and supply below. Note that, for all of these, a Robert-Nicoud, 2010).14 Geographic constraints significant amount of research has been reported reduce housing supply by limiting investment in I in peer-reviewed journals to estimate statistically housing (Paciorek, 2011). significant correlation between the barrier and supply inelasticity and/or high housing prices. Lack of Major Off-Site Infrastructure: The I We are aware of no production barrier for which lack of major off-site infrastructure to support research exists that defines the net contribution development is cited as a major impediment to of specific elements of the barrier to its dollar or housing development. The Final Report & Iunit impact on production. Nor is there any Recommendations of the Affordable Housing research of which we are aware that defines the Advisory Committee, April 2006 notes that the mechanism by which those elements affect current infrastructure capacity is a significant housing supply inelasticity. Finally, no definitive barrier to providing more housing units in the I research has been conducted in Hawaii with urban core of Honolulu. All forms of public respect to these production barriers. To infrastructure are in dire need of maintenance, effectively address these issues would require up-grade and new installation. Roads, sewer, I considerable research that is outside the scope water, drainage, and schools have historically of the current study. been the responsibility of government to construct. Many of the required infrastructure I Hawaii's housing market is supply inelastic.12 improvements have been passed on to the An increase in demand does not lead to an developer, adding to the price of a house. A Joint increase in supply in a timely or efficient manner. Legislative Housing and Homeless Task Force I That leads to higher prices and affordability encouraged creative, innovative and cost- problems. Previous versions of the HHPS and other studies have identified major impediments 13 State of Hawaii, HHFDC, Consolidated Plan for Program Years 2015 Through 2019, May 15, 2015. I 14 Hilbert and Robert-Nicoud reported that a highly 12 A market situation in which any increase or decrease in significant independent variable in their analyses of the price of a good or service does not result in a housing prices in U.S. cities was the ratio of acres of Icorresponding increase or decrease in its supply. developed land to acres of developable land. Hawaii Housing Planning Study,2016 Page 11 ©SMS, Inc. December,2016