2016 Hawaii Housing Planning Study

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I I1. Modeled Demand Assumptions persistent feature of demand, we find no evidence that it must necessarily continue. The housing demand estimates utilize population Some major components of past run-ups, I estimates that conform to those presented by including falling interest rates, major increases in DBEDT in their latest population forecast. The external demand, and the bubble and bust of the most recent version is the 2040 Series. last run-up are not in evidence for the next five I years. Hence, we accept the short increase in Figure 10 presents household growth estimates demand for the next period and the slower and for the State housing market between 1990 and less volatile growth to the year 2040. I 2040. The total number of households is expected to grow between 2016 and 2040, but at Obviously, changes in model assumptions would a slower rate than in the past. The average alter results Increasing employment would push I growth rate is projected to fall to 0.65 percent up household incomes, shortening the current annually between 2020 and 2030, then to dip to adjustment period and perhaps increasing the an average of 0.45 percent per year from 2030 volume of the next rise in demand. Increasing through 2040. Slower growth in the number of interest rates would change the new forecast Ihouseholds is primarily a function of slower significantly, as well. population growth. I Figure 10.Total Households, State of Hawaii, 2. Demand Estimates 1990-2040 600.000 __ 5% The estimate of housing units needed in Hawai'i I �Household growth rate for the next ten years is shown in Table 27. The —Households figures in the table are the number of units a% needed between 2015 and 2025, inclusive. v I 9 aoo,000cc L3% L Housing demand estimates recently released by N DBEDT32 focused on the number of new housing 300'00° a units required to accommodate new households 2% N added to the population during a specific period. 200'000 The demand estimates are independent of r 1% supply estimates and do not specify that demand I 100.000 uj, u' – units will be built. oi,r „ i11JJJI1IJIIJHIUacs In Hawal I, we generally agree to use the official pp M *.8 N U1 r1 Q P` O m ,O 01 N J1 pppp I 01 01 01 01 O O O .ti .ti .ti N N N N M 0 e-, 01 N o N N N N N N N 00000000000 N N state population estimates unless there is a .r - .-1 N N N N N N N N N N N N N N Source. DBEDT long range forecasts 2040 tactical reason for producing an independent forecast. The DBEDT forecast for housing I The average household size is expected to be demand were deemed appropriate for 3.00 persons per household by 2025 To some expressing the need for new units in Hawaii in extent, household size is limited by smaller unit the near future. For Hawai`i County, DBEDT I sizes, but the primary causes are demographic. estimated housing demand between 2015 and In-migrant household sizes are larger than those 2025 to be 19,610 units, 16,292 of which were from households formed by natural growth and required for new households and the remainder out-migrant households are often relatively for vacancies and seasonal units. Ismall. As noted earlier, the Hawaii housing market has been cyclical over the last 40 years. We have I had three major market expansions followed by 32 Department of Business, Economic Development & periods of post-expansion adjustment. While the Tourism. 2015 Measuring housing demand in Hawai'i, cyclical nature of the housing market has been a 2015-2025. DBEDT,* Research and Economic Analysis IDivision,April 2015. I Hawaii Housing Planning Study,2016 Page 33 ©SMS,Inc. December,2016