2006 Housing Policy Study by SMS Research & Marketing Services, Inc.

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But how are Hawaii County households doing relative to soaring housing costs and general inflation? In 2006, just over 43 percent of Hawaii households had shelter -to- income ratios less than .30. That means 57 percent were paying more than 30 percent of their incomes for shelter each month. Twenty -six percent (26 %) were paying more than 40 percent of their income for shelter. Shelter -to- income ratios dropped steadily between 1992 and 2003. The depressed housing market of the nineties held prices and rents in check while the burgeoning economy of the late nineties raised household incomes. But between 2003 and 2006, rapidly rising housing costs pushed the shelter -to- income ratio back to its 1997 level. Other conditions in Hawaii households haven't changed much as a result of higher housing prices. About the same number of people (82 %) rated the condition of their units as excellent or satisfactory. Crowding, which fell steadily over the last 15 years, dropped from 19 percent in 1992 to 6.6 percent in 2006. Doubling up had also dropped between 1992 and 2003, but rose again to 37 percent in 2006. HOUSING DEMAND The Housing Demand Survey measures demand as interest in moving to a new housing unit, whether to buy or to rent. In 2006, nearly 42 percent of all Hawaii County households expressed a desire to move to a new home in the near future. The rest said they had no intention of moving in the foreseeable future. About 13 percent of those who intended to move wanted to move to a home outside of Hawaii. If we subtract those households from the total who want to move, the resulting measure of "effective demand" indicates pressure on the housing market over the next several years. Effective demand was equal to 37 percent in 2006. It fell from 40 percent in 1992 to 35 percent in 1997 and held at 35 percent in 2003. In 2006, it rose slightly to 37 percent. Nearly 32 percent of those who expect to move out of Hawaii mentioned housing prices as their main reason for leaving. That's up from 10 percent in 1997 and 20 percent in 2003. HOUSING PREFERENCES Preferences for new housing unit characteristics have changed little over the past 15 years. Among households that want to move, 71 percent want to own their next unit. But in 2006, about 8 percent of those who want to buy were not sure they could afford it and may continue renting. That would drop purchase incidence to about 65 percent, less than the current homeowner rate. Buyer Preferences: Most potential buyers (92 %) wanted single - family homes purchased in fee. Less than half (40 %) would accept a condominium unit if they could not find a single - family unit in their price range. About 42 percent said they could start with one - bedroom units and 48 percent said they needed at least two. The preferred number of bedrooms was lower than in the past. Perhaps buyers are more willing to settle for smaller units in the face of high prices. The same was true for bathrooms. More than 93 percent of buyers said they would need one or two bathrooms. Thirty -nine percent said they needed 1,500 square feet or more of floor space. Thirty -six percent said they could accept units smaller than 1,200 square feet. Hawaii Housing Policy Study, 2006 Page 3 © SMS, Inc. February, 2007