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

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In 2006, for the first time, it is possible to analyze housing need separately for single family and multi - family units. For families who want to own single family units, about 55 percent will not be able to locate an affordable unit in the 2006 housing market. Units affordable to households below 80 percent of the county median are in very low supply and the price adjustment period may be particularly stressful for these low- income households. For those who want multi - family units, the situation is more favorable. Families with incomes below 50 percent of the median for their county, and those with incomes above 120 percent of median, will have difficulty finding and affordable unit. For those with incomes between 50 and 120 percent of the median for their counties, affordable units seem to be in ample supply. As the affordability curve approaches parity (where a household with median income can afford a median - priced housing unit), the middle- income groups will have real opportunities to become homeowners in Hawaii. The situation remains unchanged for families with household incomes below 50 percent of the median income. These low- income households will not be able to find affordable single - family housing units. ISSUES HPS 2006 data are rich and comprehensive. They can be applied to a broad range of housing issues and policy alternatives. Some issues that have been addressed at this point are briefly summarized below. Trading Off Distance and Traffic of Affordability: Some of the best locations for developing housing units at affordable prices are distant from population and job centers. For buyers this describes a trade -off between affordable and increased commute time. For planners the trade- off is that between producing housing for Hawaii's people and strain on infrastructure, especially on traffic congestion. Most movers (64 %) want to buy new homes in the same area in which they currently live and work. Of those, about 22 percent would be willing to consider a more distant locations if they can find a home at an affordable price. And of those, 56 percent would give up their jobs and look for a new job. Unlike the rest of the islands, this means that these new residents would result in a small net decrease in long -range commute traffic. Traffic tradeoff is illustrative of similar development issues. Developing large numbers of units at some distance from job centers, without creating jobs there, causes serious strain on infrastructure. Sustainable Lease: A sustainable lease is a leasehold arrangement that maintains property in an affordable price range. They are of interest in Hawaii because: (a) they allow government to maintain affordable housing developments as affordable over long periods of time; (b) sustainable leases on government land can reduce development costs and produce affordable units for median income households; and (c) they are generally more acceptable to prospective buyers than conventional leases. Any sustainable property arrangement requires limitations on ownership and resale. The property must be owner occupied, must be sold back to the sponsoring agency, and there is a ceiling on the resale price. Other aspects of the ownership agreement usually offset these features. Hawaii Housing Policy Study, 2006 Page 5 © SMS, Inc. February, 2007