2011 Housing Planning Study - State of Hawaii

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and there is no indication that the underlying ACS data as well as authorized county building factors responsible for those cycles will change permits. Post-2010 new unit counts reflect the significantly in the future. The model, therefore, previously noted assumptions and the history of forecasts continuation of that pattern. It the housing market since 1980. produces another housing run-up beginning later in this decade. We note that the quality and Figure 12. New Construction, State of quantity of housing-related data has improved Hawaii, 1985-2030 notably since 1992. The model and its forecasts 12,000 benefit from the improvement and reflect ■MF new build (total) ■SF new build(total) improvement in detail through the years. 10,000 The forecast suggests continued slow growth in n 8,000 1 1111 1 11 Hawai'i's housing market in the short term. It r predicts slow sales between 2011 and 2017. We do not expect any further decreases in sales. s,000 1! E Obviously, changes in model assumptions would x 4,000 alter results. Increasing employment, for instance, would push up household incomes, 2,000 shortening the current adjustment period and increasing the volume of the next run-up. - N1,65 Increasing interest rates would have the opposite 9801985199019952000200520102015202020252030 effect. The results shown in Figure 11 represent Source: Hawaii Housing Model, 2011 our current best estimate of housing demand over the next twenty years20. The market cycles are apparent in the supply forecast just as they are in the demand estimates. The forecast follows a similar pattern HOUSING SUPPLY of rapid growth and longer adjustment periods during which housing prices fall slightly and The Hawaii Housing Model measures supply in production is reduced significantly. terms of housing units added each year with separate estimates for single-family and multi- The forecast suggests continued slow growth in family units. For past years, added units are the Hawai'i's housing market. Specifically, it difference between housing unit counts for two predicts slow sales between 2011 and 2017. We adjacent years. Forecasts of added units are do not expect any further decreases in sales. based on past performance of the housing market, population growth, household formation, Again, changing assumptions would alter the household income, and expected interest rates. forecast. Increasing population growth, The assumptions applied for the supply forecast decreasing unemployment, and low interest are the same as those noted above for the rates all work toward increasing demand and demand forecast. therefore the need for more housing units. Slower growth in any of those assumptions Modeled Supply would decrease the need for new units. Table 11 shows our current best estimate of housing Estimated production of new housing units for supply changes for the next twenty years. Hawaii between 1980 and 2030 is shown in Figure 12. For years before 2011, the housing unit counts are based on decennial census and 20 With the standard caveat that reliability of forecast estimates decreases in later years. Hawaii Housing Planning Study,2011 Page 23 0 SMS, Inc. November,2011