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

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Out -of -State Ownership: In the last six years, as West Coast real estate prices passed those in Hawaii, out -of -state demand increased dramatically and helped to push Hawaii home prices to record highs. In 2006, 9.9 percent of Hawaii County's single - family housing units and 16 percent of the condominium units were owned by persons from outside of the State. Housing Prices: The most salient characteristic of Hawaii's housing market in the last three years has been rapidly rising prices. Sales prices and rents are at historic highs. Home resale prices3 fell in Hawaii from 1990 through 1998, and then rose at an increasing rate from 1998 through 2005. In 2006, sales prices continued to rise, but at a slower pace. In the last three years, sales prices in the County of Hawaii for single - family units topped out at over $390,000. Condominium sales followed suit, rising from $185,900 in 2003 to $390,000 in 2006. Average shelter costs for renter households in Hawaii rose by 40 percent between 2003 and 2006. Advertised rents4 went up 20 percent during the same period. Increases in advertised rents began in 2001 and began to slow in 2005. As the percentage of renters paying the higher rents increased, the average shelter cost for all renters rose sharply between 2003 and 20055. The peak of the current run -up in advertised rents was July of 2006. Since that time, advertised rents have been falling. CURRENT HOUSING SITUATION FOR HAWAII COUNTY RESIDENTS Among the County's 61,213 households in 2006, about 68 percent were homeowners and 90 percent of them owned their property fee simple. Eighty -five percent of all households were located in single - family detached dwelling units. Seven percent were renting apartments, and about four percent were living in condominium units, either owned or rented. Most of the rest were in multifamily units. The average monthly mortgage payment was $1,250 a month and the average rent was $1,000 per month. Hawaii County had the lowest shelter costs in the State last year, although the rate of increase over the past three years may have hidden that fact from many residents. With our record low unemployment rates, Hawaii household incomes were up since 2003. The Census Bureau reported Hawaii County's median household income in 2005 at $48,524. Our survey found similar medians. U.S. Department of Housing and Urban Development (HUD) income guidelines express income in terms of the median household income for each County in Hawaii, adjusted for household size. Median incomes for the State of Hawaii in their calculations rose from $46,086 to $53,571 between 2003 and 2006. New unit sales prices are unavailable. They are expected to be higher than for resale prices, and to vary according to the same patterns as resale prices. Rent data are taken from two sources. The Housing Demand Survey measured monthly rent for all renter households. The Rent Study measured average monthly advertised rents. That is, rents paid by all renter households lagged advertised rents. Hawaii Housing Policy Study, 2006 Page 2 © SMS, Inc. February, 2007