Kauai economy roaring away
But many people are hurting because of the higher price of housing
With construction projects on the horizon for years to come and tourist spending that rose this year despite 40 straight days of rain, Kauai's economy looks strong for the near future.
That's according to Leroy Laney, economics consultant to First Hawaiian Bank, who was slated to tell community members the good news last night at the bank's 32nd annual business outlook forum.
Laney said that 2006 will be the state's and Kauai's 10th straight year of growth, although it might be a bit lower than previous years.
One of the main things holding back Kauai's economy, Laney's prepared remarks said, is the expanding economy itself, which has created a lack of workers.
Kauai's unemployment is 2.5 percent, just under the state level of 2.6 percent.
According to Laney's prepared remarks, with housing prices up 28 percent in 2005 on top of 37 percent in 2004 and inflation up to a painful level of 4 percent this year, workers have been pushed off the Garden Isle due to higher costs of living. That's led to less job creation, he added.
School enrollments across Kauai have been down as well over the past few years, Laney said.
"It's often the households with younger children that are hit the hardest by the lack of home affordability," Laney added.
But the real estate market is beginning to change across the state, he said. Following nationwide trends, the housing market on Kauai has begun to cool, and an actual drop in prices is possible, he added.
Currently, though, while the number of single-family homes sold is down from previous years, almost 30 percent from the same period a year earlier, housing prices remain high.
"The speculators are mostly gone," he said, "and those wanting a home to live in have been on the sidelines more, watching prices closely."
Despite the change in the market, construction is still booming, with such projects as the 1,500-unit Kukuiula development near Poipu.
While the 10-year expansion is showing signs of a slowdown, Laney said, and attitudes are turning negative toward growth, the projects already under way will keep contractors busy for a while.
Elsewhere on Kauai, agriculture will get a boost with the reopening of the Tropical Fruit Disinfestation Facility in Lihue, slated to be running next year.
"The main beneficiary will be papayas, but other tropical fruits may benefit," Laney said.
And an ethanol plant, proposed by Gay & Robinson, Kauai's lone sugar plantation, could begin converting sugar to the fuel additive as early as 2008, Laney added.
Elsewhere, crafts workers got a boost with the creation of the "Kauai Made" label earlier this year, which will help market locally made goods.
And the Pacific Missile Range Facility, which Laney said is often overlooked as an important part of Kauai's economy, will get its own boost next year when it becomes the primary testing ground for the Army's Terminal High-Altitude Area Defense ground-based missile defense system.