Priced out of home
Home-buying programs can't
keep up with skyrocketing
isle housing prices
Hawaii's rapidly rising real estate prices are outpacing measures aimed at helping low-income families buy homes, and the problem is particularly acute on the neighbor islands, county housing officials say.
Driven largely by big-spending buyers from the mainland, home prices on Maui and Kauai have risen well past those on Oahu, even though neighbor island incomes are considerably lower than Oahu incomes.
"It's frightening," said Ken Rainforth, Kauai County housing director.
Rainforth says the county has homeownership programs in place set up in the 1990s to help low-income families buy affordably priced homes in the range of $175,000 to $185,000, but prices have moved way beyond that.
"Now, we have the same programs but the cheapest they can find is $285,000, and even that's rare," he said.
Hawaii's overall homeownership rate has risen at one of the fastest clips in the nation, according to the Danter Co., a real estate research firm. The percentage of owner-occupied homes in the state grew from 50.2 percent in 1997 to 58.3 percent last year, it said.
But lower-income buyers are increasingly being left behind.
"It's gotten worse for that segment because housing prices are growing faster than incomes," says Kendall Hirai, executive director of the Hawaii HomeOwnership Center.
Counties statewide impose requirements on developers aimed at ensuring an affordable component in new housing projects.
Typically, 10 percent of a project will be designated for lower-income brackets. Developers can often pay a fee to circumvent the requirement.
On the Big Island, that fee comes to a mere $4,700 per unit, a figure dwarfed by the profits developers can make building market-priced units.
Ed Taira, head of the Big Island's Office of Housing and Community Development, says county officials are discussing tightening such requirements.
"We can't keep going down this road. There's only so much we can bear," Taira said.
Kauai County's Rainforth says there is a shortfall of roughly 1,000 housing units on the island, a "huge number" in an island population of 25,000 households.
He said county officials there have recently begun to consider establishing public land trusts and mandating that some government-sponsored housing projects remain "perpetually affordable".
"We need to figure something out in order to keep our children here," he said.
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Homeownership rates
among lower-income
families have dropped
WASHINGTON >> Homeownership rates for low- and moderate-income working families with children have declined since the late 1970s, even though the overall U.S. homeownership rate has risen, according to a study released yesterday by an affordable housing coalition.
The new analysis of already-released government data suggests in part that incomes for these working families haven't kept pace with soaring housing prices, highlighting a need for government to promote construction of more affordable homes, the Center for Housing Policy says.
National problem
Homeownership rates for working families with children between 1978 and 2001.
Region 1978 2001 Northeast 61.1% 55.5% Midwest 71.7% 65.3% South 60.2% 58.7% West 54.3% 46.9% U.S. 62.5% 56.6%
Source: Center for Housing Policy
Over the last couple of decades, builders have generally erected bigger homes than those built before 1980. "Larger homes tend to be more expensive, and any new supply created tends to be geared toward higher-income people," said Barbara Lipman, the center's research director.
The report said 68 percent of all U.S. households were owned in 2001, up from 65.2 percent in 1978. However, the homeownership rate for families with children was 68.4 percent in 2001, down from 70.5 percent 23 years earlier.
The rate for working families with children was 56.6 percent, down from 62.5 percent. "Working families" meant those in which members work the equivalent of a full-time job and earn between the full-time minimum wage of $10,712 a year and up to 120 percent of an area's median income.
Since the study only dealt with data up to 2001, it was impossible to connect how the rise in mortgage rates this year would affect homeownership, said economist David Crowe of the National Association of Home Builders.
"In and of itself that would make it more difficult for people of modest means to get into homeownership," Crowe said. "We're hoping from a macro sense that an improving economy should counter the increase in interest rates, at least for the next year or so."
Mortgage rates were in the high teens in the late 1970s and early 1980s, but have generally declined since then. Last year, rates hit their lowest level in nearly four decades, but they have inched back up over the last two months.
Homeownership rates for working families in 2001 were up somewhat since 1991, but still lower than 1978, suggesting that rising housing costs and a lack of affordable stock may be more important factors, Lipman said.
The median sales price of a new home in 1978 was $55,700, about four times the $14,258 median income of a working family with kids, according to census data cited by the group. The median new home in 2001 cost $175,000 -- five times the median income of $35,000.
