Prices ease for isle homeowners

Housing costs dropped between 2000 and 2005, but renters pay top dollar, census data shows

While Hawaii renters are paying more monthly than any other state nationwide, homeowners' housing costs actually went down between the years 2000 and 2005, after accounting for inflation.

That data, to be released today from the American Community Survey by the U.S. Census Bureau, has already raised a few eyebrows in the Aloha State.

Nationally, the agency found that homeowners spent a larger proportion of their incomes on housing costs last year than five years prior. Housing costs, as defined by the U.S. Census, include mortgage payments, taxes, insurance and utilities.

In Hawaii, homeowners are spending a median of 21.2 percent of their income on such costs, higher than the nationwide median of 20.9 percent.

Yet for Hawaii that number went up only 0.3 percent compared to 1999, the census data indicates.

The Census Bureau also said that the median monthly housing cost in Hawaii in 2005 was $1,763, down from the inflation-adjusted median monthly housing cost of $1,855 in 2000, after adjusting for inflation.

That means that the median monthly cost was $92 less in 2005 than it was five years prior -- the largest decrease of all the states.

Nationally, homeowners are spending a larger percentage of their incomes -- 21 percent in 2005 compared to 19 percent in 1999 -- on housing costs.

According to government guidelines, homeowners should not pay more than 30 percent of their income on mortgages and other home payments. In 2005, about 40 percent of Hawaii homeowners exceeded that benchmark -- the same proportion as in 1999, according to the bureau.

That is the same period during which the median home price on Oahu climbed from $300,000 to $625,000, according to separate data for those years compiled by the Honolulu Board of Realtors. In August of this year, the Oahu median home price was $635,000, according to the board.

Kendall Hirai, executive director of the Hawaii HomeOwnership Center, said despite the U.S. Census findings, he's seeing more clients struggle with home-related costs.

"There's definitely a growing demand from people who need help with the challenges of, not just the prices of homes, but learning how to manage their money," he said. "We don't encourage people to have that high of a debt load."

A good number of rental tenants, for instance, are paying more than 50 percent of their income on rent. So are homeowners who are just on the cusp of making it from month to month.

This year, tenants and homeowners are also faced with higher-than-expected inflation rates, higher utility costs and property taxes.

"It requires people to be a lot more disciplined with the way they spend their money if home ownership is a priority," Hirai said.

Bank of Hawaii economist Paul Brewbaker suspects that the U.S. Census data captured a period in the housing market before the rapid rise in prices at the tail end of 2005.

Brewbaker also suspects the numbers might have remained stable because of lower interest rates between 2000 and 2003.

"Interest rates for much of that period were flat or trending downward," said Brewbaker, adding, "They took a snapshot where the numbers lined up favorably for Hawaii."

But in the next round of census data, Brewbaker said he expects Hawaii's numbers to move to the top of the list in increases, given that the inflation rate here is 2 percentage points higher than the national average.

University of Hawaii assistant professor of economics Carl Bonham found the census data "a little surprising."

Bonham said household incomes went up nearly 20 percent between 2000 and 2005, while home prices doubled.

"If a household income is estimated to have gone up that much," he said, "and the percentage going to mortgages is relatively flat, then that helps to explain how you can have a big runup in home prices."

Possibly, he said, the U.S. Census numbers included homeowners who refinanced when interest rates dipped during that five-year period, and thus were paying lower monthly mortgage payments.

Brewbaker said there will be one constant in the next 50 years -- home prices in Hawaii will always be higher than on the mainland.

"That's one of the constant features of life in the islands," he said. "Housing tends to be a higher proportion of peoples' expenditures than elsewhere in the country. It's not so much the housing, but the land that the housing is on."

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Housing costs up in most states

Monthly housing costs for homeowners increased in most states from 2000 to 2005. Housing costs are defined as mortgage payments, taxes, insurance and utilities. Here are the median monthly housing costs for homeowners carrying a mortgage in each state. The 2000 amounts have been adjusted for inflation to 2005 dollars. Figures in parentheses represent decreases:

State	2005	2000	Change
Ala.	$913	$925	($12)
Alaska	1,477	1,491	(14)
Ariz.	1,194	1,178	16
Ark.	842	836	6
Calif.	1,912	1,676	236
Colo.	1,443	1,358	85
Conn.	1,718	1,617	101
Del.	1,246	1,249	(3)
D.C.	1,662	1,464	198
Fla.	1,247	1,139	108
Ga.	1,206	1,178	28
Hawaii	1,763	1,855	(92)
Idaho	996	1,006	(10)
Ill.	1,455	1,359	96
Ind.	1,031	986	45
Iowa	1,008	940	68
Kan.	1,068	1,007	61
Ky.	935	925	10
La.	946	925	21
Maine	1,093	1,047	46
Md.	1,561	1,470	91
Mass.	1,781	1,534	247
Mich.	1,213	1,102	111
Minn.	1,351	1,184	167
Miss.	870	853	17
Mo.	1,029	976	53
Mont.	1,026	979	47
Neb.	1,107	1,015	92
Nev.	1,452	1,350	102
N.H.	1,566	1,390	176
N.J.	1,938	1,769	169
N.M.	1,004	1,054	(50)
N.Y.	1,652	1,539	113
N.C.	1,089	1,117	(28)
N.D.	972	928	44
Ohio	1,141	1,092	49
Okla.	913	866	47
Ore.	1,296	1,276	20
Pa.	1,196	1,145	51
R.I.	1,585	1,367	218
S.C.	991	1,014	(23)
S.D.	986	939	47
Tenn.	990	1,000	(10)
Texas	1,220	1,118	102
Utah	1,200	1,250	(50)
Vt.	1,242	1,158	84
Va.	1,411	1,297	114
Wash.	1,454	1,438	16
W.Va.	797	809	(12)
Wis.	1,258	1,161	97
Wyo.	988	936	52
Nation	1,295	1,234	61

Source: Census Bureau