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An influx of visitors and seasonal residents causes an imbalance on most Hawaiian islands, but this particular case is exacerbated by the unprecedented rate of growth that could eventually price out some long-term locals.
Oahu’s population is growing much faster than its housing supply.
To catch up with demand, developers would have to build about 2,000 more homes each year than they do now, Eugene Tian, a Hawaii economist, told the Honolulu Star-Advertiser.
His calculations assume 1 percent population growth on the island and 2.8 people per household. Whereas Tian figures Oahu would need about 3,525 homes a year to match demand, the island issued an average of 1,612 new permits a year from 2011 to 2013.
Oahu issued about 7,000 housing permits a year in the 1960s and about 6,500 a year in the ’70s. The gap between population growth and housing permits is the widest in at least 50 years, said Tian, the chief economist for the Department of Business, Economic Development and Tourism.
Developments such as the 5,000 planned condominiums in Honolulu’s Kakaako neighborhood are a start. But because towers take years to complete, Oahu’s housing deficit will endure in the near future.
The housing supply on the neighbor islands is more balanced because of their slower economic recovery since the recession and an enduring supply of housing.
Paul Brewbaker, an economic consultant with TZ Economics, has similarly been trying to call attention to the housing deficit on Oahu.
“People seem to have lost all context for what constitutes ‘a lot’ of home building,” he said in January. “Kakaako condos totaling 5,500 units this decade sounds pathetic.”
Tian said the market will react to the imbalance as developers see opportunities. The gap right now is so large the price of a single family home is projected to reach $800,000 next year. That follows a record of $650,000 last year.
Presenters at a recent Honolulu Board of Realtors forum said the city’s planned light rail line offers hope for adding land for housing and redevelopment to lands near train stops.
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