“Something wrong here.”
That was the subject line of an email from a reader earlier this week.
He pointed to a story about the new condo at 801 South Street, on part of the site which formerly housed Honolulu’s two competing newspapers (“High-rise in Kakaako completed, owners set to move-in June“).
The story quoted Marcus and Sara Hayden, UH employees who had just closed on a unit in the building, their first experience with home ownership.
Here’s the final paragraph of the story.
Hayden also found out that the unit, which he bought for $414,000 with two parking stalls, was appraised by his lender at $480,000. Hayden and his wife expect to sell the unit in about 18 months or so to move into a larger unit in 801 South B that Sara Hayden contracted to buy before getting married. The neighboring tower is slated to be finished late next year.
The reader commented:
If people are already planning to sell their affordable priced condos at a profit before they even move in, it seems to defeat the whole concept of housing for the working people.
This wasn’t a criticism of the Haydens, but rather a question of policy.
Is this a problem for Kakaako’s few new “affordable” projects? Are there policies to limit speculation in affordable units? Perhaps someone else can fill us in.
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@Lopaka43: I may not be familiar with all the rules, but those that I have seen do not provide protection against flipping. After 10 years, the “flipped” housing isn’t in the pool.
I would disagree that rent control doesn’t work. Even in NYC, where landlords have eroded it over the years, it protects those in rent-controlled apartments. I’ve posted an extensive outline of how it works on Disappeared News. I’ve also mentioned co-op regimes and we lived in one example of that in New York, where they have a mixed history.
Singapore is a good example in many ways. But this is not Singapore, unfortunately, and we are not working at the problem with the vigor necessary to make a dent in the demand.
My anger isn’t righteous, nor is it anger. Nor am I having fun. It’s an observation. And the people cannot be separated from the government. As long as we, as a population, remain detached and undemanding, we’ll not be able to bring about the change we need. That’s also an observation and I’m not angry or funny.
Having said all of this, there are still advocates working hard who can help make a difference.
Larry, if you define flipping as selling your home after living in it for ten years, I agree the City’s rules don’t prevent that.
Whether that is a bad thng depends on your philosophy about what affordable housing programs are supposed to do.
If you think the purpose is to create an inventory of “affordable” units, than you probably view the unit as lost when the original owner sells it at market rates after the ten years.
Another way to view it is to see it as a low income or low-middle income household being helped to attain home ownership and the security of the equity that owning a home provides.
Policies under consideration would increase the length of time units must be retained as affordable, especially if they are rentals.
@Huh?; Claiming developer hardship? With the boom happening in Kaka’ako of all places? Sorry, but your tale of voodoo economics doesn’t wash.
Must be talking to developer… or a real estate speculator.
@Lopaka43; Just to clarify a point here,… I’m not going after affordable home recipients who decide to sell their units after 9-1/2 years….or even 6 years,… if there are extenuating circumstances. I realize that unforeseen events happen in people’s lives.
What I DO object are recipients who have no intention of making the affordable unit their long -term home in the first place and are simply trying to cash in quickly. The scenarios you describe do not match the situation that Ian was talking about.
The situation Ian referenced was a Star-Advertiser story about a workforce housing unit in Kakaako which would be covered by the HCDA rules I cited above.
However, you are right, Allen. It appears that the HCDA rules about length of ownership and shared appreciation do not appear to apply to work force housing for some reason.
“boom in Kakaako”
You should study the real statistics that are available, and you would see your arguments fall apart immediately when you realize building in the last 10 years have been at less than half the annual rate on Oahu than the five decades before.
But then it’s easy to be fooled when basing policy on newspaper headlines rather than hard facts.
Can you assist with a link to the statistics that you’re referring to?
“Can you assist with a link to the statistics that you’re referring to?”
Sure,
There have been several state, county, TV, and private reports recently all corroborating the same data about building in Hawaii being a fraction of past decades, despite appearances and arguments to the contrary.
Here is the most user-friendly formatted version recently from economist Paul Brewbaker –
http://www.hawaiibusiness.com/kakaako-remade-for-the-21st-century/2/
I think the DBEDT data book also has similar stats, but the rcent ones don’t go back as far.
The great thing about our free market system is, if building affordable homes were so easy and profitable as critics like to claim, then everyone should be doing it and making excess returns!
That’s when one should research the graveyard of Hawaii developers before one proceeds any further. Let’s not waste time blaming developers and look to where the real problems always lie — the politicians who encourage the pointing of fingers to divert the blame from themselves! Oh, and we as the uninformed public should also be blamed for falling for the misdirection, and letting our politicians skate so easily year after year.
Please realize that if you want to charge less than half the market rate for your the new building you want to build, no bank will lend you
the money because the rents won’t pay back the construction loan – yes, the shortfall is at least $100,000 per unit. So if you can’t come up with tax dollars to pay it, you will have to spread that $100,000 cost for each unit to the market units, which make those market units even more unaffordable to the average buyer, forcing you to sell luxury units to comply with the affordable requirements. Handcuff that with more restrictions on sales with equity-sharing, time limits, etc., and you’ve just killed your building project, and no one will finance your project. This is the reality no one wants to hear, and therefore no one is serious about solving the problem.
Please also see today’s Sunday paper article “Small projects add up”
“The state Department of Business, Economic Development and Tourism published an updated report this month on housing supply and demand in Hawaii, and projected that about 65,000 new homes are needed statewide over the next decade, or about 6,500 a year.
“Developers, however, have been producing about 2,400 new homes annually since 2009 compared with 6,000 to 7,000 during the 1980s and 1990s, according to the report. Most of the need and production is concentrated on Oahu.
“‘There has not been a sustained increase in private residential construction,’ the report said. ‘Because of constrained supply and increased demand in the Honolulu metro area, housing prices reached an all-time high in 2014.’
“Median prices last year reached a record $675,000 for single-family houses and $350,000 for condos.”
http://www.staradvertiser.com/businesspremium/20150419_SMALLPROJECTS_ADD_UP.html
Don’t forget, with Hawaii’s population growing by 1% a year, we need new homes for 14,000 more people each year. All the bright ideas that end up discouraging building will only make things worse year after year.
@Huh?; I don’t care about overall construction stats on Oahu. We’re talking about Kaka’ako. That’s where the project described in the article (801 South St.) is located. Kaka’ako is where at least a dozen new high-rise residential and mixed-use projects are being planned or already being built. If that isn’t a construction boom, then what is?
There is none so blind as he who chooses not to see.
re: Allen N
Fun to pontificate without facts. Now that you have facts, it’s time to leave behind the feelings.
What you have given us are assertions, not facts or data. BTW, construction employment data also would refute your claims about booms, but then we would be relying on facts again.
You’d probably be shocked to hear the original plans envisioned for Kakaako provided for adequate capacity for twice the current buildout.
“I don’t care about overall construction stats on Oahu. We’re talking about Kaka’ako.”
“There is none so blind as he who chooses not to see.”
agreed.
@Huh?;
So where are the stats that say construction in the Kaka’ako area is slower now than in the past? You can throw all kinds of numbers and data here about the state. That won’t change the “fact” that Ian’s post was talking about Kaka’ako specifically.
Ian Lind wrote:
“Is this a problem for Kakaako’s few new “affordable” projects? Are there policies to limit speculation in affordable units? Perhaps someone else can fill us in.”
Go ahead, sir. Provide us with facts and data about the community that is the topic of the article at hand. Or are you only groping around with stats that are not germane to the area in discussion?
“Is this a problem for Kakaako’s few new “affordable” projects? Are there policies to limit speculation in affordable units? Perhaps someone else can fill us in.”
No. Yes. Yes. Suppose you won’t like that answer either. What you won’t admit is that the problem/answer is more complex than you think, there is a lot you didn’t know, and you don’t have a simple practical solution as you may have thought due to facts you did not know that others are aware.
When you charge into a discussion with bold claims about your POV being superior because you have the stats and data to back you up,….then fail to deliver, takes a lot of chutzpah to go carrying on about how others should take it on faith that you have it right. For that, I salute ya, Chief.
I guess I gotta spell it out for you. It’s not about whether Kakaako has more building now than before, that’s your straw man argument, and not Ian’s question. It’s whether the current policies can be “improved” without making other things worse. Since you don’t understand the problem, the answers all seem simple to you. You ‘ve fallen for the politicians’ misdirection, my friend.
Let’s see some more of that chutzpah.