Priced out of Paradise: Military housing allowance dropping 8.6% - Hawaii News Now - KGMB and KHNL

Priced out of Paradise: Military housing allowance dropping 8.6% on Oahu

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HONOLULU (HawaiiNewsNow) -

Despite the hot housing market, the military housing allowance on Oahu has been cut by 8.6 percent for 2016, according to the Department of Defense.

Officials say the Basic Allowance for Housing is updated annually to meet current housing costs. It rose every year, from 2010 to 2015. But this year, Oahu saw the biggest cut in the country.

Department of Defense reports indicate the 8.6 percent decrease means a first-class sergeant in the Army with dependents who arrives on Oahu this year will get $3,075 a month, compared to the $3,312 per month that was offered last year.

Military families say the decrease will make a difference.

"There are some locations in the states where it may not be as critical and the BAH rate reflects that. It's a much lower rate. Here, I really genuinely don't believe that a military member with a family would be able to afford housing out in the community without that BAH. It is absolutely critical here," said Walter Greene, who served in the Air Force for 30 years and has lived off BAH at several different locations.

Officials say the BAH rate here has typically ticked upwards, but the Pentagon had hinted there could be correction this year.

"It just depends on what units are available out on the market for rent when the study is done, so it can be a little challenging," said Pete Sims, the senior vice president and regional general manager for Lend Lease, one of the biggest military base landlords in the state. It manage about 10,000 homes for the Army and Navy.

"Our project is set to weather this storm. It's one of many variables that we manage and we project forward. Our service to service members will not change or be reduced."

Lend Lease officials say they were prepared for the possibility of cuts, but are concerned about the decrease because they feel it doesn't reflect the true local housing market.

Experts agree. Real estate consultants say the average rent on Oahu has increased more than 6 percent for everything from apartments to single-family homes. They believe the Department of Defense used a generic formula to calculate this year's rate that didn't take into account Hawaii's unique housing market.

"I was very baffled by the drop in the military allowance of 8 percent, particularly since the other market that's very similar to Hawaii -- San Francisco -- it went up," said Ricky Cassiday, a real estate analyst. "Somehow they determined it was lower this year than in years past, which flies in the face of economic reality and local perceptions."

Service members already receiving a housing allowance will not be impacted by this year's cut. Their rates are grandfathered and remain protected so long as there is no change in their status.

Copyright 2016 Hawaii News Now. All rights reserved.

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