Developers: Rising mortgage rates threaten Maui’s wildfire recovery
HONOLULU (HawaiiNewsNow) - The Federal Reserve on Wednesday decided not to raise interest rates again — at least for now.
But high mortgage and construction loan rates are making it harder for Maui and other counties to dig out of the housing crisis.
Prominent Maui developer Everett Dowling is responding by making big changes to one project that was already in the pipeline towards construction.
“These are mortgage rates that we haven’t encountered for about 30 years,” Dowling said. “It happened so suddenly, that it’s a shock to the system.”
Dowling has taken over the Kuikahi workforce housing project in Wailuku, which was planned as for-sale housing. Rising interest rates made the homes unaffordable.
“You’re getting squeezed on the cost. And your revenues decreased because the buyers can’t afford the mortgages. They can’t afford to pay the sales prices,” Dowling said.
To keep the project alive while Maui is desperate for new housing, Dowling’s company is proposing dropping the plan from 54 buildings with homes for sale to a simpler, six-building layout with 202 rentals.
The range of affordability: From $1,273 for a studio to $3,464 for a three-bedroom.
Jack Dowling said they hope to complete construction in three years.
“It’s a combination of those three things — pivoting to from for sale to rentals, the project design and the project timeline,” were the key factors, he said.
The Dowlings told the Maui Count Council they need a $40 million, low-interest county loan to make it possible. But County Housing Director Lori Tsuhako said the project will have to compete for the money.
“If you just do a very simple calculation on paper of how much has been asked for verses how much money is actually available there is a very big deficit in that,” Tsuhako said.
That answer frustrated those who hoped that the county would act faster on a housing crisis made worse by the Lahaina fire.
Community advocate Kai Nishiki said, “Action is what’s missing a sense of urgency is missing.”
Council members were also disappointed that the county wasn’t able to green light the project.
“We have the resources to help invest in our people,” said Council Member Gabe Johnson, “Because our people are leaving.”
Council Member Yuki lei Sugimura pointed out that projects need to nail down financing before they can seek approvals. “This is ready to run,” she said. “Other projects are just trying to rev up.”
Dowling pointed out that Maui is his home and the center of his companies efforts, despite having a reputation as the most difficult county in which to build housing.
“We not going to give up trying,” Dowling said. “We will keep knocking our head against the wall and maybe one day we’ll get some housing built.”
Hawaii News Now spoke to other developers centered on Oahu and they agreed interest rates are forcing them to change their projects.
Although they also said the overarching challenge continues to be multiple layers of regulatory steps, which add time and cost to every new project.
Copyright 2023 Hawaii News Now. All rights reserved.