Priced out of Paradise: As housing inventory drops, rental rates go up
HONOLULU (HawaiiNewsNow) - Rent has increased statewide 10- to 12-percent since 2012, while the housing inventory is way down -- and real estate experts say those two factors are contributing to a housing crisis that's only forecast to get worse.
"Right now, because of the pressures of rising prices, growing incomes, growing jobs -- there's a lot more people running around looking for rentals than there is rental housing stock," said Ricky Cassiday, a Hawaii real estate analyst.
Renter Katie Wilson knows first-hand how difficult it is to find an affordable place. She looked at nearly two dozen apartments and applied to half of them, but only heard back from two.
"I thought there would be a lot more options under a grand, but honestly what you get for your money here isn't much -- especially downtown where I wanted to be. You had small square footage, but it was still really pricey so I actually expanded a lot more to areas I thought I would never look in just because of the pricing," said Wilson.
She said that in two she could get a 400-square-foot studio for $1,100 a month. For the same price, she could get a two-bedroom apartment Aiea, where she eventually opted to rent.
The 26-year-old recently graduated with her master's degree and has a full-time job, but says landlords seemed concerned that tenants wouldn't be able to keep up with rent.
"A lot of them had a requirement that rent couldn't be more than a third your income, which in Hawaii I felt the rent prices made that pretty difficult," said Wilson.
Cassiday said one out of every five Hawaii residents qualifies for affordable rentals, but only one in 20 is actually renting affordable housing because there just aren't enough units, regardless of how much families make.
In fact, analysts predict the state will need 17,000 new rental housing units by 2020.
"As the rental market gets tighter, as rents go up -- it becomes a problem," explained Peter Savio, founder of Savio Realty.
"Rents tend to rise faster than income -- especially in this type of market or this situation. We haven't built local condominiums for the local market in the last 10 to 15 years and that's the reason it's so tight this time. We haven't had the local developers building local condominiums with local pricing. We're building everything for the multi-million dollar apartments. We're building the more expensive units. We're not building the average units and that's what's creating the dilemma right now," he said.
Hawaii has historically had the highest median monthly rent in the country, regardless of bedroom size.
In 2005, the median monthly rent was $995. By 2014, it hit an average of $1,448 -- that's a 45% increase.
Experts say the numbers are especially staggering when compared to the median monthly rent for the nation, which was $728 in 2005 and $934 in 2014.
This September, Hawaii hit a new record for the median price of a single family home -- $734,000.
"Wages have been outpaced by prices and if housing prices are like this, it pulls rentals with them," said Cassiday.
Bottom line, experts say the lack of construction of affordable rental units combined with the current low supply is driving up rental rates.
"The solution is we need to build or at least make the opportunity available for more either condominiums to be built in the local market or lots available for local investors to buy and build smaller buildings," said Savio.
This story is part of an ongoing series, "Priced out of Paradise," in which Hawaii News Now will explore Hawaii's high cost of living and why so many island families are struggling to make ends meet.
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