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When It Comes To Housing, The Median Is The Message

Creating more “affordable” housing is an obvious solution to the supply shortage undermining Honolulu’s present and future.

That “solution” is also a canard, at least in terms of how the shortage has been framed and addressed. Unless supply reflects where true demand exists and the financial capacity of residents, Honolulu’s crippling housing imbalance won’t be rectified.

Honolulu’s affordable housing shortage is rooted in an income shortage. Median wage levels for four of Honolulu’s five largest major occupational groups fall below the overall median of $43,840.

For too many of its workers, the future isn’t about affording a median-priced single-family home ($785,000 through November) or condo ($425,000), it’s about the next paycheck and the next rent payment or grocery bill. For some it means deciding to relocate to the mainland.

Honolulu’s median household income as calculated by the U.S. Department of Housing and Urban Development is $99,000, but this isn’t a result of most jobs paying well. Honolulu wages often fail to mitigate Hawaii’s high cost of living, requiring many to work multiple jobs and many households to have multiple members working.

By definition half of local households are financially unable to purchase or rent “affordable” units aimed at households earning 100% of area median income. The calculation doesn’t include consideration of whether a household has sufficient funds for a hefty down payment, management fees, property taxes, or utilities, a harsh reality that squeezes the pool of eligible buyers even more.

The pricing of residential projects deemed “affordable” is based on median household income levels for the entire county. But median income has a major, often overlooked geographical component as well.

The difference in the median incomes for Honolulu’s 35 state house districts is striking. They range from $121,982 (District 17: Hawaii Kai, Kalama Valley) to $41,641 (District 29: Kalihi, Kapalama, Iwilei, Chinatown). For projects, both for-sale and rental, to be truly affordable, their pricing needs to reflect the incomes in the areas where they are situated.

Although the logic is daunting, we’ve decided that “affordable” can be defined as a unit priced within reach of a household earning up to 140% of area median income, further narrowing the range of truly affordable units coming to market.

It shouldn’t be a surprise that developers find it easier to build affordable units for buyers with six-figure household incomes than they do for those earning less than 80% of AMI. Or for those precariously perched even lower down on the income ladder, where need is greatest.

Canards Are Not Solutions

While it makes for a good sound bite, mandating that a rail-accessible project’s affordable component pricing be reduced from 140% of AMI to 120% is no recipe for addressing the shortage confronting Honolulu. A ladder only works if it has rungs extending from the bottom, where first time buyers or renters have a chance to begin their climb, through to the top, where most of what we are mandating gets built.

In promoting their new, urban Honolulu condo projects, developers often justify them as convenient downsizing options for empty nesters. They point to buyers from areas like Hawaii Kai and Kahala for good reason — relatively few in Kalihi have the means to trade their home for a Kakaako high-rise address.

Honolulu faces a related, similarly existential problem: retaining its appeal for younger residents who make up its most mobile demographic and rely on the availability of homes below the 80% of AMI rung on the ladder. Insufficient salaries and a shortage of housing options are hardly a means for maintaining population (or economic) growth.

Honolulu’s declining population has longer-term implications, including a declining birthrate. The number of annual births in Honolulu continues to fall. It shrank by 1,523 between 2012 and 2018, equivalent to a decline of 11%.

Canards can be useful fiction, but they aren’t solutions, especially if we continue to create housing aimed to meet the demand of a minority of our working population. Overlooking the economic inequality and hardship this approach perpetuates won’t address a problem that Honolulu can’t afford to ignore.

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