Housing Crisis Deepens as Hawaii Faces Mass Exodus

During a recent government meeting, Dean Minakami, Executive Director of the Hawaii Housing Finance and Development Corporation (HHFDC), addressed the pressing issue of homeownership in Honolulu. Highlighting the challenges faced by residents, Minakami emphasized the need for collaborative efforts to promote homeownership opportunities, particularly as many locals are leaving Hawaii due to affordability issues.

Minakami shared a personal anecdote about a tenant moving to the West Coast, underscoring the emotional impact of the housing crisis on families. He referenced a 2019 housing study indicating a significant demand for housing, with a deficit of 22,000 units identified at that time. The trend of out-migration has continued, with 67,000 residents leaving Hawaii in 2022 alone, marking the seventh consecutive year of net out-migration.

The presentation also revealed that while the council has approved numerous rental projects under the Low Income Housing Tax Credit (LIHTC) program, only a handful of for-sale housing projects have been greenlit. Out of 23 approved projects, only five were for sale, with the majority focused on rental units. Minakami pointed out that developers often prefer rental projects due to uncertainties regarding support for for-sale initiatives.

Minakami stressed that the LIHTC program, while crucial for affordable rental housing, is not a comprehensive solution to the housing crisis. The program is oversubscribed, with only a limited number of awards available each year, primarily benefiting households earning below 60% of the area median income (AMI). He noted that this does not address the needs of working professionals who earn above this threshold.

The fiscal implications of these housing projects were also discussed. Minakami compared the financial assistance required for LIHTC projects versus for-sale developments, revealing that the former often necessitates significantly more government funding without the promise of reimbursement, as these projects are exempt from property taxes. In contrast, for-sale projects, while riskier for developers, generate property tax revenue for the city, providing a more sustainable financial model.

Minakami concluded by calling for a concerted effort to incentivize developers to pursue for-sale housing projects, which are essential for retaining residents and addressing the ongoing housing crisis in Honolulu.