What is Affordable Housing?

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Photo: Brendon Kalei'aina Lee

The average price for a house in Hawaiʻi is now $828,002. The average rent for a two-bedroom house in Hawaiʻi is now $2,300. Many say that in Hawaiʻi the cost of a house is beyond the reach of the average household. The monthly mortgage payments for that house, using simple math, would be roughly $2,072.

It is not that we cannot afford the house, we cannot afford the 10% down payment that most lenders require. The average renting household in Hawaiʻi is already paying more than what a mortgage payment would be. So, they can afford the house. They need assistance coming up with such a large sum for the down payment.

It is an election year and as usual over the last several decades the hot button topic for candidates is “affordable housing.” What exactly do they mean by that? Well, I guess that would depend on the office they are running for.

As an Office of Hawaiian Affairs Trustee, to me, it means several things. First, it means partnering with the Department of Hawaiian Homelands. They are the only agency that can presently and legally provide housing exclusively for Native Hawaiians. This partnership could be a multi-pronged approach.

First, provide down payment assistance for beneficiaries. OHA has the capability to provide a fund for down payment assistance through low-interest loans via a new revolving loan for short-term down payment assistance. The monthly payments on an average down payment for a single-family home on the homestead would be approximately $683 per month for 10 years. This is more than doable for the average household.

Second, with the newly acquired Iwilei properties, OHA is well-positioned to build actual affordable housing along the Transit-Oriented Development corridor in the near future. The only way to ensure these affordable housing projects benefit Native Hawaiians is through this partnership.

Third, continue to acquire properties around the state that can be used for affordable housing projects.

In both Iwilei and statewide scenarios, the partnership could be utilized in two different ways. One is to provide affordable rentals until an award on the homestead is available or as a part of the newly proposed “buyout” option where a homestead beneficiary is offered a property off the homestead and, if the beneficiary accepts, they are removed from the waitlist.

Another would be to create a separate fund to assist Native Hawaiians who are not eligible for DHHL with down payments. Given the same 10-year plan, this is doable for the average household.

To allow for these types of affordable housing initiatives we need several things to happen. First, the Trustees need to rebalance the Native Hawaiian Trust Fund. Currently, the Fund is far too risk-averse given OHA’s large landholdings. This will create greater returns, which means greater funds for spending. Next, revamp the debt policy to allow for greater land acquisitions. OHA needs to leverage its ability to take on debt to acquire more assets which in turn means greater wealth. Part of the taking on debt means OHA needs to utilize its ability to issue revenue bonds. OHA is the only state agency that has this ability and in 40 years it has never taken advantage of this.

This is just a quick rundown of what “affordable housing” means to this Trustee. The best part about this – it is all easily accomplished with a little bit of vision, and a little bit of cooperation. Let’s hope that others see it that way too so we can help our people realize the dream of homeownership.