The Aloha State is in danger of saying “aloha” to housing unless a new wave of units comes to the market.
According to an Associated Press report, Hawaiian housing experts are warning that their state will need between 65,000 to 80,000 new units by 2025 in order to keep up with the current demand for new housing. This is especially acute for affordable housing, as single-family homes cost a median of $750,000
“We’ll continue to see increasing median household prices which will continue to essentially squeeze out individual—especially local residents—from being able to afford a home,” said Luis Salaveria, director of the state Department of Business, Economic Development & Tourism.
Ramping up home construction would also benefit the Hawaiian economy, according to Carl Bonham, executive director of the University of Hawaii Economic Research Organization.
“If we actually built enough houses to satisfy growth in population and existing shortfall, it would add one percent to our total jobs, one percent to our total income over the whole time period, so every year we’d have one percent more jobs than we would otherwise,” said Bonham. “It’s by no means a small issue.”
When it comes to closing costs on mortgages, the Aloha State is also the most expensive state.
According to new data from Bankrate.com that analyzed closing costs on a $200,000 home loan, Hawaii had the highest average closing costs with $2,655—more than a few dollars above the national average of $2,128. The other states with high closing costs were all along the Atlantic coast: New York ($2,560), North Carolina ($2,409), Delaware ($2,358), South Carolina ($2,322), and Connecticut ($2,313).
In contrast, Pennsylvania’s closing costs were $1,837. Low closing costs were also abundant in Wisconsin ($1,863), Kentucky ($1,874), South Dakota ($1,904), Oklahoma ($1,911), and Missouri ($1,926).
“Thanks to the new and improved mortgage disclosures that the CFPB introduced last October, closing cost estimates have become more accurate because they mandate that lenders include all costs ahead of time,” said Holden Lewis, Bankrate.com’s senior mortgage analyst. “This is great for consumers who can now comparison shop with more confidence.”
The HAMB 25th Annual State Conference "Get TRID Fit With HAMB" will be held Wednesday, Sept. 14 at the Japanese Culture Center of Hawaii, located at 2454 South Beretania Street (Manoa Grand Ballroom) in Honolulu, Hawaii. This year marks the 25th year of the annual Association of Mortgage Professionals (HAMB) State Conference. Don't miss this opportunity to earn your eight education credits while recharging your mortgage network. Keep your NMLS registration healthy with HAMB.
So, who is buying homes in Hawaii? The Aloha State’s Department of Business, Economic Development and Tourism was curious to find out, so it analyzed data compiled by Title Guaranty for a new report that tracks home sale activities from January 2008 to September 2015.
According to the newly released “Residential Home Sales in Hawaii,” a total of 139,998 homes were sold during this period—or, roughly 18,064 homes sold per year and 1,505 homes sold per month. The data incorporates resales of existing homes and new developments, and both single family homes and condominiums in its statistics.
Nearly two-third of the homes sold statewide during these years (72.5 percent) were purchased by Hawaiian residents, with 23.5 percent sold to Americans coming over from the mainland and four percent sold to foreigners. Californians represented the majority of mainland buyers (38.4 percent), followed by Texans (10.5 percent) and Washington State buyers (8.5 percent), while Canadians made up 44.1 percent of foreign buyers, followed by Japanese buyers at 37.9 percent.
But wherever the buyers came from, they needed to have plenty of U.S. currency to secure their transactions. The average price for homes purchased by foreign residents was $785,604, while U.S. mainland buyers paid an average of $630,390 and Hawaii residents averaged at $478,189. Buyers from across the Pacific paid the most for Hawaiian residential properties: those arriving from Hong Kong had the highest average home price at $1.05 million, followed by Chinese buyers shelling out an average of $936,738 and Korean buyers paying an average of $882,894.
Cathy Lee is currently taking her second go-round as president of HAMB–The Hawaii Association of Mortgage Professionals. A senior mortgage loan originator at Hawaii Lending Specialists LLC–a brokerage specializing in residential, commercial and government-assisted lending programs–Lee spoke with National Mortgage Professional Magazine about her work with the association and discussed the state of the Aloha State’s housing scene.
How did you first get involved with the association?
I first started in mortgage banking after I was laid off from the Dean Witter stockbroker firm. I started as a loan processor, but at the time, there was no one teaching anyone how to be a mortgage professional. It was one of those things you learned as you go. I stumbled across HAMB and they had classes, so I joined and started going to different seminars. I first became involved in 2003, helping out at conferences, and later joined the board. I served as HAMB president in 2011 and again in 2015.
You are now in your second term as the association’s president. What brings you back to this role?
Everyone is a volunteer and it takes away from everyone’s day-to-day work activities. But the way I see it is this: If you can give little, that’s great. If you can give a little more, that’s fantastic.
What is the association’s input in the state legislative process? And what issues are currently on your plate?
We have a lobbyist that helps when an industry-related bill is introduced. We have the opportunity to sit with the Commissioner of the Division of Financial Institutions and see if we can work things out.
We are the only profession in Hawaii that requires the posting of your office hours. You need a sign that says you are open from eight to four, etc., and you have to be at desk from eight to four. For a mortgage professional, that is really hard because much of our business takes place outside of the office. I have clients on other islands, so I have to fly to these other places and be out of the office all day.
We are trying to see if the state can include language that says, “By Appointment Only,” on these signs. I’m hoping we can compromise on something. For a one- or two-person shop, to have someone sit there for eight hours is difficult—and they cannot answer questions or even open my drawers because they are not licensed.
How does the association keep its members up to speed on industry-related issues?
We offer classes that keep everyone updated on issues, such as the new TRID regulations. We’ve asked lenders and people in escrow to put together presentations, and we’ve asked real estate agents to attend to make sure they are notified and involved.
As a state affiliate of NAMB, how do your members benefit from its connection with the national group?
NAMB does a lot for the industry. They keep us updated on all issues and, as a state affiliate of NAMB, we’re lucky to have them.
Thanks to NAMB, I went to Washington, D.C. in 2010 and 2011. Going to Washington is a long trip for me–I have to fly out two days head of the meeting. Going to the West Coast is a little easier–in a short period of time, I can be there. But if you are able to make it to Washington, D.C., it’s a great experience. They have great speakers and you meet with your legislators and speak to them; I have been able to sit at table with reps from the CFPB and have conversations with them.
In your opinion, what can be done to bring young people into careers in the mortgage profession?
I am not seeing much of the younger generation coming through. My opinion is that the younger generation is looking for careers with fast-earning capabilities. This profession requires time–you have to meet your clients, know their needs and figure out ways to help them. Some young people are not patient enough to do that, but I am hoping to see new faces.
What is the current state of Hawaii’s housing market?
Our housing is crazy in parts. In downtown metro Honolulu, a condo studio can go for $300,000 or $400,000, while a one-bedroom can go for $500,000-$600,000 and up. We have affordable housing on the outskirts of the Main Island on rezoned agricultural land. But, now, because of that new housing going up, our farming community is getting smaller.