Across Oahu, new housing developments are drastically transforming the landscape.
From the Ewa plains to the ever-changing Honolulu skyline, Oahu's growth may have only just begun.
It’s a contentious topic; a double-edge sword wielded by the city of Honolulu as it tries to reconcile the needs of many. On one hand, proposed Oahu new homes draw the ire of local residents vying for the preservation of native lands with simultaneous pushback on a development phenomenon that many see as the culprit of Oahu’s congestion and record housing prices.
On the other hand, we see the City of Honolulu enamored by the jobs and economic opportunity that real estate development brings to Honolulu, and an argument that the only short-term solution to relieving Oahu’s housing shortage is to build more housing.
What many don’t realize is that the State of Hawaii provides tax incentives to developers who build homes for sale or rent under Honolulu Affordable Housing guidelines. Developers work hand-in-hand with overseeing agencies like the Hawaii Housing Finance and Development Corporation (HHFDC) to develop a percentage of below-market priced homes for sale and rent to those who meet certain income and eligibility requirements.
Developing neighborhoods like Hoopili, Koa Ridge and Kakaako are offering some relief from Oahu's housing shortage, and Gentry Homes, one of Oahu's most active residential developers, has also just announced their latest project, Kealii.
Keali'i by Gentry at Kapolei Golf Course will offer brand-new Kapolei luxury homes for sale. Keali'i will have 66 homes total, 56 of which with direct golf course views and frontage. There will also be eight homes offered under Honolulu Affordable Housing guidelines, and all homes will be made available through lottery releases.
Oahu's Housing Shortage Drives Demand
Regardless of which side of the issue you take, it’s an objective truth that the Oahu real estate market has some of the highest home prices in the nation, and as the housing shortage persists, demand keeps upward pressure on housing prices and rents. For equity-conscious homeowners and investors, this upward pressure is a large part of the appeal.
Oahu homes have long been considered one of the safest real estate investment plays in the world, seeing only a minimal price retreat compared to the rest of the nation during the 2008 housing crisis. Think of Oahu homes as limited edition, like a Michael Jordan rookie card: So few were made that as the basketball phenom gained notoriety and worldwide appeal, Jordan’s stock soared to unparalleled heights. Oahu has similar notoriety among real estate developers. As a trophy destination with international appeal, the presence of all five branches of the U.S. Military and nearly one million residents, developers are still swooning over Oahu in 2020.
Locations President and CEO Jason Lazzerini echoes this sentiment: “The main driver for the surge is pent-up demand. There is a housing shortage on Oahu, and developers are filling a critical need. This is being led, in large part, by millennial first-time-homebuyers. Millennials are amassing some wealth and realize that homeownership offers them more control and the opportunity to build wealth over time.”
Changing Oahu Homebuyer Preferences
“There is also a move toward lifestyle purchases when it comes to real estate," Lazzerini added, noting that many homebuyers--especially millennial homebuyers--are willing to trade living space for amenities and proximity to urban hubs. New projects like the Ililani condos in Kakaako will feature unique amenities like a community garden, citrus grove and putting green.
Robin Markle, Locations vice president of Projects adds: “Oahu is very unique in that there is demand from a diverse set of buyer profiles, giving developers a number of options to choose from when planning which housing type to bring to market. Having some of the best weather in the world draws the appeal of vacation homeowners and investors, both domestically and abroad, as well as a plethora of lifestyle elements, like Oahu’s famed beaches and proximity of world-class shopping.”
What's next for Oahu's real estate market
The economy is in a unique place to support this housing expansion. With steady growth, near record-low interest rates and low unemployment, we can expect continued growth in 2020.
Demand for Honolulu luxury apartments and affordable housing options all but guarantees that the Oahu market is ripe for new development in 2020.
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