Housing in the Oahu real estate market is a hot, and often misunderstood topic
in a state with short housing supply, and some of the highest home prices in
the nation. Most are aware of the new residential condo towers popping up in
the Kakaako and Ala Moana Skylines, however,
most aren’t aware that developers are actually required by state law to offer a
certain number of units for sale under Affordable Housing guidelines.
With a few hundred affordable units offered for sale and sometimes thousands of
applicants, the supply never meets the demand. The Ala Moana
neighborhood is seeing the greatest influx in new condo projects and may offer
as many as 5 residential towers, a condo-tel, and rentals. Affordable Housing
will be offered by each project in some capacity; but whether it’s for sale or
for rent is to be determined.
Considering affordable housing? See some of the common FAQ’s and guidelines
below to help you determine if you might be eligible.
What is HHFDC?
The Hawaii Housing
Finance and Development Corporation(HHFDC) operates as the overseeing agency of
all affordable housing in Hawaii. The development and financing of the
affordable housing units is operated by the agency as well.
What advantages does HHFDC's
Affordable Housing provide?
Qualified and eligible applicants of the program are given an
opportunity to purchase below market prices.
Opportunity to live and own in a new construction project in Metro
With the height of Oahu home prices today, a common theme amongst
many of my clients is the scenario by which buying a home equates to
a downgrade in preferred location or quality of home,
relative to their rental. Putting aside the many benefits of homeownership
vs. renting, this can be true. The Affordable Housing Program can offer
opportunities for a more lateral move -- providing homeownership options
to a prospective buyer in locations or of a quality that wouldn't normally
be in the budget. But again, with restrictions.
Are you eligible for
Eligibility for the
program is ultimately determined by HHFDC’s review of the information provided
on buyers’ applications.
The most notable
requirements for the program are as follows:
Applicant must be 18 years or older
Must live in the unit
US Citizen or permanent resident alien
Resident of the State of Hawaii; currently resides in the State of
Hawaii. State ID or Drivers License is typically requested as proof.
Applicant must not own a majority interest (more than 50%) anywhere. Yes,
On top of being eligible for Affordable Housing, buyers must
also qualify by showing they have gross income(s) that
satisfy a mortgage lender’s guidelines to purchasing a home.
Are there income limits
for Affordable Housing?
Yes. Buyers’ eligibility
is determined by their household income being no greater than a specified area
median income(AMI) determined by HHFDC(Usually 120-140%). Take a look at the
chart below for the 2018 AMI; note your household size at the top of the
What is the buyback
Buyers wishing to
purchase Affordable Housing unit must know that they are required to own and
occupy their unit for 10 years. Should they look to sell, rent, or transfer
ownership of the home prior to the 10 year buyback period, HHFDC is given first
right of refusal to purchase the unit. Once the 10 years buyback period
expires, the restriction no longer applies.
I do my best to have my
clients "crystal ball" their futures for the next 10 years as a
decade is a long time, and a lot can change in terms of family
dynamics and income. Make sure you consult your Realtor to gain full
perspective on what you can and can't do as an Affordable Housing owner, and
how that may affect your real estate future going forward. For some, Affordable
Housing is a perfect fit. For others, it may handcuff them from their
accomplishing their long term Oahu real estate goals.
Is a deposit required?
Yes. Buyers are required
to make a $500 good faith deposit upon signing a contract for a unit. A total
deposit of only 5% of the purchase price, less the $500 good faith deposit is
due after 30 days.
Shared Equity Program —
What is it?
One of the caveats to
the HHFDC allowing buyers to purchase at below market prices, is the Shared
Appreciation. In turn when you sell your unit you will share some of the net
appreciation back with the HHFDC to help fund future projects. The SAE is
determined prior to closing and once determined, will never change.
Here's a sample SAE
computation using estimated figures to help you understand the how an Owner's
Percentage Share and the HHFDC Percentage Share is calculated:
What’s the next
Affordable Housing opportunity if I’m curious about buying?
Those looking to
purchase the Metro Honolulu area should look to the Ililani condo project
as of now( July 2019) near SALT at Kakaako, There was some the other
project which has already finished sale for affordable units ,SkyAla Moana condos, The Central Ala Moana condos. These are exciting
projects in highly desired Honolulu neighborhoods that are quickly transforming
into thriving urban epicenters.
Those looking at
homeownership in West side of Oahu should look to the Ho'opili project;
more specifically the Kohinaat Ho'opili and Ilima at Ho'opili phases
that are currently selling Market Priced units, but estimated to bring Affordable
Housing units later this year. Ho'opili is centered between Ewa and Kapolei,
anchored right next to the future planned Honolulu Rail, and just north of the
new Ka Makana Alii mall. We expect Ho'opili to
consistently offer affordable housing opportunities as new phases are
Last not but not least, the highly anticipated KoaRidge project in Central Oahu will also be offering affordable
housing units with estimated sales to commence in 2020.
The Howard Hughes Corp. has released plans for its 7thHawaii
tower — a 400-foot luxury condominium building whose name pays homage to the
original owner of the 60-acre master-planned community Ward Village.
Victoria Place will be located at 1100 Ala Moana Blvd.,
between Waiea and Victoria Ward Park, a portion of the site The Howard Hughes
Corp. (NYSE: HHC) had previously planned as the site for one of the two Gateway
Towers, according to an application filed with the Hawaii Community Development
Authority, which oversees development in Kakaako.
The application seeks to consolidate the footprint for the
two previously approved Gateway Towers into one for Victoria Place, and expand
the makai end of Victoria Ward Park to “provide enhancements for wellness,
connectivity to the ocean and culturally inspired placemaking,” the developer
Victoria Place plan to have 350 residential units, 15,590
square feet of open space at the ground level, and 64,105 square feet of
recreational space. The unit mix would include 137 one-bedroom units, 146
two-bedroom units and 77 three-bedroom units.
There is no retail or commercial space planned for Victoria
The focus of the ground floor is going to be the integration
of the park, it will be a nice change and transition.
The project is being designed by Solomon Cordwell Buenz, who
also designed the Anaha and Aalii towers for Howard Hughes, as well as the ONE
Ala Moana and Park Lane Ala Moana buildings around Ala Moana Center and
Brookfield Properties' Lilia Waikiki project, which is expected to start
construction this year.
HCDA has scheduled a presentation hearing on the project for
Sept. 4 2019 , with a decision-making hearing scheduled for Oct. 2.
Please contact me for any more detail or inquiries!