Hawaii’s Rent Reach Shockingly High Levels, Demand Far Exceeding Supply

by Edwin Quinabo

Struggling to make ends meet financially in Hawaii just got tougher in the COVID-19 era. The cost of rent is up in Hawaii, along with consumer prices of most goods, food, utilities, and gas.

Hawaii’s housing, both rentals and properties for sale – which always have been the single biggest household expense in Hawaii, according to the Bureau of Labor Statistics – soared higher at a time after Federal and Hawaii State moratoriums, as well as other pandemic-related tenant protections like prohibiting landlords from raising rent, have all come to an end.

“It’s like a double, triple whammy,” Roland Salvador, Salt Lake renter said, who had his rent go from $1,850 in 2019 to $2,200 per month starting March this year for a 2-bedroom apartment. “Gas prices are so high. And when I shop for groceries, I pay about 25% more for just about the same amount of food.”

The current inflation in the U.S. is 7.5%, the highest since February 1982, according to the U.S. Department of Commerce’s Bureau of Labor Statistics. Another measure of inflation, the Consumer Price Index (CPI) showed a 7.5% increase over the last 12 months.

Economists say the rise in consumer prices is partially attributed to the supply chains that broke down during the start of the pandemic and ensuing lockdowns. Supply chains have not yet caught up to pre-pandemic levels to meet the surge in demand that started as soon as most states reopened their economies.

And there’s no telling how long higher prices will last. Some economists predict inflation should correct itself as soon as supply chain bottlenecks return to pre-pandemic form.

Like the price of consumer goods, experts say the rise in rent is also a low supply-high demand issue where there is a shortage in total rental units available relative to a higher number of people scrambling to find rentals.

Michael Yoshino, Realtor-Associate, Locations Real Estate Brokerage, Esq., told the Filipino Chronicle, “When the rental eviction moratorium was in effect, rental prices were down because everyone was staying in place to stay safe.  Once it was lifted, the renters quickly consumed the rental inventory and it’s been trending in this direction ever since.

“So we have low rental inventory which has been driving rental prices up over the last half year or so.  Many of the renters are local and a good portion have been displaced by owners selling their home in this hot market but we also have many renters from out-of-state who are moving to Hawaii due to the rise in the work from home trend,” Yoshino said.

There are 190,420 renter households in Hawaii.

HERO’s findings on rising Hawaii rent
In the University of Hawaii Economic Research Organization (UHERO) Dec. 17, 2021 21Q4 Update, researchers found home and apartment rents have increased significantly over the past year.

“Zillow estimates that the median rent for Honolulu in September was 9% higher than a year ago. Statewide, advertised rents on Craigslist for one-bedroom units have increased by 14% over the past year, while advertised rents for two-bedroom units rose by 35%. The continued increase in rents is exacerbating the hardship for renters struggling to make payments or facing possible eviction.

“In October, 20% of Hawai‘i residents had missed their most recent mortgage or rent payment, or they expected to miss their next payment,” the report stated.HERO’S look into apartment prices on Craigslist found dramatic results. “The median asking rent on Oahu has climbed to $2,100, up from $1,700 a year ago,” UHERO reports.

Median Rental Prices
*Oahu: 1-Bed $1,700; 2-Bed $2,195; 3-Bed $2,800
*Maui: 1-Bed $1,700; 2-Bed $2,150
*Kauai: 1-Bed $1,500 – $1,800; 2-Bed $1,800 to $2,100; 3-Bed $2,100 to $2,500
*Hawaii (Big Island) 1-Bed $1,000; 2-Bed $1,400; 3-Bed $1,800 to $2,500
Source: KHON

Cost of Hawaii single-family homes up, contributes to high rent
Economists say Hawaii’s high price in single-family homes contribute to the state’s high rent. When residents cannot afford to buy a home, that leaves them in the rental market, increasing local demand.

“A surge in the price of single-family homes had the median price topping $1 million by the third quarter of 2021 in all counties except the Big Island. On Oahu, single-family home prices have increased 20% over the past year, exceeding the national rate of 14%. Condominium prices have risen a less dramatic 8% over the past year,” UHERO researchers reported.

They said home prices have surged this year, mirroring a national trend. Together with high rents and higher consumer price inflation, this is posing challenges for families.

Working two jobs to build up rent reserves
Blandena Buenafe, Waipahu, renter, called the current rental market “ridiculous” – and says up to 25% of her take-home income each month goes to paying her rent.

“I have been working two jobs just to make sure I have sufficient savings reserved for at least six months. So if something should happen, I have enough,” Buenafe told the Filipino Chronicle. She is worried that rent will continue to rise.

Hawaii has highest Housing Wage in nation
According to a new report by the National Low Income Housing Coalition (NLIHC), Hawaii has the highest Housing Wage (housing cost vs wage) in the U.S. In NLIHC’s “Out of Reach” report researchers analyzed rent prices in all 50 states to determine how much was needed to rent a two-bedroom apartment at fair market value without spending more than 30% of one’s income. Hawaii came in at No.1 with a housing wage of $38.76 an hour.

Researchers also found that those getting paid minimum wage in Hawaii would need to work approximately 153 hours a week to afford a two-bedroom apartment, which costs about $2,015 per month to rent.

Hawaii’s current minimum wage has been at $10.10 for four years.

Rising prices versus Hawaii wages
On Hawaii’s wage vs rising prices, UHERO said before COVID-19, wages were outstripping inflation by 1%. But whatever gains were made had changed as inflation has spiked. And UHERO forecasts Hawaii’s cost of living will again rise faster than wages.

Other drivers of rising rent
Nancy Caasi Hata of West Oahu Realty told the Filipino Chronicle a lack of affordable housing keeps homeownership low. “And in a desired location in Hawaii, residents will want to stay even if it means renting. This contributes to growing demand and higher rent.”

Hata said millennials, now older and financially stronger, is a population adding to the rental market. “Millennials have a desire to avoid living in clusters with family and want more flexibility.” She has noticed this trend developing at the onset of the pandemic.

Hata says there is low inventory in the middle-to-lower end price points. And at the higher home prices, fees, and rising interest rates — renting is preferred, more feasible or in many cases the only option available to Hawaii residents. Again, this increases demand which can only lead to higher rent prices.

Rental property owner: rising repair and maintenance cost
Venus Delos Santos, rental property owner, said her concerns have always been about safety, repair costs, tenant responsibility and accountability.

She said the high cost of repair and maintenance would influence her to raise rental prices. She attributes rising repair and maintenance costs “to the decrease in the production of construction materials and other supplies, as the pandemic causes staff shortages nationwide.”

”As a landlord, there are other costly considerations. She cites property clean up, pest control services, replacing major and small appliances, even efforts to evict and find a new tenant as expenses that could factor into raising her tenants rent.“

Landlords are most concerned about property value and hoping they don’t plummet,” Delos Santos said.

Mainland, international investors and the future of increased migration
Since the late 1980s as housing costs began rapidly ascending, a common criticism among Hawaii’s locals have been to blame the outsiders, U.S. mainland and international investors particularly from Asia for sweeping in, paying for local real estate at overvalued prices, in effect raising overall housing market prices well beyond locals’ financial means.

Realtors both nationally and locally say migration flow will only increase as the pandemic’s stay-at-home working environment is looking to be a more permanent trend among the wealthy. With online working possible from just about anywhere, Hawaii and other desirable, weather-friendly states all year round are expected to see higher numbers of wealthy migrants entering their housing market as buyers and renters.

Based on the second quarter of 2021, Hawaii is already drawing in Americans from states with high professional and high-income populations. Out-of-state renters to Hawaii most frequently came from Los Angeles, New York or San Francisco.

“This migration flow is putting pressure on local rent prices because these movers have budgets that are 10% higher than the existing residents who are also searching for a new apartment,” according to an online survey by a rental-finding company.

How locals get by with high housing costs
Salvador says his share of the rent is about 25% of his monthly income. But he gets help from his girlfriend who contributes about one-third of the total rent. “To be honest, I wouldn’t be able to come up with rent on my own and pay for everything else. Hawaii is too expensive.

“It’s the same at my parents’ house. They own a house in Aliamanu but receive help from my sister and her daughter to pay for their mortgage. This is the Hawaii style. We have multi-family members living under one roof.

“People used to stereotype Filipinos as living with too many people. But as housing, grocery, insurance and the price of all the things we need go up in our state, it’s more common. All the ethnicities do the same now, multi-generational living,” said Salvador.

Sources of rental assistance
Renters having a hard time making rent are encouraged to look into rental assistance programs.

*Oahu Rental & Utility Relief Program-One Oahu, is a special pandemic assistance program that has already sent over $120 million to households. There are also counterpart rental programs for Maui (mauicounty.gov/MauiRentHelp), Kauai (kauairenthelp.com) and Hawaii (HawaiiCountyERAP.org.) counties.

A household can qualify for the Rental and Utility Relief Program (RURP), which is federally funded and administered by Catholic Charities Hawaii and the Council for Native Hawaiian Advancement when: the household can show financial harm during the pandemic and at least one member is at risk of losing their housing, and the household is at 80% annual median income or lower. For a household of four, that is $96,650 a year or less.

For more information, call Catholic Charities Hawaiʻi: 808-521-4357, option 1, then 1 again or the Council for Native Hawaiian Advancement: 808-596-8155, option 1.

Both call centers are open Monday to Friday, 8 a.m. to 5 p.m.To apply for rental assistance online, visit oneoahu.org/renthelp.

*Section 8 is a housing choice voucher program, meaning that approved applicants can find their own apartment, townhouse or house to rent and Section 8 will pay landlords directly on their behalf.

Section 8 is a federally funded program designed to assist very low-income families, the elderly, and the disabled to afford decent, safe, and sanitary housing in the private market.

Eligible families at or below the very low (50% of the median income for Honolulu) income limits set by the U.S. Department of Housing and Urban Development (HUD). For a household of two, applicants must be making below $48,350 or a household of 4, below $60,400.For more information on Section 8 eligibility, visit honolulu.gov/cms-dcs-menu/site-dcs-sitearticles/1339-cad-section-8-eligibility.html

*Informational resources: State Landlord-Tenant Hotline (808-586-2634)
Legal Aid Society of Hawaii (808-536-4302)

The Legal Aid Society of Hawaii has additional resources for rent and mortgage assistance statewide online at legalaidhawaii.org/i-cant-pay-my-rent-mortgage.html. The Emergency Broadband Benefit can help eligible households with internet bills and in some cases, buy laptops, desktops, and tablet computers: https://www.fcc.gov/broadbandbenefit.