With soaring housing prices in Maui County, council members are looking at ways to update the county’s sales price guidelines so affordable housing can actually be affordable.
Median sales prices have spiked year over year, and many residents have questioned how affordable housing prices are calculated. While the housing crisis is evident nationwide, Hawaiʻi has extremely limited land and other natural resources, along with high shipping costs.
“We have all heard from residents over and over again, justifiably, that even Maui’s affordable homes are not affordable to them,” Maui County Council Affordable Housing Committee Chairman Gabe Johnson said during his committee meeting Monday.
Median sales prices for Maui County single-family homes hit a new record high of more than $1.2 million in April. Meanwhile, affordable homes have gone for $600,000 to $800,000 in recent years.
That’s why Johnson and other council members are discussing legislation that would bring down affordable housing costs.
The topic of the Affordable Housing Committee meeting Monday focused on adjusting the county’s metrics for affordable housing prices, which was recommended by the county-commissioned Comprehensive Affordable Housing Plan.
Presenters included M. Keaka Aumua, Hawaiian Community Assets community service specialist on Maui, Faith Armanini, Homebridge Financial Services mortgage loan originator, and Gina Chamberlain, nonprofit Rural Community Assistance Corp. rural development specialist.
The recently published Comprehensive Affordable Housing Plan advises that the county update its rent and sales price guidelines to come up with prices that include principal, interest, taxes, insurance, mortgage insurance and HOA fees capped at 31% of the homeowner’s gross income.
By changing it to 31%, more federal resources are available for the community, Chamberlain said.
Currently, some residents are paying nearly 50% of their gross income toward housing, according to Armanini.
“I don’t think anybody can live on that,” she said.
Aumua said many families in the low- to moderate-income brackets of $57,000 to $92,000 face tough choices. If they’re able to qualify for a mortgage, they typically cannot afford payments long term.
“Our families are often being priced out,” she said.
Instead, Aumua said housing for low- to moderate-income families considered truly affordable should be closer to $150,000 to $250,000 for apartments and $350,000 to $450,000 for single-family homes.
Under 2021 to 2022 prices, the lowest price for a two-bedroom, one bathroom apartment was $385,000, and the lowest single-family home with four bedrooms, two bathrooms at 6,700 square feet was $618,010, according to Aumua.
Johnson said that there are two major factors in determining the price of an affordable home.
The first factor is Area Median Income, a federally produced number, which can be problematic. Many experts believe those numbers are artificially high, but Johnson said that topic will be discussed in the future.
The second factor is the formula the county Housing department has been using to calculate the affordable sales price. The county starts with income levels given by the US Department of Housing and Urban Development. Then, it calculates what a person at that income level can afford to pay for a home.
“We have the power to change that, to make it more accurate, to make it conform to mainstream mortgage standards, giving our local families an increased ability to use federal mortgage programs that allow for home ownership with low or no downpayment requirements,” Johnson said. “By simply changing the formula we use based on the federal program standards, we can make affordable homeownership accessible to more people.”
Johnson said that he intends to draft legislation that would bring Maui sales price guidelines in alignment with federal mortgage programs, per the recommendation of the Comprehensive Affordable Housing Plan.
“The price must be affordable so that a household earning an AMI percentage with a 3% downpayment will pay no more than 31% of its monthly income toward a 30-year fixed mortgage at 30 year fixed rate plus 1% including property taxes, HOA dues, insurance,” he said, referencing possible draft language of the measure.
Council Member Kelly King asked whether fewer developers would then build affordable homes.
Johnson replied that his Bill 61, which expanded the uses of the Affordable Housing Fund to include long-term planning for affordable housing, houselessness solutions and infrastructure assessments, will help subsidize developments.
“If we say that our folks can’t afford these, and the developers say, ‘Well, we can’t build them any cheaper,’ then the only way we are going to solve this is with government subsidies,” he said. “I’m so glad we all voted for Bill 61 that allows the uses of affordable housing fund for 100% affordable housing projects. So now the government can buy down the units.”
Council Member Yuki Lei Sugimura said that she wants to see the county build more infrastructure to help alleviate development costs, which would lower home prices.
“The county should built it, the infrastructure, which is what we’re supposed to do anyway according to the charter and bring the cost of housing down that way and not look for the developer to find the water, build the sidewalks, do everything, which we do now,” she said. “We may be at a point where we should pivot and look at ourselves in the mirror and say, ‘OK, what more can we do?’”
Multiple testifiers on Monday praised the possible changes.
“This is just a basic, simple step that the county needs to take to adjust its horrible pricing guidelines to get in line with the other national standards,” Michael Williams said.