Affordable Housing Perspectives: Garboden and O'Toole

Feb 25, 2019

Affordable Housing Perspectives

State lawmakers, along with the Governor, are attempting to increase the affordable housing supply for either rent or lease. But, what will work?

 

 

 

 

 

Phillip Garboden, UH professor with Housing Economics Policy and Planning Department
Credit Brooke Jones, communications specialist with Legislature Majority

Increasing housing supply will reduce prices in the long term, but, that process – known as filtering – is only an ideal model.  That, according to Professor Phillip Garboden with the U-H Housing Economics Policy and Planning Department.

 

“So what is filtering?  It’s basically the idea that as the housing stock ages, it becomes less desirable and therefore, less expensive.  So, today’s luxury units are tomorrow’s moderately priced units and next week’s low-end units.  This process necessarily depends on a steady stream of new housing.  This housing is generally supplied at the top of the market or near to the top, where developers can expect the highest returns per acre of land.”

 

Randal O'Toole, scholar with Grassroot Institute of Hawai'i
Credit Wayne Yoshioka

Garboden says filtering is reversed when land is expensive or scarce and there are development restrictions.  He says, in these markets, developers will renovate or demolish lower-end properties to build luxury units, thereby decreasing the affordable housing stock.  Grassroot Institute of Hawai’i scholar, Randal O’Toole, says contrary to popular belief, increasing density -- building up -- will not lead to affordability.

 

“The average price of land in Honolulu is $3.3-million an acre.  But, if you want to build 50 units per acre then you’ve got another problem.  And, that is construction costs are a lot higher.  You’re getting into highrise housing and that’s gonna be 5.5 to 7 times the cost – per square foot --  on a single family home.”

 

O'Toole addressed attendees at a Grassroot Institute luncheon at the Pacific Club
Credit Wayne Yoshioka

O’Toole says Hawai’i passed a State Land Use Law 58 years ago that restricted development to 6 percent of the available land; the rest was zoned for conservation and agriculture.  But, he says, that can be changed by the property rights law of the U.S. Constitution and the Fair Housing Act.

 

“We know the land is there.  You know the land is there.  There’s two ways to free it up.  One, is to repeal the 1961 Land Use Law and the other is for somebody who owns some of that land to go to the Supreme Court of the United States and say, hey, this law is violating my property rights and it’s harming minorities by forcing them to move off the island because they can’t afford to live here.”

 

Garboden briefed members of the Senate and House Housing Commitees
Credit Brooke Jones

Currently, 91 percent of the state’s residents live on 6% of the land.  Professor Garboden, who briefed members of the House and Senate Housing committees last week, says the affordable housing crisis is now and government interventions -- by policy and subsidy -- are needed at all price points.

 

“And so we must intervene at lower price points while reducing barriers to new building.  Tax credits, revolving funds, creative financing, project-based vouchers, it’s just part of the solution.  We also want to make sure that 40 years from now, we’re no upset by the fact that we did not allow for new supply.”

 

Professor Garboden says there is no single solution to solve Hawai’i’s housing crisis.  Wayne Yoshioka, HPR News.