Despite all signs that a disaster is on the horizon for the housing market in Maui, the Maui County Council are diverting affordable housing funds to an ill-conceived affordable rental project. While recognizing that something must be done to provide families with affordable housing, the Council and county administration are essentially ignoring the signs of a massive foreclosure crisis and are doing little toward helping families get into new homes.
The Realtors Association of Maui is clear in predicting an onslaught of foreclosures like never seen before in Maui. Currently, Maui has the highest foreclosure rate in Hawaii which also overshadows the national average and experts in real estate warn that these terrifying trends will likely continue for another year or more. There are 444 pending foreclosures in the next quarter alone, not to mention the hundreds of homeowners who have already experienced foreclosure.
Perhaps one of the overlooked consequences of foreclosure is the effect of empty homes. Without question, the loss of a home is plenty devastating for the family involved but the effects of vacant homes on neighborhoods is equally devastating. Property values in said neighborhoods can drop by as much as 40 or 50 per cent which also means a loss of revenue for the county. Unfortunately, instead of using their resources to deal with this issue, the county looks to be assigning funds to solve the problem of affordable rentals. Real estate experts worry that the problem of affordable rentals is here to stay while the county still has some time to tackle the issue of foreclosures.
The council has fast-tracked the allocation of$ 2.75 million toward the development of a 28-unit rental facility. While the Real Estate Association of Maui typically supports projects that bring about affordable rentals, they see a number of problems with this current project. For example, the construction price runs to $464,285 per unit at a building in Wailuku. In addition, DBR Development LLC, the winning bidder for the project, is a California company while several qualified local firms were bypassed. Finally, the excess of rentals on the market now suggest that rental prices will drop naturally and investments should be directed toward the foreclosure crisis.
However, the main concern is not the cost, construction, or appropriateness of the project but the fact that these units will not be ready for tenants for 3 years. On the other hand, the problem with foreclosures is very much in the present. Some nonprofit organizations are taking matters into their own hands. Na Hale O Maui is planning to buy several foreclosed homes for around $350,000 and then sell them to low income Maui Families for around $200,000. Moreover, these homes would be sold with restrictions of further increases in price meaning that they will continue to be affordable in the long term. In consequence, families who are currently renting would move into their new home leaving more rental properties unoccupied. Na Hale would be able to finance 30 homes using county funds leading to further stability in our dubious real estate market.
With all the evidence under consideration, the Real Estate Association of Maui seems clear in its recommendations. The impending foreclosures in Maui are guaranteed to bring stress to families throughout the island as well as having a direct negative impact on the economy and county revenues. As property values continue to fall, the county and local government could face its own serious financial problems causing budget deficits and likely future layoffs. On the other hand, investing in foreclosed homes and creating affordable options for buyers will bring the kind of stability to the market that can have a positive impact on the economy as well. The Na Hale project brings opportunity in the face of disaster.