Life may be getting slightly easier for Hawaii’s renters because apartment rents have flattened and are declining in many parts of Oahu, two new housing studies show.
The military’s calculations for what is called the Basic Allowance for Housing, the amount needed by a service member to rent an apartment or house on Oahu, found that rental prices have fallen 3% in the past few years, according to Defense Department spokesmen.
It’s a contrast with the average figures for the mainland, where rents have risen about 2.8%, military analysts reported.
The decline follows a general flattening in rents in Hawaii for the four previous years, according to the Defense Department. The military tracks the numbers nationwide, compiling the data mid-year, with a final analysis released in mid-December.
Nationwide, in the same 2015 to 2019 period, the general rate of inflation has been 8.5%, which means that income-adjusted rental rates have fallen even more sharply in Hawaii.
The military’s analysis echoes findings by Locations, a Honolulu-based real estate services company, which is reporting that rental rates have dipped for some kinds of housing in parts of Honolulu county. In particular, rental rates are flat or down in Ala Moana, Kakaako, Ewa, Hawaii Kai and Waikiki, Locations reported.
In Ala Moana/Kakaako, for example, the median rent was $3,000 in 2015 but $2,750 in 2019. In Kahala, it fell from $2,300 in 2015 to $2,250 in 2019. In Waikiki, the median rent was flat at around $2,000 from 2015 to the end of 2019, Locations reported.
Slight increases, of about 5%, were reported in scattered markets, including Nuuanu, Kailua, Kaneohe and Mililani.
But even where recent increases occurred, they were less widespread than in previous years, when rents were jumping like magic beans sprouting into the sky.
A 2014 report on the Honolulu rental market, for example, found overall apartment rents climbing about 5% a year between 2012 and 2014.
By mid-2015, rents in Honolulu were jumping as much as 10% or more annually, a report that year from Harvard University’s Joint Center for Housing Studies showed.
But things have changed.
Local housing experts say the statistics from the DOD and Locations align with their personal observations of the market.
“In the last three to four years, rents have flattened or decreased,” said Matt Brummel, president and principal broker of Honolulu Property Management, which manages 1,000 apartment units, most of them on Oahu.
This trend became evident even before vacation rental rules on Oahu were changed. Those effects have not yet been fully studied and it will be some time before a more definitive analysis is completed, but experts think it will cause further good news for Hawaii renters as more units formerly rented to tourists become available to local people.
Housing experts say the big change came when new housing construction in west Oahu, Kakaako and on military bases added to the supply of housing, giving renters more ability to move if they can find opportunities elsewhere.
“Supply has increased to where it lets renters be more picky and choosy and don’t need to pay the same rent,” Brummel said.
About 1,448 housing units were built on Oahu in 2018, 881 were built in 2019 and 671 will be built in 2020, says housing analyst Ricky Cassiday, who tracks construction data and the market for property managers and developers.
“The average rents are going down,” he said.
To be sure, rental rates remain uncomfortably expensive for many renters in Hawaii. Many of Hawaii’s renters spend half their income on housing, at a time that households that spend more than 30% are considered financially stretched.
Rents remain very high by national standards as well, with DOD spokesmen noting that Hawaii is among the nation’s most costly housing markets, even with the recent downturn.
Experts also note that low-income renters and large families who need to rent homes with three or four bedrooms also may not be feeling much relief.
But still, there are perceptible signs of change, housing experts report. In one downtown building, for example, a lower-floor unit rented for $3,800 a month in 2014. More recently, a nicer unit in the same building came up for rent and was leased at $3,400, or $400 a month less, Brummel said.
When the tenant in the $3,800-a-month unit moved out, the landlord realized that rents had fallen so much that he decided to sell instead, he said.
“Everything comes back on the table when the landlord listens to the market.” Housing expert Ricky Cassiday
For years landlords had the upper hand, but some renters are now finding themselves with more negotiating clout. Renters may be finding themselves with more flexibility in terms of choices, the price they pay and the amenities they enjoy, housing experts say.
Cassiday said the effect is most notable in studios and one-bedroom apartments in Honolulu. He said that the people who are benefiting the most are dual-income couples who can live in a one-bedroom apartment and commute easily to work.
He said that they also have more negotiating room. New appliances? Fresh paint? OK to bring a pet? These are all things that renters are asking for when they go apartment-hunting now, and some of them are getting what they want.
“Everything comes back on the table when the landlord listens to the market,” Cassiday said.
Landlords who had grown accustomed to being able to raise rents each time tenants move have found themselves disappointed lately.
“They’re used to that certainty, understandably so,” he said. “It has been consistent a long time and now it’s not.”
Many landlords who previously were not required to make upgrades when their units came up for rent are being forced to renovate and modernize, Brummel said.
Renters, meanwhile, are beginning to sense the shift in the market, Brummel said, and they are deciding to move to another area where they can save some money each month.
“It used to be that you could rent whatever, even if it was beat up,” he said. “But now tenants are more picky. They’re asking ‘Why aren’t there new appliances?’”
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