Rents soaring in Hawai'i

By Christie Wilson
Advertiser Staff Writer

Plunging mortgage rates have catapulted rents to new heights, as property owners take advantage of the red-hot housing market by pulling their units out of the rental pool to sell for high profits.

A smaller rental inventory means that "people are standing in line" for the couple hundred units that Windward Isle Properties manages in Kane'ohe, Kailua and Hawai'i Kai, ranging in price from $750 to more than $5,000 a month.

The rent increase is a reversal of conditions recently reported by the U.S. Census Bureau showing that Hawai'i's median gross rent in 2000 actually was lower than in 1990, when the state was experiencing a real estate boom.

"1990 was the apex of the market," Sauvage said. "The rental market was softer in 2000. It was still in a recovery phase. Now it's so strong, boosted by low interest rates, that the supply is completely gone."

The tighter market has put the squeeze on renters, Sauvage said, particularly those in two- and three-story walk-ups who were paying under $1,000 a month.

Judy Kaminaga felt the squeeze when the rent at her Kahala studio recently was increased from $795 to $900, forcing her to move. The 24-year-old student now rents a room in a friend's house for $575 a month.

"When I was first looking for a place to rent, a rental management company said I should plan to spend 30 percent of my income on housing. But before I moved, almost half of my income was going to rent and utilities," she said.

Earl Teeter, 56, said he can't remember a time when rent increases weren't a regular occurrence. Teeter's family of four has been looking for a place to live since March after their landlord sold the Kalihi house they were renting.

"The rent in Hawai'i is very high. Anything under $1,800 is in pretty bad shape. I usually end up having to fix them up as we live in them," he said. "Affordable two- to three-bedroom homes are usually run-down rat traps."

Teeter devotes his entire $950 net monthly pay from his job at City Mill and some of wife Janet's paycheck from Duty Free Shoppers to pay for housing.

According to the 2000 census, Hawai'i led the 50 states in median gross rent at $779, just as it did in 1990, when the median gross rent was $830. (Median gross rent is monthly rent plus utilities; median means half the rents were higher, half lower.)

Nationally, the median gross rent was $602, a 5.4 percent increase over the 1990 figure, according to a census summary based on a 1-in-6 sample.

Hawai'i ranked third in terms of median gross rent as a percentage of household income. Renters paid a little more than 27.2 percent of their paychecks for rent and utilities. Only renters in California and Florida paid a higher percentage.

Rents in East Hawai'i also have risen in the years since the census, but the numbers have yet to return to 1990 levels, said Nancy Cabral of Day-Lum Rentals & Management, which handles 450 residential rental units in South Hilo and Puna ranging from $500 to $2,000 a month.

For example, Cabral was able to charge $650 a month in 1990 for a two-bedroom, one-bath apartment in Hilo. The price dropped at one point to between $400 and $450, and has just now climbed back up to $550.

She expects rents will rise further as the economy in East Hawai'i benefits from the expansion of astronomy activities, the University of Hawai'i at Hilo and diversified agriculture.

The Census Bureau also reported that there were 174,458 renter-occupied units in Hawai'i in 2000 — about 10,100 more than were counted in the 1990 survey.

Advertiser staff writer Kawehi Haug contributed to this report.

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