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The Honolulu Advertiser
Posted on: Thursday, September 29, 2005

COMMENTARY
Shift housing focus to educated workforce

By Dean Uchida

It is easy for us in Hawai'i to get complacent as we enjoy prosperous economic times as the military privatization and healthy tourist industry are pumping money into the economy, and low interest rates push up the demand for housing. A recent article in the New York Times examined the residential real estate market in Denver and provided a sobering insight into what might happen in Hawai'i.

During the late 1990s through the early 2000s, Denver was experiencing double digit appreciation in its residential real estate market (sound familiar?). Large international telecommunication companies were moving into the Denver area resulting in new jobs and increased demand for homes. Suddenly, as quickly as it started, Denver lost 6 percent of its jobs (74,000) between 2000 and 2003. People who lost their jobs could no longer afford their mortgages and put their houses up for sale, causing a glut in the market. Today, even with historically low interest rates, Denver's residential market is slowly recovering.

As we again find ourselves struggling with the cyclical nature of the real estate market and the challenges of providing "affordable housing" for the workforce in Hawai'i, the Denver experience points out the need for us to consider income as one of the factors that influence the housing market. Interest rates and income drive the demand for housing and developers build where they can sell homes.

The HUD standard is that no more than 30 percent of a family's gross income should be dedicated for housing.

In Hawai'i, the focus of the community (policymakers and developers) has been on the supply side of the problem. And, considering the complexities of the market, that may well be the proper focus for government. However, I began to also take a closer look at the demand side.

Looking at the demand side also requires a longer term view as one considers how to increase income in Hawai'i, or stated another way: How do we ensure quality jobs over time and thereby increase workers' income? While there have been a few success stories of homegrown companies providing quality, knowledge-based jobs, the real challenge is creating more high-quality jobs. How then do we begin to expand the knowledge-based jobs in Hawai'i? What do employers, who could provide high-quality, knowledge-based jobs, look for in moving to or expanding into a new market?

Aside from the obvious business decisions a company must consider in opening or relocating a new office, such as market location and production and transportation costs, two of the fundamental issues that I find consistently referred to by employers are an educated workforce and affordable housing. Depending on the product or service, employers do not want to spend an inordinant amount of time and money on training workers, or worse yet, have to provide remedial education to get the workers up to a level that they are "trainable."

Raising the median income of the family of four above the current $67,750 requires a longer term view of things. Realistically, we are not talking about solutions that will impact buyers in this current housing cycle, but quite possibly the next.

Perhaps we are focusing on a symptom and not the real problem. Perhaps the answer to the affordable housing crisis is not only in increasing the supply of housing in general, but of equal importance, in focusing on creating an educated workforce. Perhaps it is going back to some very basic concepts and ideals that education and intelligence are the keys to economic and social prosperity.

Dean Uchida, an 'Aiea resident, is executive director of the Land Use Research Foundation of Hawai'i. He wrote this commentary for The Advertiser.