Jul 9, 2010

How many Illegal Dwelling Units are there in Honolulu?

(Note: My study examined only single-family category homes Sold in 2009.)

In a previous post, I did a guesstimate based on a 1996 San Francisco Planning Dept study which estimated between 8% to 15% illegal units. Using 8% as a baseline, I used US census data to find the # of one and two-family households in Honolulu . (I did not include apt units or structures > 3+ dwellings) 

Multiplying 8% x 190,512 = 15,241 which is an estimate of # of illegal units.

Another method is to study past sales data. Relying on 2 sources of information: MLS data and OahuRE.com, I searched the public comments field (limiting my search to Single-Family Home category, Sold in 2009) for the following terms:
  • separate entry
  • rental
  • studio
  • multiple family / multi family / multifamily / multi-family
  • extended family
  • illegal 
Discrepancies could be explained by varying search criteria ie.OahuRE.com automatically added min List Date = 7/8/08, to the search criteria, whereas some of the sales in 2009 maybe from listings before that date. Anyway, the numbers from OahuRE vs MLS, are close. 

Excerpts of comments from MLS:
  • 3 separate entrances; 4 bdrms/2 bth upstairs, 4 bdrms/1.5 bth downstairs, and 2 bdrms/1 bth in back house. Great for large families or Investors w/rental income.
  • Spacious classic 3 bedroom home with 2 bedroom basement unit. Perfect for multi-generational family or extra rental income.
  • This is a single family home converted into 5 rentals. Convert back to single family home, or home for family w/2 rentals
  • permitted addition w/full bath & own washer/dryer-great rental or mother-in law quarters
  • Main unit is 3 bedrooms, 2.5 baths, 2 living rooms/areas & 2 bonus rooms. Second unit is 2 bedrooms, 1 bath & 1 living room/area. Second kitchen is non-conforming
  • 3/2 upstairs & 1/1 downstairs with wet bar, ideal for studio rental or multi-family Upstairs apartment could be incorporated into main house or used for additional family members or rental income.
  • 3/1 upstairs and 3/1 downstairs, with separate entrances. The back cottage (in poor condition) has 2-bedrooms and 1-bath
  • 3/2 up with study & 2/1 down with 1 individual studio in prestigious St. Louis Heights with excellent Hokulani school district. 3 separate entrances possible for extended family.
  • Multiple dwellings w/separate entrances. Duplex w/ 2/1 on ea.side, & detached cottage (2/1)
  • Currently configured as 3/1, 4/1.5 and 4/1.5. Back portion built in 1991, front in 1964. Great for extended family or live in part and rent the rest 
Preliminary results suggest that 9.5% of all homes Sold 2009 in the single-family category were described by the listing agent as containing a separate living area. However, some of the homes listed are duplicates listed more than once, ie search terms occur in the same MLS listing and therefore would count more than once.

I did not review each house individually. Some may indeed be legal 2nd units (ie large lot size may allow multiple homes or additional units allowed in an Apartment zone). However, a few also have multiple illegal units or illegally converted uses, ie. Maid's Quarters upgraded to a full 2nd dwelling unit. Also, illegal units are not advertised as "illegal" and may be hard to find. Additional homes may be discovered under expanded search terms ie. "in-law" or "does not match tax records" or "nonconforming" or "live in one rent the other" or "cottage". 

The search I did was limited to single-family category of MLS and did not include Multi-Family listings that may also include illegal dwelling units. Also, this search was limited to text in the Public Comments section, as the search could be replicated on both databases (Oahure.com and the MLS).  Including Realtor's comments to other Realtors (not publicly available) may have produced greater results.

Interestingly, if a property is producing good rental income, chances are, it would NOT be sold now when prices are below the market high of a few years ago. It is reasonable to assume that owners who are desperate to cover the mortgage are more likely to add a separate rental unit.