Aug 1, 2010

ADU's may increase New Construction 25%

Whether you call it Ohana Units or Accessory Dwelling Units, Second dwelling units hold enormous potential to help revitalize one of the largest sectors of our local economy -- the Construction Industry -- and provide affordable housing in the core of urban Honolulu. A separate 1984 study by the City & County of Honolulu stated:
"It was a slow year for single family residential construction on Oahu in 1982-83. However, in the programs first year of implementation, ohana units comprised roughly one-fourth of all single family construction. Without the ohana zoning provisions, these units probably would not have been built. Theoretically, about 45 acres of additional land would have been required had these additional units been constructed in a typical subdivision."
She may not have known it then, but in the 1980's, Mayor Eileen Anderson was promoting Smart Growth principals: concentrating development in existing urban areas with existing public facilities, while preserving agricultural and pristine lands.

In 2009, there were 856 Building Permits issued for New Single-Family dwellings at a total valuation of approx $296,000,000. If ADU's were legalized today and embraced with the same zeal as when Ohana Units were first introduced, we would see 214 more new homes built, injecting an estimated $74 million (25% of $296 million) into the local economy.

That alone would result in $2.96 million in GET, not to mention increased property taxes and other transaction fees.

While the market to Purchase a New Single-Family home may have slowed, the Rental market is tighter than ever. Rental income from ADU's can supplement homeowner's income to help prevent foreclosures and stabilize neighborhoods.

More recently, the upheaval in housing and credit markets has made renting more attractive for a growing number and share of households. Although a rising tide of former owners who have lost their homes to foreclosure are now turning to rentals, it is primarily the impact of tighter credit standards and the uncertainty generated by falling home prices that is driving growth in demand. Over the longer term, though, homeowners who defaulted on their loans will provide an enduring lift to the number of renter households because they will likely need years to undo the damage to their credit scores.
jchs.harvard.edu, 2008)

By allowing ADU's in Honolulu, gov't will help to create affordable housing, stimulate the construction industry, and generate additional revenue to help balance budget deficits. All without raising taxes.