Waiawa Cancellation Has Losers and Winners

November 10th, 2009 categories: For Buyers, For Sellers, Rants & Riffs

Gentry Development, Alexander and Baldwin and Kamehameha Schools Bishop Estate (KSBE) have just pulled the plug on developing 12,000 housing units in Waiawa (West Oahu).

“Local developer Gentry Cos. lost its rights to develop Waiawa Ridge, ending the more than 20-year-old project that was expected to produce its first homes next year in the community envisioned with 10,000 to 12,000 homes.” CLICK HERE TO READ THE HONOLULU ADVERTISER ARTICLE

Waiawa is located just west of Pearl City at the junction of the H1 and H2 freeways. Given the magnitude and location of the project here are some of the losers and winners.

Losers

Gentry Development. I can’t imagine starting to do something in 1987 and having it fall apart 22 years later. Gentry had to have invested significant money and time to move Waiawa toward development; after all of that cost it has to hurt to lose the deal.

Future homebuyers. Home prices in Honolulu have always been notoriously high, a result of the lack of new supply (can you say “economics 101”). Had the project come on line it would have added significant inventory to our market and may have afforded many buyers an opportunity to get into home ownership at more affordable prices.

The construction industry. The development was projected to require $400,000,000 in infrastructure. Beside the cost of building the actual residences, by Hawaii standards, this is a huge sum of money and it would have spurred construction jobs.

The Hawaii economy. As much as my friends on the left of the political spectrum hate the idea of “trickle down” economics, I do not believe anyone can debate that a development of this size would have had a positive impact on the Hawaii economy. Without it, Hawaii has a smaller tax base, fewer jobs and higher housing costs.

Winners

Surrounding area residents. 12,000 brand new homes could have had a negative impact on area prices for existing home resales. In my experience, all things being equal, most buyers would prefer to buy a new home before buying a used one, therefore existing home prices may be been held down.

Surrounding area residents. 12,000 new families and their cars would have significantly increased the amount of traffic in an already congested area. I have had to drive there during peak drive time and I can’t imagine it getting much worse, but this project would have turned gridlock into grid-no-can-move.

Kamehameha Schools Bishop Estate. In 1987, KSBE agreed to sell a property at a price based on the then current information. Certainly, 22 years later the market dynamics have changed, KSBE gets their property back and can now restructure a sale at current prices. My bet is that today’s values are significantly higher than the deal agreed to by Gentry in 1987.

Core Honolulu home and condo owners. No new inventory and no traffic solutions, means that demand for existing properties within 7 miles of Diamond Head will continue to increase. Long-term increased demand and low supply means upward pressure on prices in this area.

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If you would like to discuss your real estate needs, feel free to call me at 808-737-2093 or toll free at 877-737-2093. You can email me at keahi@lava.net.

This entry was posted on Tuesday, November 10th, 2009 at 9:13 am and is filed under For Buyers, For Sellers, Rants & Riffs. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.