Opposition To New Construction Will Increase Prices

May 24th, 2010 categories: For Buyers, The Market

Time and again I have stated that I believe Honolulu property prices will rise over the middle to long term. A recent article in the Honolulu Advertiser shows the opposition that almost all new development faces on Oahu. What opponents seem to miss is that by slowing growth, they increase demand and therefore inadvertently increase the cost of housing.

"A few hundred voices, largely in opposition to the project, were added to the record in the case in which Castle & Cooke Homes is seeking approval to urbanize 768 acres of prime farmland between Mililani and Waipi’o for development of 5,000 new homes, a 28-acre medical campus, a 150-room hotel, parks, two elementary schools and nearly 500,000 square feet of commercial space for retail, offices and light industrial businesses."

CLICK HERE TO READ THE ENTIRE HONOLULU ADVERTISER ARTICLE

Note that they are talking about adding 5,000 new homes to a market that could probably absorb every single one. Here's my bet. This project will take five to ten more years before they get approvals to build. Therefore, our housing supply will continue to shrink and that means demand will continue to strengthen. This excess demand will add value to existing homes. If you own now, expect your home to be worth significantly more 10 years from now. If you don't own yet, then buy what you can afford (house or condo) to get into the market, because if you don't, you may not be able to buy as prices rise.

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