Will the Affordable Housing Rules Change in 2020?
This is a common question I get from buyers that frequent Kakaako.com and we're going to fill you in on everything you need to know for 2020. First off we need to familiarize ourselves with some of the new changes coming to the affordable housing and reserved housing rules in 2020. The big change on the affordable housing side is the designated term that the unit must remain an affordable housing before it can be sold at market value.
Looking at the two most recent projects that have launched Kapiolani Residence and The Central Ala Moana, we saw a 10 year designated term. This means purchasers have to live in the unit for the duration of the 10 years before they can rent the unit out or sell it at market value. Of course, owners have the right to sell at anytime but if it's within the 10 year term it'll be at a lower predetermined value. This rule is in place so that owners aren't flipping their units for big profits over the short term, which is not the intent of the program.
In 2020 we will see this 10 year term extended to 30 years for some projects. Yes, 30 years! This is not for all projects but the ones that are coming up on the radar to launch in 2020 will have a 30 year term. That may seem like a long time but we have to address the affordability of real estate here in Honolulu and keeping units in the affordable housing program for a longer period of time is one step in the right direction. Projects like Ililani that launched in 2019 will keep their 10 year designated term.
On the reserved housing side of things, we've previously seen 2 year and 5 year designated terms at condos like Ke Kilohana and Aalii. I think moving forward we're going to see this extending to a much longer term as well.
One of the stipulations of purchasing a reserved housing unit is that the applicant cannot have previously owned any real estate interest. With the new 2018 reserved housing rules a current reserved housing owner can apply to purchase a unit in a new condo project provided the unit they're applying for is larger than the current unit. So you're in luck if you've already purchased a one bedroom and you're looking for a larger unit in one of the newer buildings launching in 2020.
The qualification AMI is still 140% of the area median income.
What Projects Can I Apply for in 2020?
At the time of writing, there is only one project that will likely start sales for affordable housing in 2020 and that is Sky Ala Moana. The affordable housing portion of Sky Ala Moana known as The Flats will consist of 84 total units. There isn't a whole lot of information available regarding Sky Ala Moana's affordable housing at this time.