Affordable Condos in Hawaii Update

Affordable Condos in Hawaii Update

As Hawaii real estate prices soar higher, local buyers are left scratching their heads wondering where is the affordable housing? However, some buyers feeling priced out may not be aware they qualify for local affordable housing programs which can help land them a home purchase.

The Basics of Affordable Condos in Hawaii

Whenever there is a new residential condo development built in Hawaii like Ulana Ward Village, a percentage of the inventory is made available via programs designed for locals who meet certain income requirements.

This doesn’t mean it’s always made available for purchase. Developers may provide “for rent” units, senior living and other specialty housing. The developer ultimately decides what will be made available.

When homes are made available for sale, homes are usually made available through an application and lottery system to those that meet eligibility requirements.

The timeline to buy usually comes quick – a project is announced for sale (via news outlet), an application period is held (usually 1-2 months) to check eligibility requirements, and then finally a lottery is done in the case that the number of applicants exceed the amount of units available for sale. After the lottery, a unit selection order is announced and those who qualify can select and purchase a unit which they qualify for financially via a loan.

There are two main agencies that regulate affordable condo housing programs made available to locals.

HHFDC (Hawaii Housing Finance and Development Corporation):

Program: “Affordable Housing”

HCDA (Hawaii Community Development Association):

Program: “Reserved Housing”

Both programs come with their own sets of eligibility requirements and also restrictions for use.

The HHFDC governs programs all over the state. Recent developments like The Central Ala Moana, Ililani and Koa Ridge made homes for sale available through the HHFDC program.

HCDA programs are concentrated in the new development areas so future residents can buy condos in Kakaako and are less frequent. Howard Hughes developments often feature HCDA programs for purchasers.


The Pros

Both programs offer a way for those that do not own a primary residence to buy a brand new home at “below market” pricing.

At developments like The Central Ala Moana, HHFDC units and Market rate units had nearly identical square footages, interior finishes, and appliances. The HHFDC units however were priced at about $100K – $200K less than the market rate units. This affords a great opportunity for a new homeowner to walk into a sizable portion of equity right off the bat. The chance to do so does come with heavy restrictions in place for the owner.

The Cons

Both programs come with significant restrictions on how the home can be used post-closing which the applicant must agree to.

Buyback: For a set timeframe, the owner must use that home for primary residence only. They cannot rent it out for profit, they cannot sell it for a profit. For HHFDC units, a 10 year timeframe is typical. For HCDA, 2-5 years is typical.

Shared Equity: Once the unit is able to be sold for a profit, a portion of the profit is owed back to the program which governed the program.

For example: if you bought a unit for $400K and sold it for $500K, the owner must pay a percentage of the $100K profit back to the HCDA or HHFDC. The percentage is calculated at closing, and is unknown at the time of original purchase. This is done theoretically to help subsidize future programs.


How to decide if this is right for you:

You should consider these programs only after carefully considering the following:

Timeline – are you OK with potentially a 5-10 year hold on a property which you must physically reside? If flexibility is what you are after, these programs would not be recommended. For example, if you have plans to get married and grow a family, a 1 or even 2 bedroom unit will not fit your needs for long. If your life plan is somewhat set however, and you can see yourself staying in one place for upto 10 years, then these programs will work greatly to your advantage.


Available Options – many people often rush into “Affordable” programs because they are under the belief that they are getting a great deal. Without a proper assessment of the market, that is really impossible to say. Before applying or even while you are applying a worthwhile exercise to go through is to have a lending professional define your budget, scout the market for available listings with an agent and see ALL properties you qualify for before committing long term to one of these programs. Knowledge is power and if you know what options are out there for you that meet your budget, then the decision to enter one of these programs can make a lot more sense.


Financial Goals – you should set your financial goals and see if the program restrictions coincide with those goals. For example, if your plan is to purchase a property and rent it out in a few years, this is not a recommended program. The HHFDC and HCDA clearly state that you may not rent out these properties for a profit during the duration of the Buyback periods. If however, that is not in your plan and are seeking a primary residence only, these programs might be right for you.

If these programs seem to align with your needs, then there are upcoming and ongoing developments that may feature either HHFDC or HCDA programs.

Ililani (HHFDC)

The Park at Keaaumoku

Ulana Ward Village

Koa Ridge


Remember that affordability is relative. What is affordable for some buyers may not be for others. The most important thing you can do while purchasing a home is to set your budget first and get prequalified.