One reason why Hawaii home prices will explode

There’s good news in the world of Hawaii construction, which includes housing construction: It’s quickly on the rise.

According to a report released on Friday by the University of Hawaii Economic Research Organization (UHERO), the Hawaii construction industry has finally turned the corner last year after five flat years.

“We are now seeing impressive gains in percentage terms for private building permits, although these are starting from very depressed levels,” states the report. “Home building, retail and visitor industry upgrades, the ongoing boom in photovoltaic installation, and, yes, rail, will combine to drive a strong industry expansion over the next several years.”

Since interest rates are still very low, foreclosures are slowing down and the economy is getting back its footing, the report forecasts we should expect to see housing construction to grow sharply over the next two years. Commitments to build, including government contracts, will jump 23.5 percent this year and more than 20 percent in 2014.

One area with a lot of growth was in the additions or alterations category. Many homeowners have chosen to take advantage of the state tax credit and opt for photovoltaic installations.

More construction equals more jobs. Last year, construction jobs averaged 29,500, and they’re expected to rise to 31,600 this year and to 38,600 by 2015 when both the rail project and the next housing upswing will be in full swing.

The report cautions that the federal spending sequester could pose some risk to the construction forecast, but the direct impact on local construction will likely be limited.

With all this new construction coming, the housing inventory will rise, but so will the average home price. It jumps from $650,100 in 2013 to $724,000 in 2014. In 2015? It goes up another 12.6 percent to $815,000. Gah.

So if you’re in the market to buy a home now, act as fast as you can.