As a 30-year-old hotel worker making an average wage, Kimberly Higashi assumed she'd be locked out of home ownership in Hawai'i.

After all, with median single-family home prices doubling in the past five years to about $600,000 on O'ahu, it would take an annual income of around $100,000 plus a down payment of about as much to afford such a home with a traditional loan.

"It is very discouraging, especially for the average-income person," Higashi said. "You think you can never afford a home."

But for a few tenacious and lucky souls, a growing number of new homes — not 75-year-old hovels or 300-square-foot studios — are becoming available to lower- and middle-income residents.

Higashi found a new three-bedroom single-family house in Kona for $284,000 last month.

"I was lucky," she said.

Higashi bought one of 12 affordable homes offered in Kona by the private developer Aloha Aina Homes.

Most new affordable homes in Hawai'i are built by developers as a public benefit negotiated with the county in exchange for rezoning agriculture land for residential use. Typically under these agreements, developers have had to sell 20 percent to 30 percent of homes at affordable prices.

Government housing agencies and nonprofit developers using grants and tax-credit funding also are contributing a few affordable housing projects.

Prices for affordable homes statewide typically range from $190,000 to $390,000 under county guidelines. Extreme affordables can be priced as low as $120,000.

On O'ahu, the affordable-home price for a family of four earning the island's median income of $67,750 a year would be about $275,000.

Not much in the way of affordable housing has been built during the roughly five-year run-up in median home prices that topped out at $780,000 for single-family homes on Maui last May.

4,000 NEW HOMES

In the next few years, though, more than 4,000 new homes for low- and middle-income residents statewide are expected to start hitting the market, which is good news for many people who now are priced out.

Still, because the affordable-homes market is small in relation to housing production and demand, it remains exceeding difficult to get in the entry-level-home door.

Higashi, a front-office assistant manager at the Hapuna Beach Prince Hotel, is single and moved to the Big Island from O'ahu five years ago. She had to enter two lotteries to become a homeowner.

The first drew nearly 50 applicants for 14 townhomes in a 49-unit Castle & Cooke affordable-home project at Waikoloa Village. Higashi lost out but had better luck in a pool of 210 entrants hoping to buy one of the 12 affordable single-family homes built by Aloha Aina Homes in Kona.

"It's kind of sad," she said. "You see so many people wanting an opportunity to be able to afford a home. Everybody's in the same boat, but there's only 12 homes."

'Ewa resident Alice Lenchanko, a stay-at-home mother of two married to a construction journeyman, is frustrated by the dearth of affordable homes available today.

"There's just nothing for us," she said. "Everything that's coming up is targeted for people with high incomes."

The lowest-priced new homes Lenchanko has found on O'ahu are close to $400,000. So Lenchanko, 33, and her family live with her mother.

"A lot of my friends are moving away," she said. "The working-class families in Hawai'i are struggling."

On O'ahu, most of the affordable-home requirements for master-planned communities in 'Ewa and Mililani largely were fulfilled during the 1990s when real estate values plummeted so low that market prices amounted to affordable prices.

That resulted in few affordable homes built in the past few years as surging prices made homes less affordable for more people. Recently, however, more developers are planning big projects with agreements that promise to deliver a new round of affordable homes.

Today, the largest upcoming affordable-housing requirement is for about 1,500 units as part of the roughly 5,000-home first phase of the planned Waiawa community by Gentry Cos., which expects to begin selling and delivering homes in early 2009.

Expected sooner are 350 affordable homes in Kapolei as part of a planned 1,150-home community called Mehana by the Schuler Division of D.R. Horton. Initial sales are expected to begin late next year but could take a decade or more to complete.

Also in Kapolei, Castle & Cooke plans to sell 228 affordable townhomes within the Villages of Kapolei. Sales also are expected to begin late next year. Prices are difficult to estimate because they change with interest rates but could range from roughly $315,000 to $370,000.

In the condo market, 63 affordable units at the Keola La'i high-rise in Kaka'ako are scheduled for lottery sale later this month or in April by developer Alexander & Baldwin Inc. Average prices are $290,643 for one-bedroom units and $358,317 for two-bedroom units, which is roughly 40 percent less than what comparable Keola La'i units are selling for.

Of the four projects above, all involve some government initiative. Gentry Waiawa and Mehana by Schuler are part of county agreements requiring 30 percent affordable housing. Castle & Cooke's Kapolei project is a state contract using some tax-credit financing and state land. And the Keola La'i condos satisfy a 20 percent affordable-housing requirement by the state Community Development Authority that regulates development in Kaka'ako.

On other islands, the story is similar. The largest affordable project on the Big Island is 1,000 homes on county land by UniDev LLC.

A large Maui affordable-home plan calls for 325 for-sale units under a county requirement with Maui Land & Pineapple Co. And on Kaua'i, Schuler agreed to sell about 175 homes, or 40 percent of 440 homes, at affordable prices to help Grove Farm Co. meet county affordable housing requirements for its Lihu'e Plantation.

BUILDING COSTS SURGE

Few for-profit developers are building homes at county-defined affordable prices today outside of government programs largely because of land and construction costs that have jumped roughly 30 percent in the last year or so.

Take, for instance, 215 N. King St., a 251-unit tower next to 'A'ala Park completed last year by local developer Marshall Hung's Downtown Affordables LLC.

Local housing-market analyst Ricky Cassiday said 215 N. King units sold for an average of $243,000 — the lowest for any new-home project last year on O'ahu. Cassiday said it would probably cost about that much per unit to build today.

In Hawai'i Kai, 69 affordable senior rentals planned as part of a luxury condo project called Hale Ali'i could be scrapped because of high construction costs.

The state's largest housing developer, Castle & Cooke, said development costs are at a point where it's difficult not to lose money selling homes for below the high $300,000s unless state land, tax credits or some other subsidy are involved.

On O'ahu, the lowest market-priced single-family homes available run in the high $300,000s at Sea Country, a Schuler project in Ma'ili, and at the last phase of Ewa by Gentry's Montecito line, of which the last 18 homes were released for sale last weekend.

"For a single-family home on this island, that's as low as you go," said Bob Brant, president and CEO of Gentry Homes.

A few developers, however, are attempting to break affordable-housing barriers with nontraditional strategies aimed at delivering homes at below-market prices.

On O'ahu, an affiliate of The Church of Jesus Christ of Latter-day Saints is planning to develop up to 550 homes at Malaekahana and is considering selling the homes on leasehold land to keep prices low.

On the Big Island, Westpro Holdings turned to modular construction to cut up to 20 percent from construction costs and reduce building time, which also lowers expenses.

Alan Dickler, Westpro president, said the company was established in 1997 by former time-share-industry executive John Stevens, who adopted affordable housing as a challenge.

"He really took to heart the need, and we figured out a way to do entry-priced housing," Dickler said of Stevens.

Westpro's first project was a market-priced subdivision with 190 single-family homes in Kona called Lokahi Makai. Nineteen of the homes were sold at affordable prices.

Westpro didn't have to sell homes at affordable prices. Often, counties will let developers satisfy the requirement for building affordable housing with a one-time cash payment. Westpro could have paid the county $85,000, or $450 per house, to satisfy its affordable-housing requirement, but it opted to sell 19 affordable homes instead.

That experience led to Westpro starting modular-home construction under affiliate Aloha Aina Homes, which initially built 30 homes at Discovery Harbour in Ka'u to test the manufacturing process.

The first three-bedroom modular homes — with vaulted ceilings, a two-car garage and steel-framing — sold for about $330,000 last year. Five or six homes are still available for $360,000 to $385,000.

NO RELIEF IN SIGHT

Westpro is now working on a 108-unit affordable condo called Seascape on the Big Island, with two-bedroom units expected to be released for sale later this month at prices around $285,000.

A legislative affordable-housing task force recently estimated that 44,190 new housing units will be needed in the Islands by 2009. About half of those units will be needed by households earning less than $54,250, which is 80 percent of the annual median income for a family of four.

Meeting that need generally is viewed as impossible without a significant downturn in home values, increase in incomes or continuation of relatively low interest rates.

Local real-estate industry leaders predict home prices will be higher this year than last year, and are more likely to flatten than to fall unless there is a dramatic shock to the state economy.

Hawai'i's real-estate bust of the 1990s was triggered largely by California's recession and Japan's financial crisis that caused job and income losses, and economic stagnation. A significant military population loss was another factor.

Without a real-estate bust, Cassiday said, home builders will concentrate on developing homes from $400,000 to $600,000 as demand fades for higher-end homes, where profit margins tend to be higher.

"Pretty much now the top's dropped off," he said. "The middle is still there."

Mike Jones, Schuler Division president, said that since 1987, the company has sold about 3,000 of 8,000 homes at county-defined affordable prices — a balance that's very difficult to maintain given market conditions today.

"We've tried to be the lowest-priced home developer on the island," he said. "That's always been our forte. It's harder to do this now."

Reach Andrew Gomes at agomes@honoluluadvertiser.com.