Have You Checked the Price Of Living in Paradise Lately?

ON the veranda of her East Oahu town house, Maria Naehu talks about growing up in California and moving here four years ago with her Hawaiian husband. Now 30 and 32 years old, with a combined income of $90,000, the couple says they want to have children and own a single-family home, but they can't afford both.

``All our friends are in the same boat,'' she says. ``We constantly sit around and anguish over whether we should stay here or make the break.''

Representative of many young professionals here, Ms. Naehu considers building a life in Hawaii tenuous at best. ``There is a price for paradise,'' she says, looking at a hillside of palms and flitting finches. ``Could I be just as happy in Iowa with 100 acres and money to travel and educate my kids?''

After nearly a decade of outpacing the nation in inflation - from about 3.7 percent to 5 percent from 1984 to '93 - Hawaii is suffering from the bitter fruits of that legacy. The state has a 35 percent to 39 percent higher cost of living than does the average United States metropolis. Inflation here is attributed mostly to development.

During the 1980s housing boom, before the savings-and-loan scandal, demand for Hawaiian assets from mainland investors soared while state lawmakers embraced pro-development legislation. Great economic expansion followed, and trends showed that the prosperity Hawaii has enjoyed since statehood in 1959 would continue.

By the mid-1980s, an appreciation of the yen and more liberal loaning practices in Japan led to a Hawaiian real estate speculation frenzy that contributed to fast-rising housing costs. Japanese spending alone reached $2 billion a year in 1989 and 1990.

Hotel and resort development went largely unrestricted, while directives from the state capitol kept a lid on housing construction, limiting supply. Home prices doubled from 1986 to 1990.

``The building boom never got past hotels, luxury condos, and high-end housing,'' says Paul Brewbaker, a chief economist for Honolulu's Bank of Hawaii. ``Those high housing costs are reflected in Hawaii's cost-of-living differential.''

Forty percent higher rents than on the mainland, 45 percent greater home costs, and 25 percent costlier food have been exacerbated by higher per-capita income taxes and the move by thousands of residents into higher tax brackets due to inflated incomes. The median earnings of full-time wage and salary earners is $25,532, about 10 percent more than the national average.

Cost of living has become the No. 1 issue, and below it the ailing economy. ``Economic vitality is the one issue that drives all the others,'' says Gov. John Waihee (D). Three gubernatorial contenders for the November election tout ``jobs'' as the first priority in a push for diversifying the economy beyond tourism to such areas as oceanography/aquaculture and agriculture.

Like California, Hawaii grew faster than the nation through the '80s, fell into recession later and harder, and is rebounding later. Tourism leads the modest recovery after a four-year slide.

Fed by Japanese visitors, who have returned in large numbers after their own recession, this summer's figures show annual visits increasing after a four-year drop-off of some 1 million a year. Because 40 percent of the gross domestic product comes from tourism - almost $9 billion annually - the numbers are telling.

``Hawaii's footing for recovery is starting because of tourism,'' Mr. Brewbaker notes. But he cautions that the 1985-90 building boom has created a glut of skyscrapers now hurting the second-largest industry, construction. ``But there is a certain drag in construction we predict will not bottom out until early next year.''

Until that happens, the average family is one in which several members have left for less-expensive pastures. ``They want to live here,'' says Walterbea Mousser, a native Hawaiian with siblings in Colorado, San Diego, Guam, and Alaska. ``But they can't afford to.''