The housing crisis in Hawaii has worsened significantly in recent years, with only one in five households now able to afford a single-family home. This represents a steep drop from just three years ago when 44% of households could afford the mortgage on a median-priced home. The high cost of homes has caused home sales to plummet, reaching a 25-year low. Despite this, prices have not dropped, with interest rates being a major factor contributing to the increased cost of buying a home. Many homeowners are reluctant to sell their homes and buy new ones due to the significantly higher interest rates, further exacerbating the housing market crisis in the state.
The issue of affordability extends beyond homeowners to renters as well, with Hawaii having the highest median rents in the nation. A majority of renters in Hawaii spend more than 30% of their income on rent, making them considered “rent-burdened.” The recent Maui fires have further intensified the housing crisis, causing prices to rise and availability of rentals to decrease. Short-term vacation rentals make up about 6% of Hawaii’s housing stock, with a 9% increase in active listings across the state between 2022 and 2023. Despite efforts to incentivize a shift away from vacation rentals towards housing for locals, this has not been seen on a significant scale, with short-term vacation listings on Maui actually increasing slightly since the fires.
The report also highlighted that a significant portion of Hawaii’s property owners are not residents of the state. People from out of state account for 13% of property owners on Oahu and 32% on Maui. About 85% of vacation rentals on Maui are owned by out-of-state individuals. The lack of housing being built in the state has not had a real impact on affordability, with strict limits on where multi-family homes can be constructed, high developer fees, and permitting delays all contributing to the high costs of condos and reducing the amount of new housing being built.
The authors of the report suggest that converting thousands of vacation rentals into long-term rentals could have a significant impact on affordability in Hawaii. This proposal has been put forward by Maui’s mayor as a potential solution to the housing crisis facing the state. However, progress has been slow in addressing the underlying issues contributing to the lack of affordable housing in Hawaii. It is clear that more needs to be done to increase housing supply, reduce regulatory costs, and make homeownership and renting more affordable for residents of the state.
Overall, the housing crisis in Hawaii is a complex issue that requires a multifaceted approach to address. With home affordability at an all-time low and rents continuing to rise, policymakers must take significant action to increase housing supply, reduce regulatory barriers, and incentivize the conversion of vacation rentals into long-term housing options. Failure to do so could have long-lasting negative impacts on the residents of Hawaii and the overall economy of the state.
