In May, the newest edition of the “Hawaiʻi Housing Factbook,” a housing report published by the Economic Research Organization at the University of Hawaiʻi (UHERO), will be released.
An early look at the data suggests affordability for single family homes has gotten “marginally” worse. Most Hawaiʻi residents still cannot afford to buy a home, and market conditions – including low supply and high interest rates – remain unchanged.
Another factor likely to adversely impact the housing market is the Trump Administration’s termination of thousands of federal jobs in February. These job cuts included positions at the Department of Housing and Urban Development (HUD) which administers programs in Hawaiʻi such as the rental assistance program known as Section 8. HUD could not be reached for comment.
“Hawaiʻi’s been in a bad place for housing affordability for a long time,” said Justin Tyndall, an economics professor with UHERO and the UH Department of Economics. “Our first factbook (2023), pointed out that during the COVID era things got worse, in terms of prices going up quite a bit. Over the last couple years, we’ve been dealing with high interest rates. A very small portion of the population has sufficient income to afford a house, and that figure has gotten historically worse.”
Currently, the median single-family home sells for about $1 million, though this figure varies widely between the islands with the highest median prices in Maui and Honolulu counties.
The condo market on Oʻahu offers some “glimmers of hope,” Tyndall said. New condo developments in Central Honolulu are being built and will become available soon. Condo prices are slightly down on all islands except Maui. According to the 2024 Factbook, the median condo price was $600,000.
But the immediate cause for the slight decrease in condo prices is the insurance market. “These condominium buildings are not able to get insurance because prices have gone up so much. Part of (the rise) is reckoning with climate change, but also a general unraveling of that insurance market. For most buildings, you can’t get a federally insured mortgage if the building doesn’t have full insurance,” said Tyndall. Homeowners’ association fees have gone up rapidly in response to the insurance crisis, and the increase in fees will likely negate any decrease in condo prices.
Affordability in the free market is unlikely to change significantly, at least not any time soon.
People at all levels of government and in the nonprofit sector are pushing for restricted-market housing solutions that can shelter everyone from the houseless to the middle class. A sustainable housing market needs to be permanently affordable, deed restricted to full-time residents, and subsidized said Kenna StormoGipson, Hawaiʻi Housing Policy Foundation executive director.
The Foundation wants to take practices and policies that have worked in other parts of the country and bring them here to Hawaiʻi. StormoGipson often points to Aspen, CO., as a model for what could be.
Of the total housing inventory in Aspen, 40% is permanently affordable through deed restrictions and is only for residents who live and work in Aspen full time. By contrast, only 6% of Hawaiʻi’s housing market is similarly restricted. This leaves the remaining 94% of housing vulnerable to increasing rents that outpace wages or to being sold to buyers who do not live or work in Hawaiʻi.
“The most exciting things happening in housing across the country are happening at the city, county and state level. That’s really the shift. The shift is thinking of housing as a local issue, and then setting local rules and local funding,” said StormoGipson.
State and county elected officials have proposed and introduced measures to address both supply and affordability. But implementing such measures has proven challenging. Tyndall pointed out some examples of county level actions and public housing investments, such as the recently adopted ALOHA Homes legislation and the phasing out of the Minatoya List. “The bigger reason to be somewhat optimistic is there seems to be some political alignment or will to implement policies,” said Tyndall.
Sponsored by Sen. Stanley Chang, the ALOHA Homes bill (SB 864), which became state law in 2023, establishes a 99-year leasehold program to make low-cost leasehold condos units available for Hawaiʻi residents on state-owned land near rail stations. According to Chang’s website, the law would allow half of the units to be sold for up to 140% Annual Median Income (AMI) and no more than 33% to be sold on an income blind basis. AMI is an annual figure generated by HUD and has been criticized for not reflecting local wages. The 140% AMI for a 4- person family in Honolulu is about $183,400.
The “Minatoya List,” created in 2001 by Richard Minatoya, Maui County deputy corporation counsel, allowed more than 7,000 apartment-zoned condos already used as vacation rentals to be permitted as short-term rentals.
In 2024, Maui County Mayor Richard Bissen submitted a proposal to phase out these short-term rentals. After being reviewed by the Maui, Molokaʻi and Lānaʻi planning commissions, Bissen’s proposal was transmitted to the Maui County Council. Many of the short-term rentals impacted by this proposed legislation were initially built and designed for workforce housing, including in West Maui, where an existing housing shortage was exacerbated by the August 2023 wildfire.
“This is one potential solution to increase long-term housing capacity among many that we are pursuing to address our housing crisis,” Bissen said. “We need to work together to do what’s best for our people. Every day our people are leaving, and this is a consequence we cannot accept as a community.”
Other state programs already in place to lift restrictions for developers seem to be popular, said Tyndall. Examples of these include the Rental Housing Revolving Fund and the 201H Program in Honolulu, which grants permitting or regulatory waivers for projects aimed at creating “affordable housing.” Tyndall questions whether this is the right approach to creating more housing supply.
“We spend a lot of effort making it very difficult to build housing, and then we spend a lot of money to subsidize developers so they can overcome these barriers,” Tyndall said. “The counties and state put up those barriers, and then they have programs to overcome those barriers. It’s a bit inefficient. A bigger supply of housing would come from making it easier for developers to build housing.”
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