We often cite San Francisco or New York City as far as America's affordable housing crisis goes, but the worst by far is Hawaii and cities like Honolulu and Hilo, as our Sunday Long Read from Eric Stinton at Dwell details.
If you’re thinking about moving to Hawaii, you’re not alone. But transplants shouldn’t necessarily expect a warm welcome. Long simmering tensions about who gets to live on the islands have flared over the past couple of years into a full-blown crisis.
When the pandemic began in 2020, Hawaii’s economy reeled. Tourism crashed, and joblessness skyrocketed. Soon after, remote work combined with the state’s low infection rate beckoned people with means from across the country to move to the islands, while sprawling estates owned by the likes of Jeff Bezos, Larry Ellison, and Mark Zuckerberg continued to metastasize. From the end of 2019 to the start of 2022, the median cost of a single-family home on O‘ahu, where most of the population lives, ballooned from $789,000 to $1.15 million. A quarter of all homes sold in 2021 were purchased by out-of-state buyers, who routinely bid well above the listing price, often without seeing the property in person. Homes are on the market for an average of just 10 days.
But the local housing crisis is nothing new; in many ways, the pandemic merely accelerated trends that started when Hawaii became a state in 1959. The cost of real estate has steadily increased since then, fueled by tropical allure and increased accessibility, with only brief and mild downturns. During the Great Recession, Hawaii’s prices dropped less and rebounded faster than those in most of the rest of the country, the whole thing just a hiccup in the state’s ever-hot housing market.
Behind the economic statistics are human tolls. Hawaii continues to have one of the highest per capita rates of homelessness in America while also experiencing five consecutive years of population decline. There’s a growing class of people who have called Hawaii home for generations but can no longer live there. Those who can afford to leave usually do; those who can’t end up on the streets.
These trends disproportionately impact Kānaka Maoli, or Native Hawaiians. (One may be a Californian for living in California, but living in Hawaii makes someone a Hawaii resident, not a Hawaiian.) Native Hawaiians account for about 10 percent of the state’s total population but more than a third of the people without permanent housing. Now, roughly three times as many Hawaiians live outside their ancestral homeland than in it, a cruel legacy of colonialism.
The roots of the crisis are familiar to other parts of the country—not enough supply, too much demand—but on these islands, what are elsewhere surging issues have been whipped up into an economic storm.
As a hilly, isolated archipelago with less total land than Maryland, Hawaii is tightly limited by geography. Try to build out and you’ll run into eroding shorelines or steep mountainsides; try to build up and you’ll hit ordinances limiting building height and intended to protect scenic views. And then there’s the cost: Since most building materials are imported, expenses are not only higher than elsewhere in the country but also especially sensitive to supply-chain conditions, international tariffs, and market variables like rising inflation and oil prices. Myriad state and county land-use restrictions complicate projects, and since Hawaii uses a general excise tax instead of a sales tax, transactions at every stage of development add costs.
"We’re the state with the most regulations and hoops that you have to jump through in order to provide housing," says Cassandra Abdul, executive director of the Maui-based housing nonprofit Nā Hale O Maui. "Navigating them is time-consuming, and time truly is money."
These days, new developments are built at one-tenth the rate of the peak of the post-statehood boom periods in the 1960s and ’70s, the last time housing was broadly affordable.
And while supply is almost nonexistent, demand is seemingly infinite. Some of it is driven by locals trying to hold on, but Hawaii real estate is also popular purely for investment. The state has the lowest property taxes in the nation, and real estate appreciation dependably beats inflation. Investors can capitalize on some of the highest rents in the country or simply hold their property and flip it later for almost guaranteed profits. It’s a perfect place to park money. Some estimates show that more than 76,000 units are unoccupied and that 30,000 to 60,000 units have been converted to short-term rentals.
"When you stack all these things together, you get a climate where there’s not going to be much housing at a price point that local people can afford," says Sterling Higa, executive director of the nonprofit Housing Hawaii’s Future.
In other words, Hawaii represents an entire state deep in the housing bubble. The human toll continues to get worse, and this time, when the housing bubble pops, it's going to burn this place down. Keep an eye on this bird of paradise, it's the canary in the coal mine.
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