As a local affordable housing developer, I am deeply concerned what Senate Bill 3202 is going to do to housing prices in our community. If you think the cost of housing in Hawaii is bad now, this bill will make it worse.

With SB 3202 (and its companion, House Bill 1630) our state legislators have tried to eliminate single-family zoning and allow property owners to build at least three homes on each residential lot, under a misguided belief that this will create more affordable housing. 

This is a Trojan horse! It will not produce affordable housing for those who need it most, because there is nothing in the bill to address affordability.

Passage of SB 3202 will immediately increase the development potential — and therefore the price — of all residential property statewide, making housing more expensive.

Without a clear understanding of how the housing market in Hawaii operates today, any changes to the law could easily worsen the very problem we are trying to resolve.

What People Need to Understand

Hawaii is an international real estate market, and has been for decades. We are not a local market.

Hawaii residents have to compete with wealthy buyers from around the world. But we cannot compete because real estate pricing today is tied to what millionaires and billionaires can afford, rather than local wages, as happens in most other markets.

Supply And Demand Doesn’t Work Here

Supporters of SB 3202 seem to be following a simplistic view of supply and demand; that if we increase the supply of housing, prices will level off once demand is met.

But Hawaii is a unique market. Since the 1980s, the more free-market housing we’ve allowed to be built, the more international demand has increased. The land beneath our houses is often worth much more than the house itself. 

So, outside investors have no problem buying a property, tearing down the house and building market rate houses in its place, whether that’s one, two or three homes. This drives up the value of the entire neighborhood.

Outside buyers and investors have driven our housing prices up $700,000 to $800,000 above what the market would be, based on local wages. Local buyers have no chance, unless we can reduce the outside demand and control pricing.

Solution: Prioritize Local Families

At a time when kamaaina are leaving Hawaii because they can’t find affordable housing, state and county leaders refuse to address the elephant in the room: The “demand” or who is buying up property. The only solution to control housing prices in Hawaii is to reduce the demand from outside buyers.

According to UHERO’s The Hawaii Housing Factbook (June 2023), “out-of-state buyers make up a large share of home sales in Hawaii accounting for over half of condominium sales on the Neighbor Islands.”

And Gov. Josh Green recently reported there are 89,000 short-term rentals throughout the state. And “52% of all STRs are owned by non-state residents, with 27% owning 20 units or more.”

So, we don’t have a supply problem. We have a demand problem.

For quick relief, Gov. Green should sign an emergency proclamation relating to housing that would put a moratorium on all STRs and return them to the long-term housing market. This would immediately produce the shortage of 50,000 housing units that the state says we need by 2025.

Other housing solutions should target areas along the rail line, which was supposed to be for affordable housing. With 20 square miles of high-density zoning, we should be able to produce 400,000 units and make use of our multibillion-dollar rail system.

We can also build truly affordable housing tied to local wages for local residents only. We can increase government sponsored housing, where government can implement deed restrictions and preferences for local buyers that private developers can’t.

Any legislative solution has to be carefully considered, with a complete package addressing various issues to keep housing affordable for local families. The solutions are there. We just haven’t had the political will to act on them.

Take Action

To prevent our housing prices from getting worse, contact your state representative, state senator and House Housing Committee Chair Luke Evslin and Senate House Committee Chair Stanley Chang and tell them to vote no on SB 3202.