The oceanic paradise of Hawaii may be one of the most popular vacation destinations in the United States, but the proliferation of short-term vacation rentals such as Airbnb and Vrbo are pricing locals out of the housing market.
Last week, Gov. Josh Green (D-HI) signed legislation that will make it easier for local governments to reform housing rules in order to limit the amount of short-term vacation rentals in a state. In pledging support for the bill, Green said the rentals are “illegal” and “contribute to skyrocketing housing costs.”
Hawaii far outpaces any other state in the nation for housing affordability. The median monthly rent for an apartment exceeds $2,000, while the sticker price to buy a single-family home regularly exceeds $1 million. A family of four requires an annual income well into the six figures in order to live a comfortable life.
As Green pointed out, vacation rentals such as Airbnb and Vrbo have been a significant contributor to the increase in housing costs, and nowhere has that had more devastating effects than on the island of Maui, where wildfires destroyed more than $5 billion in property and displaced thousands of people last year.
In 2023, Maui had just over 71,000 housing units, but of those, more than 9,000 are tied up as short-term vacation rentals and are unavailable to locals in need of long-term housing, according to a report from the University of Hawaii. The same report found that out-of-state buyers accounted for 27% of all housing transactions for single-family homes and 49% of condominium transactions. The influx of out-of-state buyers has turned 15% of the island’s housing supply into vacation homes.
More than 5,000 Maui residents are still displaced and without homes 8 1/2 months since the wildfires. As much as this story is a tragic indictment of the response to this disaster, the state of the housing market and the market incentives in place on the island cannot be absolved of responsibility for the fact that so many people are still being forced to live in hotel rooms they will never be able to call home.
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As much as Airbnb and Vrbo have created an attractive and affordable new way to spend a vacation, removing thousands of homes from the housing market has a very real social cost that can prevent thousands of people from achieving the stability that owning a home provides.
Hawaii will always be a preferred vacation spot for people all over the world, so any new homes that are built will be at risk of being scooped up by wealthy investors from the mainland who have no intention of living there but hope to cash in on the state’s enduring appeal to vacationers. By cracking down on short-term vacation rentals, Hawaii is taking a small step toward ensuring that the people who live on the islands have a place to call home.
