Why housing in Hawaii is expensive

The following is the transcript for the video above, narrated by Joe Kent, Grassroot Institute of Hawaii executive vice president, which was posted Sept. 14, 2022, on the Institute’s  “Hawaii Matters” YouTube channel. 

Why are Hawaii’s housing prices so high?

Hawaii has the highest median home prices in the nation, and the main reason housing is so expensive is because we have really strict housing regulations, which has resulted in a shortage of housing.

But what are those regulations, and how do they get in the way of creating housing? And most importantly, what can be done about it?

Hawaii has the most burdensome housing regulations in the nation. On average, it takes over 10 years for home builders to turn a raw piece of land into a house, and sometimes it takes even longer.

There’s like six layers of housing regulation in Hawaii. It’s like a six-layer cake. There’s the state Land Use Commission, the island plans, the community plans, the county zoning, the historic district and the special management area. That’s a lot of layers to get through for someone to build a house.

Consider the top layer: the state Land Use Commission. They classify Hawaii’s land into four districts: agriculture, conservation, rural and urban.

Now, urban land is the only place where you can build housing, with a few exceptions. So, if you wanted to build a neighborhood or single-family homes or an apartment or affordable housing, that could all basically be done in the urban district, which only makes up about 5% of the land.

Take a look at this map. The black dots show the 5% of the land that’s designated as urban. Now, if that percentage were increased by 1 percentage point from 5% to 6%, that would barely change the map at all — but it would amount to a 20% increase in the supply of land available for housing.

But even if that happened, it’s not like you would automatically see a bunch of housing spring up. And there are five other layers of regulation to get through.

You still need to get through the island plan and the community plan. Now, these are plans that are developed by each island and each community that specifies what kind of housing they want in each area. So, just because a piece of land is zoned as urban doesn’t necessarily mean that you can build there. If the island plan or the community plan say no, then you could be out of luck.

Now, after all of that, you still have to get through county zoning. I mean, remember at the state level, you had four separate zones, right? Well, at the county level, there’s over 30 different zones, and each zone has its own restrictions on what you can build and what you can’t.

For example, this is the county zoning map for Oahu. Now, you see in yellow here, you’re only allowed to build single-family homes on each plot of land, which is about 5,000 square feet of land. So generally, you can’t build duplexes; you can’t build fourplexes; no multifamily units; no second kitchens; no low-rise apartments; and basically, very little affordable housing.

But look how much of Oahu is zoned in yellow. I mean, most of the urban zone land statewide is zoned only for single-family homes; so that means even on the land that you can build housing, the housing isn’t very affordable.

Now, this kind of zoning means that you need a lot of land to build a very little bit of housing. Now, Oahu does have some land where apartments are allowed in the red or brown areas here; but still, most of the land is dedicated to single-family homes.

Now, some states have allowed some wiggle room with their single-family zoning.

St. Paul, Minnesota, Portland, Oregon, and the state of California have all passed laws to allow more multi-family homes in single-family areas, and that would mean you could build another house in your backyard if you had the space for it, or you could add a few rooms and a kitchen to your house or you could rent to another family. Now, if Hawaii did that, it would definitely allow for more housing units to be built, so that’s a possibility.

Now, even if you build in the right place with the right zoning and everything looks perfect, you still have to get a permit to build almost anything — and the permitting departments in Hawaii have huge backlogs. Some people wait for years to get their permit approved. Even getting a response from the department can take months.

Now, some people are so desperate to get their permit through that they just bribe the government workers. So there’s a lot of corruption in these departments, and some government workers have actually gone to jail recently because of that. So getting your permit through is another hurdle.

But keep in mind, there’s still a lot of layers. I mean, I’m not even going to talk about the historic district or the special management area zone or the water commission or other regulations. I mean, this topic could just go on forever.

But the main point is that Hawaii has more housing regulation than any other state in the nation, and that’s limited the supply of housing, which is why we have the highest median home prices in the nation. And until people decide to rise up and change that, housing in Hawaii will probably remain very expensive.

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