One of the most expensive places in the country to buy or rent a home is Hawaii. And a year after a fire on Maui destroyed the town of Lahaina and displaced thousands of people, the housing market is getting worse.
University of Hawaii economist Justin Tyndall has been monitoring Maui’s housing supply.
He says federal, state and local initiatives have had some short term success providing temporary housing for some fire survivors, but it’s still not enough in the long term to meet demand.
“We're not even getting back to the amount of housing we had before the fires,” he says. “So there really needs to be an expansion of housing supply on Maui, which I think is going to be the long term solution.”
6 questions with Justin Tyndall
What was available to buy before the fire and how much would a home typically cost back then compared to now?
“I think the important thing to remember when we're thinking about the consequences of the fires on Maui is that Maui was already in an extremely bad place to begin with in terms of housing prices and housing affordability.
“Even prior to the fires, Maui County was one of if not the most expensive [places] in the country to buy or rent housing. So that price of a single family home was well over $1,000,000. Condominiums were around $1,000,000 as well. So that was sort of the starting place.
“And then we had 3,000 housing units and about 6,000 households displaced by the fires who are now looking for housing. So we had both lost supply and increased demand in housing. So this pushed housing prices up even further. So over the last year, compared to the other islands in Hawaii, Maui has seen higher increases in prices and rent over that period.”
Let’s talk about the rental situation. For those who are trying to rent long term, what is the situation?
“I think it's pretty dire. So I think the biggest takeaway is that there's just almost no inventory of rental housing. So if you were displaced, if you're just looking for a new rental starting from scratch, there's almost nothing there. If you have a larger family also, it's extremely difficult.
“In 2023, we have some data from Craigslist. If you wanted a four or five bedroom house for a large family, the median price of these were $5,000 to $6,000 a month. So the rents are just incredibly high. And over the last year, we've seen rents rise further. So rents over the last year on Maui are up about 10 to 20%, depending on the data source you use, which is quite a bit higher than the rest of the rest of Hawaii.”
One factor is the short term rental market that in some ways, it seems to be using up housing that locals could be in. The big policy proposal in the works has been the Maui mayor's plan to phase out some vacation rentals in residential areas to free up units for locals. What would be the impact on housing and does that look likely to begin any time soon?
“So the timeline for the plan is to start phasing out units on West Maui next year and in the rest of Maui the year after that. So it's a subset of the vacation rentals that are on a particular classification. So this will probably face some legal challenges. It could get delayed, but it could get implemented in the next couple of years. And the effects would be pretty large.
“This is 7,000 units on Maui. In the context of Maui's overall housing supply, this would be like 13% of Maui's overall housing. So this could really expand housing on Maui by a significant amount, and I'm sure we would see that show up in lower prices and lower rents.”
There has been a lot of opposition to the proposal from the people who own short term rentals on Maui. Tell us about that.
“That's right. So there's been some pretty contentious meetings about this proposal. One element of it, about 85% of these units are owned by people who aren't residents of Maui, Primarily people from California, people from Washington State, people from Canada.
“These are investment properties that have been bought up by people outside of Maui and have contributed to scarcer housing and higher prices. So the motivation here is to try to bring some of those units back into the local pool of housing so locals can benefit from them.”
The governor of Hawaii urged owners of short term rentals to turn their properties into housing for survivors, as he offered incentives. How is that going?
“I think the program was relatively successful…by the metric of housing displaced people. FEMA took over about 1,300 properties on Maui and rented them to fire survivors. The price tag for that was extremely high. So rather than compel owners to do this, people were opting in.
“In order for people to do that, they had to offer extremely high rents for them to provide their housing units. We were having people getting paid $5,000, $6,000 a month from FEMA for their rental or unit. This wasn't really a sustainable long term plan. It was an extremely expensive way to house people. But in an emergency where people needed housing, the program to put people in hotels, then to put people in other units through this FEMA program, they were relatively successful in at least making sure people weren't homeless right after they were displaced.”
Will it impact the economy to inflate housing prices like that, even temporarily?
“Yeah, I think so. If you qualified for one of these programs and got housing, that was quite helpful. But there's a whole other population of people who weren't directly impacted by the fire in terms of not losing their home, but are renters.
“Now they're competing against these extremely large contracts from FEMA to take up some of the housing stock that is available. So it became even more difficult to compete in that sort of market for rental housing on Maui.”
Ashley Locke produced and edited this interview for broadcast with Catherine Welch. Locke also adapted it for the web.
