Build up, build out, or accept Hawaii’s high cost of living

by Aaron Lief, Grassroot Institute, Nov 4, 2016

For most residents of Hawaii, the high cost of living is a small price to pay in order to call the islands home. I, like many others, sacrificed a higher paying job and mainland prices in order to continue my life here–and I would make that decision again in a heartbeat. Unfortunately, as the cost of living continues to increase, many people will be forced to move away, or settle for substandard living conditions.

So what can we do? For starters, we could look at what isn’t working. Hawaii lawmakers require developers to build affordable housing, which is a laudable goal; any time a developer wants to build a project, 25% of the new units must be affordable housing. However, the University of Hawaii Economic Research Organization found that this well-meaning policy actually led to a reduction in affordable housing. Oops.

Some people believe rent control is the answer. But as we’ve written before, this also reduces housing options. Even if rent control were implemented, it wouldn’t change the fact that there simply aren’t enough homes for Hawaii residents.

It comes down to supply and demand. If there are more available houses than people, the cost of living will go down. However, if there are more people than houses–which is the current case in Hawaii–the cost of living increases. That gives us two options: increase the supply of housing, or decrease the demand.

Increasing supply in Hawaii can be difficult. The public generally frowns on new housing projects, even though they may wish for a better house for themselves. It’s a catch-22; while many people say that they don’t want to see mass urbanization of Hawaii’s agricultural and conservation land, they also want to see more affordable housing for our residents.

But red tape adds another hurdle. Hawaii’s regulations are the most restrictive in the nation for new developments. Less than 5% of Hawaii’s land mass is zoned for urban development. This leaves 95% of the land in Hawaii for conservation and agriculture, but that means it’s almost impossible to build out.

If we don’t want to expand out, then the solution is simple: build upward. Building taller buildings would conserve open space while providing more housing–and ultimately lower home prices.

If the solution seems too good to be true, it’s because it is. Hawaii’s zoning laws generally limit buildings to no more than 25 feet in residential neighborhoods, and 350 feet in downtown Honolulu. Changing these laws would be difficult since many residents are worried about losing their view.

At the end of the day, we can’t have it both ways. Either we build or we don’t. But it may be time to accept that creative solutions to housing development may be the best chance for a future in Hawaii where locals can finally stay in paradise.