Two wins for housing (and what comes next)

News Release from Hawaii’s Housing Future May, 2026

by Lee Wang

The 2026 Legislative Session is done. After 2,459 bills, 397 housing bills, and a lot of late nights, two of our biggest ideas crossed the finish line.

Both are now headed to the Governor's desk.

THE INDIVIDUAL HOUSING ACCOUNT IS BACK

SB2552 passed.

The IHA has existed on paper for over 40 years — but no bank in Hawaiʻi currently offers it. It was built for a 1982 economy and never adjusted for inflation. A $5,000/year tax-deductible deposit meant something in 1982. In 2026, it barely covers closing costs.

This year, a bipartisan effort updated the program for today's housing market — raising the annual deduction so saving for a down payment actually moves the needle for a young family.

Now comes the hard part: getting financial institutions to actually offer it. We'll be working directly with banks and credit unions in the months ahead to bring this program to life. A tool sitting in the toolbox doesn't help anyone — we need it in residents' hands.

If you've ever wondered how a young couple in Hawaiʻi is supposed to save for a down payment the state just gave their answer: with help.

INCLUSIONARY ZONING REFORM PASSED, TOO

HB1740 passed.

Here's the problem it fixes. Under the old rules, "affordable" housing programs were so tangled in restrictions that the very residents they were designed to help often couldn't qualify — or couldn't afford to stay in the homes they did qualify for.

A few examples of what residents were dealing with:

A young family who inherited a small share of a family property — say, 1/8 of their grandparents' home on Hawaiʻi Island — could be disqualified from buying a workforce home on Oʻahu. Owning any property, anywhere, anytime, could lock you out.

A buyer who finally got into a 201H home had to commit to occupying it for 10 years. Want to move closer to a new job? Change islands for family? Trade up because you had another kid? You couldn't — or you lost the home.

The result: locals stopped applying. Builders stopped building. The pipeline of for-sale workforce housing dried up.

HB1740 lifts the most punishing of these restrictions. You can start in a studio, grow into a 2-bedroom, and move when life requires it — without getting punished for the kind of upward mobility the program was supposed to encourage in the first place.

This is what "more options" actually looks like in law.

Hawaiʻi has the lowest homeownership rate in the country for residents under 35. This bill won't fix that alone. But it removes one of the biggest reasons our friends and family have been quietly opting out staying.

PARKING REFORM: NOT THIS YEAR

HB1919 — the bill to remove arbitrary parking mandates — tied 25-25 on the House floor. A tie means it died.

I won't sugarcoat it: this was the toughest loss of the session. But it was also the most-debated housing bill of the year, and for the first time, half the House was ready to move. California, Oregon, and Montana have already done this. The conversation has started here too. It doesn't end with one vote.

In the meantime, the Senate passed SB3029 — the Summer Streets Pilot Program — to test opening up certain streets for non-vehicular use, modeled after Malmö, Sweden. Small step, right direction.

WHAT ELSE MOVED

A lot, actually. A short list of bills worth knowing:

HB2270 — Down payment loan assistance got easier. Residents now only need to put up 3% (down from 5%).

SB2544 — Hawaiʻi Builds pilot program, modeled on British Columbia's program that cut housing delivery from 5 years to 12-18 months.

SB3219 — A constitutional amendment to allow Tax-Increment Financing (RISE Bonds) for housing infrastructure. This one heads to voters in November.

SB2671 — A pilot to actually staff up our permitting departments. You can't speed up permits without permit reviewers.

HB1718 — Gives counties real authority to partner with private builders on county-owned land. A quiet but big deal for Honolulu's re-emerging housing department.

We didn't get everything. The building code cycle reform (HB1725) stalled. So did off-site construction (HB2606) and a permanent funding source for DHHL infrastructure (SB3028). Those will be back.

THE BIGGER PICTURE

A year ago, 68% of residents disapproved of how the state was handling housing. They asked their leaders to try something.

This session, leaders did. Not everything. Not perfectly. But more than last year, and with more bipartisan momentum than we've seen in a long time.

The IHA wasn't a partisan bill. Neither was HB1740. When the public mandate is this clear, the politics get easier — and this session was proof.

We're not done. But we're moving.