Gov. Josh Green offered a neat solution to the long-term housing shortage on Maui — and across the state: Turn short-term rentals into units the displaced residents can fill.
“If we today were able to convince everybody who is running a short-term rental to put that into the housing pool, we would not have much of a housing crisis any longer in Hawaii,” Green told Hawaii Public Radio. “So, we should apply appropriate pressure to move short-term rentals into the long-term market and that way local people can have access to houses.”
Sounds easy, right? It’s not so simple. Here’s why he’s wrong:
A state-commissioned study estimated we would need 50,000 new housing units in the state by 2025. Short-term rentals (STRs) can’t fill the gap. No matter how many incentives or tax penalties, not all STRs would convert to long-term housing. Some owners would simply stop renting altogether.
Rents will remain too expensive for most families. Homeowners who do convert will do so at current market prices. New rentals won’t affect that because demand outpaces supply. A key cause of Hawaii’s housing problem is the mismatch of low-paying jobs and the high cost of building housing. Boosting incomes should be a priority for the state and for companies that long underpaid workers simply because residents had few options. These companies need to chip in to solve the problem.
Operators of STRs have their own reasons for preferring short term. Take one example — a family who uses their ohana unit for actual family members might want to rent out that unit on a short-term basis when not occupied. This is particularly important to our multigenerational families, especially to kupuna who cannot make ends meet.
The governor is shifting costs to a small segment of homeowners who try to supplement their incomes. Many of them, too, are trying to get by in this expensive state. Farmers, for example, have had to diversify in recent years. Green should do everything he can to encourage agro-tourism rentals.
The logic of the governor’s solution is equivalent to asking those with unused rooms in their homes to house those in need. Mark Zuckerberg’s planned $270 million home on Kauai reportedly will have 30 bedrooms. Maybe Hawaii should force him to free up those?
Put in those terms, this approach seems absurd.
Sadly, the governor’s comments have added fuel to efforts on each island to regulate STRs out of existence. They are being blamed for many social ills.
Consider this: As in other parts of the state, homeowners in Kapaau on the Big Island — Gov. Green’s home base — list ohana units on Airbnb and VRBO. Not only do these bring income to a corner of the island that has suffered since the demise of the sugar industry, but they attract tourists from around the world to an area far from the nearest resort 40 minutes away. These visitors say they are thrilled to get a taste of the “real” Hawaii and bask in the aloha spirit.
What’s more, they spend money at local grocery stores, souvenir and clothing shops, restaurants, galleries, farm stands and shave ice shops. Some of them love their experience so much that they decide to move here, adding to the local tax base. Many who stay at STRs pay about $120 to $250 a night. The closest hotel, by contrast, charges $989 a night and up. Most would not come to Hawaii if that was their only choice. Moreover, owners of STRs pay general excise, transient and higher property taxes. Why choke off this valuable source of revenue?
We should boost this segment of the market, using revenue it generates to support state-led efforts to increase long-term housing options. To his credit, Gov. Green is committed to boldly addressing the housing crisis, something his predecessors avoided. But targeting short-term rentals as an easy fix is not the answer.
Ken Wills is a writer, Realtor and farmer in Kapaau.
