How looming Federal cuts could impact housing in Hawaiʻi

Federal budget proposals are threatening to make Hawaiʻi’s housing crisis even worse. The latest proposal in Congress calls for massive cuts to housing and homelessness programs, including a $33.6 billion reduction to the Department of Housing and Urban Development (HUD)—nearly half its current funding. If enacted, these cuts would gut rental assistance, eliminate key affordable housing development programs and slash funding for homelessness services. 

With the proposed cuts, HUD is expected to close field offices across 34 states and reduce its staff by about half. Staffing reductions will put millions of people at risk who rely on federally funded housing assistance. It would additionally stall billions of dollars in private investment for the construction of new affordable housing, as well as renovation and rebuilding of existing housing.

Program Cuts

The Office of Community Planning and Development (CPD) within HUD, responsible for disbursing funding for homelessness programs and emergency vouchers, is expected to lose 84 percent of its staff. Proposed administrative changes will also result in $532 million in spending cuts to homelessness programs such as Continuums of Care (CoC), and Emergency Shelter Grants (ESG). Nationwide, over 212,000 households could lose access to shelter placement and permanent supportive housing administered by CoCs as a result of these funding cuts. 

In Hawaiʻi alone, these cuts would put approximately put 1,428 individuals across neighbor islands and 4,884 individuals on Oʻahu at risk of returning to homelessness. 

Among the many cuts proposed in the federal budget plan, a $26.7 billion reduction in federal rental assistance would be among the most devastating, eliminating nearly all funding to the Housing Choice Vouchers (HCV) and Project Based Vouchers (PBVs) programs. 

Federal rental assistance programs already suffer from chronic underfunding with only 1 in 4 eligible renters receiving assistance, yet they are among the most effective tools for promoting housing stability and economic mobility. Research demonstrates that vouchers significantly reduce rates of homelessness, overcrowding, and housing instability. Gutting these programs would strip vouchers from over 10 million individuals nationwide, crucially jeopardizing their access to market-rate units that would otherwise be financially out of reach. 

Some 55,700 people in 24,000 Hawaiʻi households use federal rental assistance to afford housing. Many of these people are working individuals supporting families, seniors on fixed incomes, veterans, and individuals with disabilities. Losing access to housing vouchers would result in an immediate risk of eviction.

Federal rental assistance is one of the most effective tools we have to keep people housed in Hawaiʻi’s increasingly unaffordable rental market. Housing Choice Vouchers (HCVs) help low-income families afford market-rate units by covering the gap between rent and what they can pay—giving them the flexibility to live in neighborhoods with better schools, jobs, and transit. Project-Based Vouchers (PBVs), on the other hand, are tied to specific units and help finance the development or rehab of deeply affordable housing. 

Together, these programs expand access to stable housing and make it possible to build and preserve affordability in one of the most expensive markets in the country. Cutting these lifelines would not only put thousands of local households at risk—it would also cripple efforts to grow the affordable housing Hawaiʻi urgently needs.

The Hawaiʻi Public Housing Authority plans to incorporate PBVs in the state's largest endeavor to support the construction of over 10,000 new units. The absence of these vouchers would jeopardize the promise of long-term affordability.

Additionally, the budget proposal includes the elimination of housing development programs like the Community Development Block Grant (CBDG) program, Home Investments Partnership program, and the Native Hawaiian Housing Block Grant. These programs provide critical funding to support the construction, rehabilitation and infrastructure needs of affordable housing developments for low- and moderate-income communities. Elimination of these programs would significantly obstruct the state’s efforts to increase housing production and expand its inventory of long-term, deeply affordable units. This is particularly critical across neighbor islands where these programs are a primary source of development funding. 

A lone positive in the Trump Administration’s fiscal agenda for affordable housing is an expansion to the Low-Income Housing Tax Credit (LIHTC) program that extends a temporary increase in LIHTC allocations, lowers the bond financing threshold for certain projects, and provides a basis boost for rural and Native American areas. A Novogradac analysis of the LIHTC provisions in the budget proposal estimates that more than 1 million additional affordable rental homes nationwide could be financed by the new LIHTC provisions. 

Although these benefits may support affordable housing development, it is unclear if they will sufficiently offset the widespread harm anticipated from proposed budget cuts to the other housing assistance and development programs. 

Long-Term Consequences

Cuts to homeless services, rental assistance, and housing development programs would have devastating consequences for Hawaiʻi, particularly at a time when residents are facing mounting financial pressure in one of the most expensive housing markets in the country.

According to the University of Hawaiʻi Economic Research Organization (UHERO), over half of the state’s renter population is rent burdened (spending over 30 percent of their income on rent), and nearly a third renters are severely cost burdened (spending over 50 percent of their income on rent). Hawaiʻi also has the highest rate of chronic homelessness and the highest share of youth experiencing unsheltered homelessness in the nation. Loss of federal housing assistance programs and grants would devastate our social safety net.

These impacts will extend far beyond housing, undermining public health and long-term educational outcomes as well. Housing insecurity is closely linked to increased stress, anxiety, and depression, which can erode both mental and physical health. Chronic stress from the threat of eviction or housing loss worsens existing health conditions and contributes to new ones, such as heart disease and respiratory illness. Many individuals facing housing insecurity are forced to delay medical care just to cover rent. For children, unstable housing often leads to school disruptions, lower academic performance, absenteeism, and developmental challenges which lead to reduced employment retention and increased probability of homelessness later in life.

Slashing already under-financed federal housing funds would deepen Hawaiʻi’s housing crisis. If passed, these cuts would push thousands of residents closer to eviction, shutter critical services, and stall affordable housing construction for years to come. Congress must reject these cuts and instead invest in housing as essential infrastructure that is foundational to public health, social and economic stability.