No one knows how many homes are sitting empty despite housing shortage

Regardless of what the vacancy rate actually is, some housing advocates are welcoming Caldwell’s proposal.

“The proposal in general makes a whole lot of sense,” said Gavin Thornton, executive director of the Hawaiʻi Appleseed Center for Law & Economic Justice.

Hawaiʻi’s property taxes are among the nation’s lowest, he said, which creates an incentive for people to buy Honolulu real estate as an investment—even if the properties sit vacant most of the time.

“It doesn’t make sense, given the housing crisis we have, to allow this inefficiency to exist in the housing market,” Thornton said.

“I think the only people who are going to have a problem with this are the people who want to see housing prices go up,” he said of the proposed tax.

Another question is how many property owners would merely pay the tax instead of renting out their properties. A similar law adopted in Vancouver, British Columbia, did more to raise revenue than to open up condos for rent. According to a February report to the Vancouver City Council, the Canadian city generated $38 million during the tax’s first year, but the tax didn’t do much to fill vacant condos.

“Given the number of property owners that chose to pay the tax instead of renting their property, it is possible that the current tax rate is not enough of an incentive to rent,” the Vancouver report said.