Hawaiʻi Appleseed releases 2024 report exploring an Empty Homes Tax to address Honolulu’s housing crisis

HONOLULU, Hawaiʻi — Throughout the City & County of Honolulu, covering the island of Oʻahu, some 35,000 homes and apartments currently sit empty. Honolulu's severe housing crisis is being exacerbated by a growing trend of vacant homes purchased as investments by non-residents. 

Approximately 13 percent of housing units on Oʻahu are now owned by individuals who do not live in Hawaiʻi. These properties are often left empty for extended periods, limiting the supply of available housing for residents, driving up prices and pushing locals out of the market. The median rent for a one-bedroom apartment in Honolulu in 2024 is $2,100, compared to $1,600 on average in the entire U.S. More than eight in 10 renters in Honolulu now spend at least 30 percent of their income on housing costs.

The Honolulu City Council is currently considering an EHT proposal in the form of Bill 46 (2024). To ensure the policy succeeds in curbing the trend of investment-purchasing, and in generating sufficient revenue to develop new housing working families can afford, the Hawaiʻi Appleseed Center for Law & Economic Justice recommends, in a new policy brief, that the city implement a 3–5 percent Empty Homes Tax (EHT) in Honolulu. 

The brief, titled “Homes Without Residents: Exploring an Empty Homes Tax for Honolulu,” examines other jurisdictions that have adopted similar policies to address their own affordable housing needs in similarly high-cost housing markets to find out which components of these policies work well and might be adopted in Honolulu.  

Hawaiʻi Appleseed’s recommended 3–5 percent tax would be levied on properties left vacant for more than 6 months each year. This tax could generate between $183–305 million for the city annually, and Appleseed recommends dedicating the funding exclusively to affordable housing initiatives after administration costs are covered. 

“By taxing properties that remain vacant for extended periods, an EHT would help to address the severe housing crisis on Oʻahu,” said Susan Le, Hawaiʻi Appleseed Senior Policy Analyst for Affordable Housing and the report’s lead author. “The EHT does this by generating substantial revenue to fund affordable housing initiatives, and by shifting the housing market dynamics away from speculative investment.”

The report highlights how Honolulu’s housing market is increasingly catering to non-resident investors at the expense of local families searching for affordable homes. Despite the glaring impact of speculative investment on housing availability, Honolulu's current tax policy does little to discourage this practice, with property tax rates among the lowest in the nation. 

Honolulu’s low property taxes, in turn, create an environment in which wealthy investors can afford to leave properties vacant, betting on long-term appreciation rather than contributing to the local housing supply. The report reveals that Honolulu’s real estate market has become highly lucrative for wealthy investors. Since 2000, home prices in Hawaiʻi have increased by nearly 400 percent, far outpacing the national average. 

For those able to invest, the return on holding real estate in Honolulu has been substantial. A single-family home purchased for $295,000 in 2000 could sell for $1,050,000 in 2023, representing a gross profit of over 250 percent. Condominiums, similarly, saw a gross profit of around 300 percent over the same period. Such significant returns attract speculative buyers who have no intention of occupying or renting out their properties to local residents.