Read the press release.
Finding affordable housing has long been a significant challenge for Hawai?is residents. Over the past decade, it has risen to crisis proportions. Economic barriers to achieving economic stability are daunting for most Hawaii residents, and are nearly insurmountable for low-income households. The growth of the vacation rental industry in recent years is exacerbating these problems. While vacation rentals offer the possibility of extra income for some residents and additional tax revenue for the state, many of the benefits go to nonresident investors. The adverse consequences of housing stock lost to vacation rentals far outweighs the benefits they might provide to local families and our community.
Hawai?is housing costs are among the highest in the nation. Hawaii workers earn the lowest wages in the nation after accounting for cost of living. These financial pressures are compounded by Hawaiis regressive tax system, which places the second highest tax rate in the nation on people in poverty. Given these factors, an unusually high percentage of our residents are renters43 percent, the fourth highest percentage in the nation. Rent is more expensive in Hawaii than any other state. In recent years, rents have been increasing at more than twice the rate of wages. Its no surprise that Hawaii has the highest rate of homelessness in the nation, and families who have called Hawaii home for generations are being priced off the islands.
At a time when Hawaii is only building half of the units necessary to keep up with demandand just a third of the units needed for low- and moderate-income householdshousing stock available to Hawaii residents is being eaten up by nonresident purchasers. Twenty-seven percent of Hawaii home sales are made to nonresidents. On Maui, 60 percent of condominium sales are made to nonresident buyers. The proliferation of short term vacation rental units (VRUs)the majority of which are operated by nonresidentshas added another pressure point by further limiting the availability of housing for local families.
Over just the last two years, the number of VRUs has increased by 35 percent. There are currently 23,000 VRUs being advertised around the state. Up to 93 percent of them are for entire homes, rather than the rent-out-a-room image purveyed by the VRU industry. One out of every 24 housing units in the state is a VRU, with some communities being completely overwhelmed by the industrys growth. On Kauai one in eight homes is used as a VRU. In Lahaina, the ratio drops to one in three. The reason why investors are choosing VRUs over long-term rentals is obvious: the average VRU brings in about 3.5 times more revenue than a long-term rental unit.
The loss of long-term rentals to VRUs means higher housing costs for Hawaii residents. Although Hawaii derives some benefits from VRUs through increased tourism spending and tax collection, the benefits are far outweighed by the costs. San Francisco, which like Honolulu has struggled with high housing costs and a proliferation of VRUs, found that every housing unit withdrawn from the market to be used as a VRU produces a net negative economic impact, even if the unit generates host income, visitor spending, and hotel taxes. San Francisco estimates that their local economy loses up to $300,000 per VRU per year. The impact of VRUs in Hawaii is likely to be similar.