Limited Island Resources and Aging Infrastructure are suffering under the strain of a building boom in Hawaii.
Maui’s second economy after tourism is construction and real estate sales. To feed the demand for luxury housing and real estate investment, builders are converging on the islands to cash in on the real estate gold rush.
The writing was on the wall when the largest agricultural land owner on Maui (A&B) announced that it was becoming a real estate development company. A year or two before finally closing the last sugar mill, they pivoted into real estate. They still maintained large land holdings and control over all the East Maui water. They didn’t need all the water or land for sugar anymore, but they weren’t ready to give it all back either. A&B has the largest commercial real estate holdings and owns the majority of commercial properties on Maui.
Ever since then, there has been a growing industry that consumes land, water, and resources by selling homes, condos, and hotels. The hotel industry keeps building hotels, and the construction industry supports developers who are building houses and cashing in on the real estate boom. Mainland developers and local developers are cashing in on the housing market for huge windfall profits, using every loophole and tactic to do so.
Developers are creating a myth that tourists are to blame, and that tourism is bad, even though most of us depend on tourism in some way. Although many do not like it, we all benefit from it in some way. The taxes alone are a significant part of the state budget that allows us to build roads and keep the wheels on our economy. The real estate and housing industry only benefits the few, not the many. While developers are building many of their hotels and condos for tourists, they are building most new homes for investors and off-islanders.
The Hotel Industry has been blaming TVRs, B&Bs, and smaller vacation rentals: The hotel industry has spent significant time and money campaigning against “legal and illegal” vacation rentals and has even tried to shut down previously permitted ones. Why? Because they want permission to keep building hotels themselves.
In this “spin” on the anti-tourism idea, they are targeting smaller tourism providers that compete with their business model. Hotels are corporate-owned mega-businesses, while smaller TVRs are usually locally or family owned. This campaign shifts economic benefit away from the local economy and toward off-island enterprises. Less money stays local, more flows to Wall Street. Local politicians and administrators allow this. In Hawaii, the hotel industry holds significant influence over many local politicians.
The main reason that many builders build affordable housing is because the rules require it. Maui County requires one affordable home for every four market-priced homes. Market-priced homes average around one million dollars, far beyond what most local families can afford. Builders know this and construct primarily for investors and mainland buyers. This is central to the housing problem—homes are being built for off-islander vacation use and investment, not for local residency.
Mainlanders Moving to Hawaii: Housing prices on the mainland are rising, and in many cases it is now cheaper for someone from Los Angeles, New York, or San Francisco to buy in Hawaii than in their own cities. This building boom is drawing many mainland buyers here. Many can afford multiple homes and become landlords themselves.
Locals Compete for Resources: New residents increase pressure on limited resources—longer lines, crowded beaches, packed restaurants, traffic congestion, parking shortages, and competition for housing and water meters. Some mainland arrivals also qualify for affordable housing and rental assistance.
When locals see all of these new faces: Crowding at beaches, fishing spots, trails, and roads creates tension. Many assume these are tourists, but many are actually malahini, newcomers who are not leaving.
Don’t blame the tourists, blame the developers and politicians: Tourists come and go. They spend money and then leave. They are a renewable economic input. Overcrowding is driven by permanent population increases enabled by development.
Politicians are allowing developers to build at an unprecedented pace: Developers fund campaigns and lobby heavily. In return, they receive approvals, land advantages, and reduced regulatory barriers. Luxury homes and mega-condos dominate new construction, priced far beyond local affordability.
Construction, development, luxury homes, and hotel rooms use up finite resources: Building consumes land and takes water away from other users. Gated communities, resorts, and golf developments permanently occupy land. Locals receive limited benefit—mostly short-term jobs—while long-term impacts include increased population pressure and resource depletion.
How many tourists are there? On Maui, every day there are already one in four, up to one in three people walking around that are tourists. This does not include mainlanders and foreigners who have recently moved here. Out-of-state license plates often represent relocated residents, not visitors.
Residents leaving to the mainland: Even before COVID-19, residents were relocating to states like California, Texas, and Washington. Between 2018 and 2019, an estimated 49,000 people moved to Hawaii.
https://www.khon2.com/hawaii-travel/top-20-people-from-these-states-are-moving-to-hawaii/
In 2020 alone, 67K Hawaiians moved to the mainland:
https://uhero.hawaii.edu/aloha-oe-population-migration-between-hawaii-and-the-u-s-mainland/
The idea that “we can build our way out” is flawed. The issue is not a lack of houses—it is affordability. High cost of living, low wages, and investment-driven housing markets prevent locals from owning homes.
For every affordable home you build, there are four luxury homes being built for investors. Even when locals qualify, they are outcompeted by buyers with stronger finances. No matter how many homes are built, they are purchased by those who can most easily afford them.
Living in the islands is a special situation: There is no nearby cheaper city. Maui already has more housing units than residents, but many are second homes or investment properties. Some investors own multiple units used as vacation rentals.
Many homes are converted into vacation rentals: Many homes are built specifically for that purpose and never enter the residential housing pool. Maui has more vacation rentals per capita than Oahu.
There are strong forces at work that are driving our housing crisis: Private land ownership plays a major role. Large amounts of agricultural land are unproductive or being positioned for conversion. Ranchlands are often degraded, leading to soil loss and environmental decline.
Converting ag land is a huge financial windfall: Landowners are seeking ways to maximize return. Conversion pathways include rezoning, subdivision into smaller parcels, or transitioning to commercial or industrial use.
Real estate flipping and investments: The industry benefits from repeated transactions. Selling a $1M home can generate $60K in commission; a $5M property can generate $300K. Investors are often preferred buyers because they close quickly.
1750 Real Estate Agents: On Maui in 2019, there were over 1,750 licensed agents.
https://mauinow.com/2019/08/20/july-2019-ytd-maui-statistics-and-mauis-top-3-realtors/
According to the DCCA: Hawaii has approximately 17,000 licensed real estate agents statewide.
Real estate commissions are driving house flipping: There are no limits on resale frequency. Agents benefit from repeated transactions and tend to favor buyers who can close quickly and reliably.
First-home buyers do get an incentive: But they often stretch finances to the limit and lack reserves for emergencies.
Affordable homes are being sold to off-islanders: New arrivals can qualify for these units, competing directly with local families.
Knowing the real causes of these problems is the first step.
#SHOWMETHEINFRASTRUCTURE
They can build thousands of luxury homes and hotels, but still cannot properly provide infrastructure: Roads, drainage, and services must come first. Policies are beginning to shift toward prioritizing long-term residents.
We need to demand much more from our politicians and rulemakers: Affordable housing must remain affordable, and tourism must be managed responsibly.
How do we do that? Tax vacation homes and luxury properties more heavily. Reduce speculative demand and return value to the local economy.
We need to show up and vote: Civic engagement is essential. Without action, long-term displacement of local residents will continue.