Maui’s mayor, Richard Bissen, proposed a plan to phase out vacation rentals in order to address a severe housing shortage exacerbated by the 2023 wildfires. University of Hawaii economists found that while this plan would increase housing affordability, it would also lead to job losses, income reductions, and decreased tax revenues. Visitor spending would also significantly decline. The report highlighted that the policy was unique in scale as vacation rentals make up 21% of Maui County’s housing supply.
The proposal would add over 6,000 rental units to Maui’s long-term housing stock, equivalent to a decade’s worth of new housing development. Condo prices would decrease by 20-40%. However, the plan would also eliminate a quarter of visitor accommodations, leading to a 15% decline in visitor spending, and causing a 4% contraction in GDP. Property taxes could also decrease by up to $60 million annually.
The Maui County Council’s Housing and Land Use Committee may consider incorporating the mayor’s proposal into a bill. One alternative suggested by the report is to increase taxes on vacation rentals, tax empty homes, and reform zoning and permitting processes. Auctioning off vacation rental licenses was also proposed as a way to push less profitable units out of the market. The study was conducted at the request of the Hawaii Community Foundation.
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