- Regulatory fees account for more than half of the price of new condos in Hawaii, contributing to soaring housing costs, according to a new university report.
- The median price for a new two-bedroom condo in Hawaii is $672,000, more than double the national average of $300,000.
- Long delays in permitting, parking space requirements, and other regulations contribute to Hawaii’s high regulatory costs.
Regulatory costs account for more than half of the price of a new condominium in Hawaii, according to a University of Hawaii report released Monday, but soaring housing costs in Hawaii have led to more locally-born residents seeking cheaper housing. Residents are leaving.
Some fear that the rebuilding of the wildfire-ravaged town of Lahaina on Maui will make it impossible for local residents to afford housing there, accelerating the migration of Native Hawaiians and other local residents.
The median price for a new two-bedroom condo in Hawaii is $672,000, more than double the national average of $300,000, according to a report by the university’s Economic Research Institute.
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The report said regulatory costs averaged $387,000, or 58% of Hawaii’s median price. According to the report, construction costs accounted for 41% and land accounted for 1.4%.
Kai’aulu o Kukuia, a 200-unit affordable housing complex under construction in Lahaina, Hawaii, on October 3, 2023. Regulatory costs account for more than half of the price of a new condominium in Hawaii, according to a University of Hawaii report released Monday, but soaring housing costs in Hawaii have led to more locally-born residents seeking cheaper housing. Residents are leaving. (AP Photo/Mengshin Hayashi, File)
Hawaii condominiums ranked highest in the nation for average land cost and construction cost per half acre. California led the nation in terms of regulatory costs per unit, with New York in second place. 3rd place is Hawaii.
Justin Tyndall, an assistant professor of economics at the university and one of the report’s co-authors, said more than half of Hawaii’s regulatory costs are due to long permitting delays, minimum parking space requirements and other regulations. It was pointed out that this was caused by He noted that over the past five years, the median wait time for a construction permit to build a multifamily project in the islands was 400 days.
Another important factor, he said, is the requirement that developers build roads, sewers and other infrastructure as a condition of receiving building permits.
“This just shifts the entire burden of who pays for the infrastructure onto the developer, and ultimately that will be passed on to the new home buyer,” Tyndall said at a press conference. he told reporters.
Other states impose this requirement on developers, but Hawaii has an “above average” willingness to make developers pay these fees, he said.
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Traditionally, county governments have built this infrastructure using property tax revenue, the report said.
On a county basis, regulatory costs per condominium in Kauai and Maui were significantly higher than the state average at $567,000 and $561,000, respectively.
Tyndall said Maui as a whole needs more multifamily housing to make housing more affordable and reforms are needed to make it easier to build. He said the report had no “tangible lessons” for Lahaina, adding that the issue “should be left to the people of Lahaina.”
The researchers compared prices for new condos rather than single-family homes because there are observable market prices for building materials, labor, and land. In contrast, the price of a single-family home is determined primarily by the cost of land.
