Hawaii has a housing crisis that needs no introduction. If you were born here, chances are you were born with it: mentions of our housing crisis started popping up in local papers in the 1930s.
Nearly a hundred years on, we’re still trying to sort it out. These days the refrain you’re likely to hear is that it’s simply a matter of supply and demand. By which it’s always meant just supply — concerns about demand are gauche.
Supply is the hot topic. Indeed our housing crisis is often described flatly as a “housing shortage.” The conventional wisdom stops here claiming that if we increase supply prices will fall.
It’s true that we’ve seen the dire consequences of not building enough. In the 40 years since 1980 production has lagged and home prices (adjusting for inflation) have risen by 161%, according to Census data.
But it’s hard to argue that we’ve never built enough. In the 40 years between 1940 and 1980, we built more homes than the rest of the U.S. on a per capita basis. Units per capita increased by 62%, our housing stock by 268%. The results were equally bad as when we didn’t build: home prices rose by 510%, adjusting for inflation.
It seems whether we build or don’t, in Hawaii prices rise. This really shouldn’t be surprising. Everyone engaged in building homes in Hawaii benefits when prices go up, and they’re good at their job.
The solution to this problem isn’t in the debate we see play out constantly between NIMBYs and YIMBYs (“not in my backyard” and “yes in my back yard”); both have had their crack at the problem. It’s instead something quite different, rooted in how property markets actually work, and our actual problems. Let’s call it LIMBY — locals in my backyard.
LIMBYs know we need supply, but think it’s ridiculous to ignore the other side of pricing: demand. LIMBYs also think it’s silly to ignore how markets work and how land is priced to guarantee a return on investment determined more by Wall Street’s requirements than by local incomes.
The solution that works through these tangled problems, that can better leverage public investment in housing, that can build a housing market tied to local incomes, is a land trust and limited-profit developers.
Land trusts provide a ready mechanism to eliminate land speculation and thereby limit price increases. A limited-profit developer creates competition in the market to price development as a simple percentage of gross costs rather than a return on investment set by capital markets.
These aren’t untested ideas. Land trusts underpin affordable housing across the globe — most notably in Vermont. Limited-profit developers are critical for housing development in Singapore and Austria.
A raft of other changes are needed to shore up things now and help us build that market. State Sen. Stanley Chang has pending legislation to retool our state financing programs, which are currently giveaways to well-connected developers. Chang wants programs to direct developers toward actually affordable housing, and we agree.
State Rep. Tina Grandinetti has introduced a slew of bills to make sure tenants in naturally affordable housing are protected — and they should be. State Rep. Amy Perruso and state Sen. Les Ihara have introduced legislation to study how to better create a housing market for locals, using state resources and trusts based on ideas from local developer Peter Savio.
Hawaii ought to be a place where you are more likely to make it here if you were grown here. As our housing crisis has steadily gotten worse, you’re now more likely to own a home in Hawaii if you were flown here. Creating a housing market for locals is the only path forward.
LIMBY Hawaii organizers Dale Kobayashi is a former state House representative and Makana Hicks-Goo is with the Democracy Policy Network.
