Maui’s mayor, Richard Bissen, introduced a proposal to phase out vacation rentals to address a severe housing shortage exacerbated by wildfires in 2023. While the policy would improve housing affordability, it would also negatively impact jobs, incomes, and tax revenues, according to a report by University of Hawaii economists. Visitor spending is expected to decline significantly if the proposal is implemented.
Bissen emphasized the cultural loss and challenges faced by residents due to the housing crisis, noting that economic models do not fully capture these issues. The Maui County Council is considering incorporating the proposal into a bill, but concerns remain about legal implications and costs.
The study found that the mayor’s proposal, affecting 21% of Maui County’s housing supply, would add over 6,000 vacation rental units to the long-term housing stock, potentially decreasing condo prices by 20-40%. Most affected owners are from out-of-state, particularly California and Washington.
While the proposal could alleviate housing shortages without the need for additional water sources, it would eliminate a significant portion of visitor accommodations, resulting in job losses and a decline in GDP and property taxes. Alternative solutions suggested in the report include increasing taxes on vacation rentals, taxing empty homes, and implementing zoning and permitting reforms.
Auctioning off vacation rental licenses could also be a way to manage the market and push less profitable units out. Overall, the study provides valuable insights into the potential economic impacts of transitioning vacation rentals to long-term housing on Maui.
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