Hawaii moves to ban short-term rentals to address housing crisis
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substack.perfectunion.us
If you want to ban AirBNB for nuisance or other reasons, great. But don't pretend that this will create enough housing for people. It just removes one small sliver of demand, and acknowledges that the core problem is a supply/demand mismatch.
If you want to deny people's needs, limit them, at least be explicit about that too. Housing is a basic necessity of life. Why limit it?
As Keynes said: is we can do it, we can afford it. We can build more housing.
The market is the result of regulation, and the regulations right now do not permit more housing, but do allow the highest bidder clear the market.
The market has been set up to only serve those with the most money, through a conscious choice of how the regulations were chosen.
The thesis being offered - which you will likely disagree with - can be read as - the economic capacity certainly exists, but the regulatory regime prices it out of the market.
Until they change this bad regulatory regime, and regulate to provide enough housing rather than regulate to keep existing conservative homeowners happy, then they will continue to put regular folks in Hawaii through a meat grinder of housing austerity.
My perspective is that you can only regulate things out of production. You can't regulate things into production. If that were true, politicians could have made us all rich by their wise words and actions. But they don't. Because they can't. That's not the source of wealth.
The prices were intentionally set high for new housing by regulation. That can be changed.
Further, it's slightly more tricky to regulate things into production, but we do it all the time. Take for example, roads, or water treatment, or any other public service. That's entirely the product of regulation, not of the free market, and would not happen otherwise.
Further, we can regulate non-publicly owned entities into production, and we do so frequently. For example financial products like a 30-year mortgage are entirely a creation of regulation, and would not exist without hearty regulation backing them. We can do similar things for construction loans, for training in the trades, for social housing, for pretty much anything.
Housing is a very solvable problem. However we actively choose not to solve it, and in fact we actively choose to make it more expensive in order to benefit those who already have housing, and to benefit those who speculate on it.
So if I have these views of housing, why am I not opposed to AirBNB? Because AirBNB is actually meeting some real need from real people, it's not pure speculation, or pure rent-seeking, like the regulatory regime that institutes housing austerity. There's real human gain from AirBNB, it's not merely an economic gain.
And I'm not entirely in favor of AirBNB either, it's just that it really really grates me that this is being falsely sold as a solution to the housing crisis. It is not. It's barely related, but related in a way that shows the true underlying problem: supply versus demand for housing.
Agreed that housing on vacant land isn't the answer. The answer is to build up, in more socially-orinted ways.
You can no longer live in Podunk Michigan and go down the street and get a good paying job pushing a broom at the local factory. That work is done by a contractor who pockets the wage and gives a quarter of it to their employees. Or the factory closed because it was cheaper to build and ship widgets from somewhere else. So everyone has to either suffer the economic depression, drive for an hour or two to go to work, or move. This housing crisis is the end result of our economic policies of the last 40 or 50 years and the hollowing out of middle America and the consolidation of a lot of industries into two or three huge competitors slugging it out.
If we can fix that system and give people outside of major metros a shot at making a decent living again then the housing crisis would disappear. There are plenty of cities across the entire US that are tearing down houses because nobody wants to live in them and otherwise they become animal nests. Meanwhile there's a housing crisis on the coasts.
One thing I'd like to see is a federal payroll tax credit for remote workers. That would do a lot to reverse the "return to office" mandates of the last couple of years. If you disperse a bunch of bright and talented people into the middle of the country, at least some of them will find ventures locally that bloom into something big.
We can make different choices.
Building housing takes anywhere from 3 to 4 years for any significant development that can make a dent. When the average investor can get 7% with minimal risk in the S&P500, you’re looking at rewarding investors a lot more than that in returns over this time period. People would rather invest elsewhere.
Once you factor that in, you’re looking at a large % required return factoring risks like lawsuits, construction mishaps, etc.
There is a reason every new development looks like luxury housing or luxury apartments. The economics don’t favor Levittown style massive buildouts anymore.
The market will reward those who can bring efficiency to something that’s clearly an opportunity to be more efficient. That’s not where we are with housing right now.
The core land use conflict is: do only a tiny number of benighted souls get to the use the land, or does the land belong to all?
Your comment honestly sounds like you personally feel attacked. Money has been shown to be moving a lot of hawaii's policy, purchases from the california .1% are well documented. The benighted souls are not who you suggest them to be.
I don't feel personally attacked, but I do have strong priors that we should try to make society work for as many people as possible, and also that land was created by none, and must be mediated for the benefit of all.
I did not suggest that any particular set of people are the benighted ones, and honestly I'm not sure who you think I thought they were.
...whatever the lawmakers say it's about.
I moved into our rental in 2021. At the time, rental ads got 400 applications per day. Many local families with money in the bank entered homelessness that year because there was nowhere to go.
The ad for ours was up for 2 hours and had over 50 apps. We won out by offering 6mos up front.
Two houses down is a short term rental. People are in it 3 weeks/yr. Any one of those homeless families would have rented it if they could.
One more family having a home is an actual good.
Keyboard jockeys can debate policy and believe they have the answer but the latest generation of homeless don't much care about theories. They just want a bedroom.
Banning AirBNB won't fix these deeply disturbing issues.
Call me a keyboard jockey, but when more families are homeless soon after the ban, it's because housing was not built.
I was with you up until this comment. It seems perfectly reasonable to me for a locality to prioritize their land use for their permanent residents over tourists. That is, at least regarding this topic, what you describe as "only a tiny number of benighted souls" are actually the souls that live in Hawaii vs. just those that want to visit.
You don’t think a community has the right to regulate land use? Short term renters don’t make good neighbors, and a community full of short term rentals isn’t really a community. I think it’s perfectly reasonable to limit them to appropriately zoned areas.
I don’t see any difference between a local government telling people they can’t run retail business in residential area and telling people they can’t run a hotel.
Compare that to the reality that in order to solve housing you need to build more houses, and to do that you have to simplify and speed up permitting, allow more multi-unit housing next to existing housing, existing home owner's properties may not go up in value indefinitely and many will decrease in value, etc.
That's a much tougher sell. Also look a the politicians' incentives. Voters are more likely to understand and have an emotional response to AirBnB being banned than the permit process being sped up by 50%.
In a couple of cases, building more housing isn’t the ideal solution
Luckily we invented the elevator so we don't have to bulldoze forests to build more housing if we don't need to
And then it becomes a massive ugly splinter of 20-story residential towers despoiling the middle of a national park.
...and still expensive.
One parking spot for every apartment max too, to keep the footprint light. I think my residence has one spot per two apartment and it seems enough, its never full, but here people bike more than they drive, so that helps.
If supply has no effect on price, then banning AirBnBs won't reduce prices either
If areas are not zoned for more housing that requires approvals. Often times those approvals can have a negative impact on existing housing in various ways. Ways that may negatively impact valuations and this would be a change that buyers of the existing inventory were not informed of or expecting. That has to be considered even if there was a magic way to somehow say ‘this new zoning will result in a net better world in the end’
Infrastructure also needs to be considered. Increased population density may not have been accounted for in roads, sewers, etc. Often a fixable issue, with lots of time and money. Schools and other public services may need to be increased as well.
There are other things to, but I think you get the point.
Meanwhile, converting short term rentals back to standard housing IS something that can be done quickly and with very few approvals relatively speaking. Things were obviously already zoned for this and buyers would have been expecting this anyway.
Converting short terms rentals back is likely to cause some amount of property holds to dump (sell) these properties that were only bought to be Airbnbs, potentially lowering house prices, at least temporarily.
Ultimately this decision likely is one of the most efficient ways to begin to address the immediate problem in the fastest and most practical way.
This is the problem. We don't build houses because people worry it will affect them, so the problem is pushed elsewhere, with everyone advocating that someone else solve the problem.
So zone it for housing.
I will once again float that zoning should be federalized, and everyone should be able to build whatever they want on their land by-right. If you have a problem with what I want to put on my land, buy my land. I'm not responsible for your property value, you are.
The federal government has the authority to invalidate local city council ordinances - for instance the FCC invalidated Chicago rules around satellite dishes. They also regulate housing in e.g. the Fair Housing Act. The housing market is interstate commerce.
Houston has no zoning rules and is one of the most affordable major metros in the US. Who cares that some guy lives behind a rollercoaster? [1]
> Infrastructure also needs to be considered.
If only there was an entity that was responsible for infrastructure, some kind of city council :) the council should be required to develop infrastructure to meet the actual demand in the area.
[edit] The whole concept of single-family zoning started in Berkeley as a way to keep minorities from owning homes in the area. By making them more expensive. It quickly spread throughout the US. The whole concept of zoning was meant to be exclusionary through pricing, and guess what, it works. [2]
[1] https://www.fastcompany.com/90766731/a-bold-case-against-zon...
[2] https://www.sierraclub.org/san-francisco-bay/blog/2021/06/en...
That's unreasonable. What if I'm your neighbor and want to turn my land into a toxic waste dump and burn tires for heat and/or fun? I'm not responsible for your property value, right?
Communities are actual things. Pretending like they're not to "solve" one problem just means you'll get other problems.
There is plenty of prior art that draws exactly the right compromises. For example Houston as I mentioned, and Japan.
> Zoning should be residential, commercial and industrial.
Whatever happened to "everyone should be able to build whatever they want on their land by-right. If you have a problem with what I want to put on my land, buy my land. I'm not responsible for your property value." It seems like that got abandoned fast.
An obviously tortured reading of what I was arguing for, so I edited it for clarity. Hope that helps.
I suspect however that you'd find burning tires in an urban area to run afoul not of zoning rules but of the EPA.
By "tortured reading" do you mean "literal and straightforward" reading?
Externalities, a thing that exists.
Also, a recognition that communities are real things that can and should have rights of their own, independent of the individuals that make them up.
> Especially to the extent that you would engage in bad faith arguments?
You've literally said "everyone should be able to build whatever they want on their land by-right," and it's not bad faith to test your commitment to that.
> Are you trying to keep people out of your neighborhood, or are you trying to keep housing unaffordable? Have you decided that, entirely arbitrarily, the neighborhood is good now and should never change? Generally curious as to your animus.
Casting aspersions like that isn't good faith.
Its fundamentally greedy and unfair to deny lots of people something they would like, without just compensation to all the people that would like to live in Hawaii (or any other high demand area)
Land should be for all, not for the few. If you want a lot of land, there's a lot of it out there, you just need to go where there are few people. If you want a lot of land where other people also want a lot of land, you need to pay everybody else for that excessive consumption.
If the housing market was interstate commerce, then it could not be regulated by state or local governments, as that power is reserved to the Congress.
You'll be happy to know that in Russell v. United States, 471 U.S. 858 (1985) the Supreme Court affirmed the interstate nature of the housing rental market. [1]
The New York State Bar Association further makes a case for the Dormant Commerce Clause in zoning. [2]
And of course, the DOJ maintains that the Commerce Clause was key to enacting the Fair Housing Act in this amicus brief in 2015. [3] There's a ton of explanation in both the body and in the associated footnotes.
[1] https://caselaw.findlaw.com/court/us-supreme-court/471/858.h...
[2] https://nysba.org/how-the-dormant-commerce-clause-can-fight-...
[3] https://www.justice.gov/crt/housing-and-civil-enforcement-ca...
The fact that the federal government had the authority to invalidate a specific local ordinance does not mean that the federal government has the authority to invalidate any local ordinance.
>> The housing market is interstate commerce
The housing market is not interstate commerce. There may have been past Supreme Courts that inappropriately used the interstate commerce clause (for example the ruling that a farmer growing wheat on his farm in order to feed his cattle was interstate commerce), but the current Supreme Court will not inappropriately use the interstate commerce clause. Under the current Court, only interstate commerce will be considered as interstate commerce.
>> Houston has no zoning rules
It has ordinances, deed restrictions, and building codes instead.
>> and is one of the most affordable major metros in the US
The Houston metro area is 10,000 square miles of mostly flat land, with plenty more buildable land bordering the metro area. The cost of a house in that scenario is going to be close to the cost of construction.
sigh
>> Congress in fact relied on the Commerce Clause, together with the Thirteenth and Fourteenth Amendments, as a principal basis for the original enactment, in 1968, of the Fair Housing Act. The legislative history of the original Act contains many references by its sponsors and supporters to both the Commerce Clause and the Fourteenth Amendment as authority for its enactment.
>> The Attorney General testified that "the housing business is substantially interstate and subject to the commerce clause" because of the interstate movement of building materials, mortgage funds, and advertising, as well as the interstate movement of workers and their families.
I know the linked article is an amicus brief - but it was filed by the DOJ so it is the position of the United States. I suppose it could be re-litigated - the lord only knows with this Supreme Court - but I don't think it's at all unfair for me to rely on this thesis. The Federal Government has the power to regulate housing under the Commerce Clause.
The whole reason the Fair Housing Act is binding is that housing is interstate commerce.
Fundamentally if you believe the Fair Housing Act is enforceable, then you believe that housing is interstate commerce, which in turn means that you must agree the Federal Government can regulate housing. I'm not saying you have to like it or support it, just that it's pretty clearly established precedent.
Respectfully, I will follow the opinion of the DOJ here.
> The Houston metro area is 10,000 square miles of mostly flat land, with plenty more buildable land bordering the metro area. The cost of a house in that scenario is going to be close to the cost of construction.
Yes that's what happens when supply meets or exceeds demand. It approaches the cost of construction. When demand exceeds supply prices tend to the highest level the market will bear. That's the crux of my argument. You know that for instance the SF Bay Area's average population density is 600 people per square mile. We're not exactly short of land out here. This isn't Singapore. And you know you can just build up, right, when not forbidden by onerous zoning rules?
[1] https://www.justice.gov/crt/housing-and-civil-enforcement-ca...
It does that in two ways — it prevents tourists from competing for their house, and it reduces tourism, reducing local wages, which reduces housing demand from other locals.
But that's bad! It's bad for the tourists and it's overall bad for the locals. It would be even faster to just prevent all exports from Hawaii, including tourism — housing prices would drop really quickly. Would you advocate for that?
Instead, the goal should be to _increase_ the amount that people can trade, so you get some value from seeing a beach in Hawaii for a week and someone who lives in Hawaii can rent out their house or work in an airport or build a sightseeing business. And we can do that through allowing more stuff — including houses — to be built!
The housing crisis is when the valuation of the home are too high. The goal is to negatgively impact the valuations so that the prices come down, so that the poor and middle class can afford to live somewhere.
I'm no fan of short term rentals, but this seems more of case of trying to look like you are doing something - while doing it to a group of people that don't vote locally - rather than addressing the more fundamental issues.
Rarely is the most politically expedient solution the most efficient one, and here it goes double. So I take a little umbrage at you calling me naive and then saying something like this.
When I say that people will do anything except the thing that will fix it, it's precisely because I know it is difficult.
It's difficult because politically powerful people don't want change and don't want to admit to the harm they are causing to so many people so they can get their way and block new housing.
Converting STRs back to houses will not bring much housing to the market. Just as a vacancy tax will not have much of an impact. Or banning foreign ownership. All these will only bring a few percentage back to the market. But there needs to be a much deeper structural change that allows for much more housing.
Though I don't live in Hawaii, I follow a state legislator there very closely: Stanley Chang. He's one of the few people in the country willing to actually advocate for, and try to move the politics towards a solution:
https://www.senatorchang.com/2023-housing-delegation
Spending political effort on distractions like AirBNB merely let people put off a real solution for a few more years. And perhaps in those few more years, they can come up with some sort of other boogeyman to chase so that the real solution can be delayed even more.
AirBNB bans will not alleviate the housing crisis, but they will delay dealing with the real problem. And that itself is bad, inefficient, and harmful to Hawaiians.
Unless you are out there somehow getting politicans' assistants to change their bosses' positions at a bar.
Instead, I am organizing in political groups that include politicians' assistants, lawyers, professional urban planners, community organizers, and random politically activated folks like myself. We craft legislation, build coalitions with other political organizations, meet with politicians and their legislative aids, but we don't buy them off in bars because that's a fantasy that doesn't work. If it did, I'd have done it years ago.
But outside that aspect there's the important part of speaking in public spaces to move opinions of those who might similarly be politically activated.
Hacker News is actually a very good place for this. People here tend to be quite active, and can be convinced to make calls to legislators, join organizations, and devote their time to finding more people to do the same.
HN is one of the most LVT-pilled places on the internet. So I will continue bickering on here, finding more folks, and seeing ideas develop and spread among some influential people.
Few crisis exist for one reason, housing least of all.
A more reasonable perspective might be that progress needs to be made on all fronts.
I'm not making an expression of fairness here. I'm expressing the minimum perspective we need to make any progress at all.
If you have laws in place to limit misuse of housing stock, and then you build a massive amount of new housing, the problem can actually be ameliorated.
Housing - especially sustainable, long-lasting, quality housing - is genuinely expensive. Not as expensive as the real estate market might make you think, but it is expensive. Especially when you're shipping materials from a different continent to the middle of the Pacific!
There are limited lots in Hawaii. It's an island! Winter here in the northern continental US is a gray and terrible thing. I'd love to move to an identical 2-acre lot in Hawaii to what I have here, and have it within walking distance of my work and my son's school and shopping. But there are only so many 2-acre lots to build, and I've got one of the biggest in my neighborhood (most are half-acre), and lots of people want that.
And most importantly, you're eventually asking an elderly native Hawaiian, living on a fixed income, who just wants to live in the house they inherited from their parents, to compete financially for ownership of a limited resource with an out-of-state engineer or business owner.
Economics says that if the native who owns a house outright can't pay as much as a millionaire from the continent can, the millionaire should come to own it, and if a developer can turn that one lot into four sublots that are worth more to 4 someone (or make them duplexes, and split to 8, or make it an apartment complex) than the millionaire's valuation of the one lot with the SFH, it should be developed. But that's only the naive case.
At the end of the day it is not the Hawaiian government's job to enable the whole world to come and live there. Being too hands off may lead to unfairness in some ways, i.e. gentrification, but at least discouraging investors seems a step in a direction of helping the less wealthy.
People who are members of a society get to decide what businesses exist in their society and what rules they have to follow.
People who are not members of that society, who live somewhere else entirely, and who come for vacation or to visit for whatever reason, are not consuming "housing" they're consuming a different resource, which is usually called a "hotel" as shorthand, regardless of the fine details.
Building enough housing for members of your society, including the inevitable growth of the long term population via in-migration or birth, is extremely important and something many places need to get better at.
But it's got nothing to do with how many hotels you allow. Regardless of what you call them.
That’s why.
it's sacred to the natives, but so was Manhattan (which is also an island), and look at what we've done there
Because I’m pretty cynical, but even I have limits.
This is the argument against a land value tax (Hawaii used to have one, it is what Joni Mitchell was referring to when she sang, "They paved paradise / Put up a parking lot").
Is "housing in the location you want" a basic necessity of life?
I think it’s fine if cities get too expensive; people just need to wake up to the idea of “this place is too expensive for me”.
There are lots of very affordable houses in the Midwest, but everyone seems to want to be a star in Hollywood or a financier in New York (no matter how delusional they are).
Could not be more supportive, as I moved from a previous neighborhood where all but three of the houses on my street were STVR's (e.g. AirBnB). My previous home was just recently (and illegally!) converted into yet another AirBnB!
At least some of these AirBNBs are just people's vacation homes that will still sit empty because the owners don't intend to give up their private getaways.
It's one thing if you can look at a property and say, "well my income is high enough that I can afford the note on this property."
It's another thing if you say "well I can afford this property by using the property to pay for itself"
I would argue that a lot of the properties will be sold off.
Which, if that happens, should lower the average cost of housing for long term residents, which is basically the primary goal of this bill.
A lot of the costs tend to spread out as you get more square footage or spend longer periods of time.
Not all travel is business or tourism.
Total tangent, but I don't think most people have considered the ramifications of this changing.
Increasing travel demand only takes a small increase in the amount of disposable income of people at the margins - people who want to travel but can't afford it.
Increasing travel supply is approximately impossible at the first derivative - the places that people want to travel are places that have hundreds/thousands of years of history drawing them in. You can't simply make another Florence because the first one is too busy. Same problem re: national parks (which are moving to a reservation system to try to cope).
I suspect we'll continue to see places that haven't historically been interesting to/developed for travelers try to stake their claims as alternatives. There are some small cities in Italy that are fantastic destinations at the moment - accentuating themselves with travel amenities but not yet mobbed by travelers.
This is only going to get worse over time (more people able to afford travel than there are places worth traveling) unless there's a major shock like having the concept of travel canceled by climate change activists.
I wonder what cool opportunities there are in trying to solve this.
Combined with the high income and business taxes, they've created a tax system that favors non-residents over residents (and retirees over the working age).
Of course the system sucks. It was designed to suck.
Or maybe
"Residents of Hawai‘i face the highest housing costs in the nation"
ref: https://uhero.hawaii.edu/wp-content/uploads/2023/06/TheHawai...
If you build a housing unit in Hawaii, nearly anyone in the entire world is an eligible purchaser. Shift the tax distribution to favor workers/residents, and a huge percentage of eligible purchasers drop out of contention. Make it so that it is a dumb idea to buy housing in Hawaii unless you spend a really significant amount of time there.
Like with Taxis and Uber, there are clearly regulatory hurdles to fulfilling hotel demand. We can tell because places like Tokyo have cheap cheap hotels, despite high density.
That is from a dated, but very anti-vacation rental report [1], i just don't see the houses in the rental pool filling this need (yes it increases aggreagate supply/changes marginal pricing).
[1] https://static1.squarespace.com/static/63a60a7b7740015574521...
Put some reasonable limit - say 10 days a year - after which you get to register as a hotel, motel, or rental property and comply with the relevant regulations and taxes.
Either the occupants should be protected by tenancy laws, e.g. you don't get to evict them, you must do all the stuff that comes with being a landlord/lady and ensure the space conforms to the legal requirements for such. Or it's a hotel/motel, in which case the same applies, but for the hotel/motel regulations.
You can't do what airbnb hosts do which is to pick and choose what laws apply based on convenience to them. If you have paying occupants of your property there are only two options: hotel guest (e.g. you're subject to hotel regulations) or they're a tenant, there is no such thing as a quantum occupant.
Also if you are basing your rental/hotel fees on market price, you should obviously being paying taxes (property and income) based on those market values. Why would you not be?
Look at your city, and then do a search on Airbnb with no filters on. Those are all units of housing that just a decade ago would’ve been full-time units.
My viewpoint: Tax relief for your primary residence that you actually _use_ and live in. Like nobody should pay property taxes for just living.
For additional residences, you can't have to both ways: zoned residential AND be renting it out as a business full time. Absolutely property tax the shit out out of these. Require business licensure, commericial insurance, fire sprinkler, inspections, zoning, taxation, because this is literally what hotels have to do.
Both for tourists and locals.