UHERO: Regulation Reform Needed For More Affordable Housing

Reducing the regulatory burden on housing construction and other government regulations are keys to creating more affordable housing throughout the islands, according to the University of Hawaiʻi Economic Research Organization.

A new survey on housing by UHERO found that the state has some of the most restrictive housing regulations in the nation.

Hawaiʻi has some of the highest home prices in the United States.

In 2021, according to a brief about the new survey released by UHERO, the median single-family home resale price in the islands was about two and a half times the national median. One of the factors that might explain Hawaiʻi’s high home prices are government regulations that limit the ability of the housing market to create the units necessary to meet demand.

The brief presents the first results from the survey’s findings. Highlights include:

• Hawaiʻi’s counties have some of the highest regulatory burdens, even when compared with the nation’s 30 most expensive counties.
• The categories that contribute most significantly to the regulatory burden in U.S. housing markets are court involvement, state political involvement and local political pressure. Hawaiʻi ranks highly in all three categories, and its level of local political pressure is particularly high, ranking in the top 5% of the national survey sample.
• Affordable housing requirements are particularly widespread in Hawaiʻi, and permitting wait times are roughly triple the national average.
• Reducing the regulatory burden of housing construction could lower housing costs. One way could be to expand the number of locations where denser housing can be built without obtaining a variance to existing zoning rules.

While clearly important to the production of new housing, the brief said, regulatory barriers are difficult to measure. To study the impact of regulation on housing markets throughout the country, researchers often rely on the Wharton Residential Land Use Regulatory Index, which surveys public officials about the stringency of local regulations surrounding new home production.

The Wharton Index excludes Hawaiʻi’s housing markets, resulting in the elimination of the state from many national studies on the burden of housing regulation. Therefore, to fill that gap, UHERO administered the Wharton Index survey throughout Hawaiʻi counties in 2021.