Maui’s mayor, Richard Bissen, has proposed phasing out vacation rentals to address the severe housing shortage caused by the 2023 wildfires. A report by University of Hawaii economists found that while this policy would increase housing affordability, it would also result in job losses, lower incomes, and a decline in visitor spending. The proposal would add over 6,000 long-term housing units to Maui’s supply, equivalent to a decade’s worth of new development. Condo prices are estimated to drop by 20-40%.
Most of the affected vacation rental owners are from out-of-state, particularly California and Washington state, as well as Canada. The policy would not require additional water sources, which are scarce on Maui. However, it would eliminate one-quarter of Maui County’s visitor accommodations and lead to a 15% decrease in visitor spending. This would result in the loss of 1,900 jobs and a 4% decrease in GDP.
The report suggested alternative approaches, such as increasing taxes on vacation rentals, taxing empty homes, and adopting zoning and permitting reform. It also proposed capping the number of vacation rental licenses and auctioning them off, similar to practices for taxi medallions and fisheries management. The study was conducted at the request of the Hawaii Community Foundation, a nonprofit organization. The Maui County Council’s Housing and Land Use Committee may consider a bill based on the mayor’s proposal in the coming months, with concerns about legal implications and associated costs.
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