Andrew Church has lived on Maui for greater than 20 years, whereas his long-term companion and fiancée, with whom he has a daughter, was born and raised on the island.
After working and saving for years, Church began buying properties to function as leases in September 2022 and now has 4 items. His trip leases are actually the first supply of revenue for his household.
Maui officers have rolled out a plan to part out 7,000-plus short-term leases in an effort to open up extra housing for native residents and produce down housing prices — a transfer that Church mentioned will devastate his household.
“My household is shedding sleep each night time over this factor,” Church informed Enterprise Insider. He mentioned if the ban takes impact, he won’t be capable of pay his mortgage and would in all probability should promote every part and depart Maui, the place his fiancé’s household roots return over a century.
“By imposing this ban, they will bankrupt my household,” he mentioned.
With a few of the most costly actual property within the US, Maui has lengthy had housing points. Hawaii’s median dwelling value is greater than practically each different US state. Maui particularly had a median dwelling value of round $1.1 million in July 2024, in comparison with the countrywide median dwelling value of $438,706, in line with Redfin.
The island’s housing issues had been exacerbated by the wildfire that devastated Lahaina in August 2023, destroying a lot of the downtown and displacing 1000’s of residents.
The plan to part out some short-term leases got here within the wake of the hearth, however as a vacationer vacation spot with native housing points, Maui is hardly alone. Barcelona and New York Metropolis are among the many cities which have banned or carried out restrictions on Airbnb and trip leases.
However on an island the dimensions of Maui, the place the tourism trade is estimated to be straight or not directly chargeable for 70% of each greenback generated, the results may very well be important.
House owners say their property values will tank
The ban, which applies to properties on the so-called “Minatoya Checklist,” consists of 7,160 items largely concentrated within the touristy areas of South Maui, primarily Kihei, and West Maui, principally Kaanapali.
The properties are technically zoned for residential flats however, since 2001, have been allowed to legally function as short-term leases — and have been taxed to that impact. The record is known as for town worker who initially wrote a memo about permitting the short-term leases, which was finally put into regulation.
Mario Tama/Getty Pictures
Maui Mayor Richard Bissen earlier this 12 months introduced a plan to finish these permissions. The Maui Planning Fee voted unanimously in favor of it, recommending it’s permitted by town council. If permitted, the ban will take impact, relying on the realm, in 2025 and 2026.
Church mentioned three of his 4 properties are on the record, however when he purchased them in 2022 and 2023, he had no thought the record existed. When researching the properties, he confirmed their tax standing as short-term leases on the county web site.
He mentioned the items had been marketed and bought to him as trip leases and that nobody, not a real-estate agent or a authorities official, talked about the record to him. Church mentioned different house owners he is aware of mentioned the identical factor and are additionally involved in regards to the monetary impacts of the ban. The Maui County mayor’s workplace didn’t present remark when reached by Enterprise Insider.
Jason Gobey, one other short-term rental proprietor, informed BI he researched and spoke to real-estate brokers in addition to others earlier than shopping for his one-bedroom condominium in Kihei in 2019. He additionally mentioned he confirmed the property’s tax standing as a short-term rental and had no thought there may very well be a difficulty with it.
Gobey and his spouse dwell in Arizona however spend about 4 months of the 12 months on Maui. He mentioned he doesn’t make a considerable revenue on his condominium however that purchasing it and renting it out was the one method they may afford to go to Maui as typically as they do, throughout which period they’re additionally spending closely on the native financial system.
“We purchased it to make use of it,” he mentioned. “However we’d like some revenue off of it.”
Each house owners mentioned their property worth goes to plunge on account of the ban. They mentioned loads of related items have been listed on the market for the reason that ban was proposed, however that nobody is shopping for them. They really feel sure that in the event that they finally promote their properties it will likely be at a considerable loss.
Although a few of the Minatoya Checklist properties will probably be transformed to long-term leases, Church mentioned it’s not financially possible for him. Because of the excessive prices related to property upkeep, he thinks he must cost far an excessive amount of to make a long-term rental work.
Gobey mentioned since he and his spouse spend a month on Maui each few months or so, his unit will simply sit empty when they don’t seem to be on the island. Each house owners mentioned the individuals who assist them keep the items, like correct managers and cleaners, would additionally lose work as a direct results of the ban.
Smith Assortment/Gado/Getty Pictures
The ban ought to assist Maui’s housing drawback, however the wider impacts are unclear
The house owners additionally mentioned they didn’t assume phasing out their leases would truly resolve Maui’s housing disaster, saying the worth of the properties would probably nonetheless be greater than the common household might afford.
Nonetheless, Justin Tyndall, an affiliate professor of economics on the College of Hawaii at Manoa, mentioned the coverage change would have a big optimistic affect on housing in Maui, growing the long-term residential housing inventory by 13%.
“That may simply be an enormous flood of latest items. A few of them would find yourself on the market, or a few of them can be rented out to locals,” he informed BI, including, “It might undoubtedly make housing extra inexpensive.”
Even when most of the properties would nonetheless be unattainable to lower-income residents, growing the availability of housing would probably put downward stress on dwelling costs and rents extra broadly.
Tyndall mentioned Maui’s housing concern largely comes all the way down to an absence of housing provide leading to extraordinarily excessive costs. A big driver of that’s how few new building tasks there have been on the island over the previous 20 years, partially as a consequence of authorities laws that make acquiring a allow troublesome and dear.
He mentioned a few of these laws make sense, like these meant to guard ecologically delicate areas, whereas others are misguided, and that there are adjustments the federal government might make to encourage builders to construct extra housing.
However the good thing about including the Minatoya Checklist properties to the housing inventory is that they’re already constructed.
He mentioned the property worth of these items will nearly actually go down, however that that is not a foul factor for the broader Maui housing drawback. He additionally famous that 85% of the items on the record are owned by individuals who dwell out of state, whereas 92% are owned by individuals who do not dwell on Maui.
Whereas he mentioned there is a consensus amongst specialists that the change will profit Maui housing by growing provide and bringing down prices, he’s nonetheless trying into what the broader impacts is perhaps.
“Maui is so depending on tourism, taking away 7,000 customer lodging items will definitely cut back tourism ranges,” Tyndall mentioned. “It is unclear by how a lot.”
He added that almost all resorts on the island usually function at 60 to 70% capability, so some would-be short-term renters will probably find yourself there, however at this level, it is nonetheless an enormous unknown.
If the change results in a big discount in vacationers visiting Maui, it could imply much less tax income for the county and job losses for folks within the service trade.
As for the short-term rental house owners, Tyndall mentioned of us ought to’ve recognized this was a chance and that many individuals who work in actual property at the least knew in regards to the record.
“Property funding entails danger,” he mentioned.
“There is not any assure you possibly can function a trip rental in perpetuity.”
Are you a short-term rental proprietor on Maui, or have you ever or your loved ones struggled to acquire housing on Maui? Need to share your perspective on the plan to part out some trip leases? Contact this reporter at kvlamis@businessinsider.com.
