Mansions are easier to build on Valley Isle than apartments
Have you ever wondered why developers on Maui spend their time building mansions instead of affordable homes? At first glance, it would seem they could make more money building mansions, but that isn’t necessarily the case. Surprisingly, developers often make less money on mansions than if they were to build low-end or midlevel homes or apartments. Why?
The reason is zoning laws, specifically the ones that prohibit developers from building lower-priced single-family homes and apartments on their land.
Most of the land on Maui is restricted to one house per acre, which is ideal for luxury housing but prohibitive for smaller homes or apartments. Homebuilders who want to change their zoning classifications to allow for greater-density, lower-cost housing instead of mansions must endure a decadelong hazing of regulations, protests and red tape before they can start construction.
In trying to speed up the process, politicians have enacted legal fixes intended to “fast-track” lower-end housing, also known as the 201-H process, which allows developers to bypass some of the red tape. But the fast-tracking process still imposes many requirements, which has resulted in many stalled projects, representing thousands of affordable units.
Developers with stalled housing projects, however, can always build mansions instead. Mansions are much easier to build because they involve almost no hearings, court battles or public protests, since they usually comprise just one house per acre and do not need to be rezoned.
This is unfortunate, considering so many families on Maui would like to see a greater number of homes for sale that would fit better into their budgets. According to the Maui Island Plan, the Valley Isle will need 30,000 new homes by 2030 to keep up with buyer demand.
In 2016, the scarcity in housing on Maui launched median home prices past $700,000, up from $550,000 in 2015. These high prices put midlevel housing out of reach for most Maui families.
Freeing up more land for greater-density housing would provide a release valve for the housing market and allow more Maui residents to buy their own homes. Instead, land and housing regulations intended to help create so-called affordable housing have resulted in fewer homes for sale for average working families on Maui — and at a higher price — and created an environment for developers wherein it is just much simpler and easier to build luxury estates.
If this trend continues, Maui will solidify its reputation as a playground for the rich, squeezing more and more of its poor and middle-class families off the island.
Given that developers can always opt to build mansions, it might make more sense for Maui policymakers to work with developers who want to build lower-priced homes, specifically by allowing more homes to be built on less land. This would also allow more land to be left as open space and make it easier for more Maui residents to have a home of their own.
* Joe Kent is vice president of research for the Grassroot Institute of Hawaii, an independent, nonprofit policy research organization based in Honolulu.