The deadly Maui wildfire disaster displaced 5,000 people and has now left Hawaiʻi with the dubious distinction of having the nation’s highest rate of homelessness, according to a report released today by the University of Hawaiʻi Economic Research Organization.

The UHERO report also underscores that the wildfires aggravated Maui County’s already acute shortage of housing. The disaster destroyed more than 2,200 structures, primarily rental homes, and claimed at least 102 lives.

The surge in homelessness, according to the US Department of Housing and Urban Development, was largely attributed to the thousands of people rendered homeless overnight by the August 2023 Lahaina wildfire, the UHERO report says. Many of these displaced Lahaina residents were in temporary housing at the time of a survey of sheltered and unsheltered homeless people.

On Monday, Maui County Council members learned that the aftermath of the wildfire hindered a $240,000 study, originally aimed at creating a homeless strategic plan. After an assessment that the County’s wildfire response rendered formation of such a plan “infeasible,” the consultant’s deliverable changed to “community-informed report” titled “Recommendations to Address Homelessness in Maui County.”

In 2024, Hawai‘i documented 11,637 individuals experiencing homelessness. Of those, 65% were in shelters and 35% unsheltered, HUD reported. The higher numbers represent an 87% increase from 2023, mostly because of a tripling in the sheltered population.

UHERO reports that Hawai‘i’s homelessness rate is 80.5 per 10,000 residents. Hawai‘i’s homeless rate is more than 3.5 times the national average of 22.6, and its higher than the District of Columbia (80) and New York (79.5), which previously had higher rates than Hawai’i.

“Maui continues to face the greatest housing challenges as they navigate recovery from the 2023 wildfires,” the UHERO report says. “The wildfires provide a stark lesson: when housing supply shrinks, prices increase, residents leave, and homelessness grows.”

Permitting delays

The UHERO report highlights a significant bottleneck in addressing the housing crisis. It notes that permitting times for new single-family housing construction in Maui County are the second-longest in the state (more than 300 days, runner-up to Honolulu’s 393 days). This delay severely restricts new housing supply, impacting availability for the homeless and resident populations. Conversely, Maui County had the fewest permit processing days for multifamily housing permits (300). However, it also issued the fewest number of multifamily permits in 2024 — just 17.

“Bureaucratic barriers, particularly very long permit delays, also stand in the way of housing production,” UHERO reports. “While external factors complicate housing production, decisions at home remain the biggest constraint.”

Slow permitting means lost county revenue

The UH economists point out that counties are deprived of potential real property tax revenue when housing production is delayed because of slow permitting — the assessed value of undeveloped or underdeveloped properties remain lower for longer periods of time.

Based on permit delays, permit values and property tax rates, the economist estimate that “forgone revenue” of 19,800 permits over the past decade is more than $9 billion.

“On average, each permit took 224 days to process,” the economists said. “We consider a hypothetical scenario where counties made small improvements in procedures, so that permit delays fell by 10%. Getting projects permitted 10% faster would have allowed that $9 billion in property value to enter the property tax system sooner. We estimate that reducing permitting times by 10% would raise counties’ tax revenues by roughly $6 million per year, statewide.”

Outside forces impede housing supply; low supply, high demand equals high prices

The sluggish pace of new housing inventory is aggravated by circumstances beyond local control, like federal tariffs on building supplies and potential reductions in construction labor.

The economists report that import tariffs on building supplies “threaten to add yet another barrier to housing production in the state.”

According to estimates from the National Association of Home Builders, 7% of construction materials come from foreign sources, and current tariff actions will increase home building costs by $7,500 to $10,000.

“Steel and lumber tariffs could be onerous for housing construction,” the economists point out. “Global import tariffs on steel have been set at 25%. Steel tariffs may be particularly damaging to single-family home construction in Hawai‘i, which commonly uses steel framing, whereas wood framing is more typical in the continental US.”

Stable and more affordable prices follow greater housing supply, the economists say, adding that their data and analysis show “that low housing supply, coupled with strong demand, has fueled the state’s deep and persistent housing crisis.”

Outside real estate investment

The UHERO economists report that, in 2024, out-of-state buyers made up 20% of the 6,835 single-family home sales and 31% of condominium transactions statewide. “High mortgage rates are less important for out-of-state investor demand, as these purchases are more often made in cash,” they said. “While these purchases represent a significant share of overall housing activity, they are heavily concentrated in the Neighbor Island condominium markets.”

Short-term rentals account for 6% of the state’s housing supply, the UHERO report says. Of the 34,000 vacation rentals statewide, nearly 11,000, or 32.4%, are on Maui. A previous UHERO report on Maui County’s proposed phase-out of short-term vacation rentals in apartment-zoned districts found that it could potentially free up 6,000 units for residential housing, but it also risks 1,900 job layoffs and a $900 million loss in visitor spending.

According to the current UHERO Housing Factbook: “While the vacation rental market in West Maui shut down immediately after the 2023 fires, the overall stock of rentals on Maui quickly recovered to pre-fire levels… In West Maui, 41% of housing units are currently vacation rentals.”

In 2023, 59% of housing units in Maui County apartment districts were in the short-term rental market, UHERO reported.

Housing out of reach

The UHERO report highlights that three out of four households in Hawai‘i can’t afford a typical single-family home. According to the most recently available real estate statistics compiled by the Realtors Association of Maui, the median price of a single-family home in Maui County was $1,295,000 in March, down 0.3% from the same month last year.

In order to afford a mortgage on a median-priced, single-family home in Hawai‘i, a resident household would need to earn 190% of the state’s median income, about $187,000. The term “afford” is not subjective. It means devoting no more than 30% of gross income on mortgage payments.

“Fewer than one in four households earn this much,” UHERO reports.

Maui County has a resident population of 164,632 and a median household income of $95,076.

The UHERO report added that condominium affordability “improved marginally” from 2023 to 2024, “diverging markedly from the single-family trend for the first time in recent history.”

In comparison to the nearly $200,000 annual income needed to afford a single-family home mortgage, a household would need $126,000 to comfortably pay for a median-priced condo. However, lower condo prices could be offset by rising homeowner association fees, the UHERO report noted.

About 60% of households are able to cover the cost of median rent without spending more than 30% of their income, according to the report.

Other wildfire impacts

The UH economists also blamed the Maui wildfires for a sharp increase in rental costs.

According to a UHERO survey, “fire-impacted renters commonly faced rent increases of 50% to 60% compared to what they paid pre-wildfire.”

However, the economists note there are “signs of relief” for renters because survey data shows the median rent paid by fire-impacted renters for one- and two-bedroom units has declined by 10% to 20% in the first quarter of this year. Nevertheless, “rents paid for units with three or four more bedrooms have remained elevated.”

Rising rental costs

Residents of all counties saw higher rents over the past five years, but Maui and Kaua‘i felt the impact of relatively larger increases — comparing these islands’ rents to the state average, monthly rental costs grew 51% faster on Kaua‘i and 37% faster on Maui. “There is clear and recent evidence from research of other markets that supply growth leads to relative declines in local rents,” the economists say.

New state laws aim to reduce housing barriers

State lawmakers passed two bills last year aimed at reducing barriers to construction of accessory dwelling units and providing for the conversion of office buildings to residential use.

“As these bills come into effect across the counties, they could substantially influence development decisions,” the UH economists say. “Getting the most housing out of these policy changes would require counties to revisit regulations around parking, lot sizes, and development fees to ensure projects are feasible. A lack of infrastructure capacity in some areas could also be a barrier to housing developments under these new laws.”