Tuesday, September 17, 2019
Hawai'i Free Press

Current Articles | Archives

Sunday, January 31, 2016
UHERO: New Perspectives on Land and Housing Markets in Hawaii
By UHERO @ 12:03 AM :: 2232 Views

New Perspectives on Land and Housing Markets in Hawaii

From UHERO, January 27, 2016

Land leasing is common in Honolulu, with many owners of residential, industrial, and commercial buildings leasing land. This report examines land and housing markets in Honolulu and the mainland United States to understand better why prices and lease rents are so much higher in Honolulu than most other US cities. Three stylized facts stand out: 

  • Census data show that Hawaii home prices were already exceptionally high in 1950.
  • Over the last six decades, inflation-adjusted land and housing prices in Honolulu register small annual real increases.
  • Honolulu’s inflation-adjusted land and housing prices have been highly volatile in the medium term since the 1960s, forcing market participants to bear high levels of risk.


  *   *   *   *   *

New Perspectives on Honolulu's High Housing Prices

by Sumner LaCroix, UHERO, January 28, 2016

Single-family home prices in Honolulu soared to record highs in 2015, with the median price for the full year reaching $700,000. In the second quarter of 2015, only three U.S. cities had higher prices—San Jose-Sunnyvale-Santa Clara ($980,000), San Francisco-Oakland ($842,000), and Anaheim- Santa Ana-Irvine ($713,000)—and Honolulu’s price premium over the next highest city—San Diego ($548,000) is huge. High housing prices are, however, nothing new for Honolulu or the State of Hawaii. Census data show that home prices in Hawaii in 1950 were already higher than in the 48 mainland states. Honolulu’s long history of high land and housing prices relative to the U.S. mainland tells us that any explanations of high land and housing prices must be rooted in history to be valid. In my new UHERO report on land and housing markets in Honolulu, I identify four factors that have contributed to high housing prices in Honolulu over the last 50 years.

The first factor is somewhat obvious but perhaps the most important—Hawaii’s world-class amenities. Media and consulting firm surveys regularly place Honolulu among the top cities for quality of life. Consider the following attributes which are likely to positively affect the Honolulu price: warm ocean waters; high number of sun days, moderate temperatures, trades winds; a multi-cultural and multi-ethnic social environment, highlighted by the host Native Hawaiian culture; relatively low racial and ethnic tensions; and a low crime rate. To gain access to these positive environmental attributes, Honolulu residents compete with each other and with people living outside Hawaii to pay higher housing prices and to accept lower wages.

A second factor raising housing prices is that the competition to live in paradise is exacerbated by the population being concentrated in the smallest natural supply of land available in any U.S. metropolitan area. Honolulu has a very small natural supply of developable land, with roughly 92 percent of the 50-kilometre radius circle centered on the Honolulu downtown not developable, either being mountains, wetlands, lakes, harbors, or the Pacific Ocean. This is much higher than the 80 percent measure of undevelopable land for the next most constrained U.S. metropolitan area, Ventura, California, or the 63 percent in San Diego or the 40 percent in New York City. High rents in the central city that middle income residents could normally escape by moving to a distant suburb would leave a Honolulu family paddling a canoe in the middle of the Moloka‘i Channel.

A third factor is land use regulation. The process of competition in Honolulu land and housing markets takes place under the watchful eyes of state and county governments that together impose the most severe regulation on land development to be found in any large U.S. metropolitan area. We compare Honolulu’s regulation with other U.S. cities by examining values of the Wharton Residential Land Use Regulatory Index, a respected index measuring land use regulation in U.S. cities. Developed by economists Joseph Gyourko, Albert Saiz, and Anita Summers, the Wharton Index aggregates 11 sub-indexes: a local political pressure index, a state political involvement index, a state court involvement index, a local zoning approval index, a local project approval index, a local assembly index, a supply restrictions index, a density restrictions index, an open space index, an exactions index, and an approval delay index. Honolulu has a higher value of the Wharton Index (compiled in 2006) than any other US metropolitan area. Its high score stems from the multiple layers of rigorous, lengthy review by both state and county governments for all new development projects.

A fourth factor that might be helping to keep Honolulu’s housing prices high is the “home voter” hypothesis, an idea first developed by the urban economist William Fischel in 2001. The idea is that high housing prices induce homeowners to vote for city and county officials who support regulations on residential development and to lobby against more development in their neighborhoods. This feedback effect from high home prices to even higher levels of regulation serves to maintain housing prices at elevated levels and protect home owners’ wealth. The economist Albert Saiz has found some empirical support for the home voter hypothesis in the overall U.S. sample. No direct evidence for the home voter hypothesis exists for Honolulu. Qualitative evidence is more abundant, as virtually any proposed new housing project or extensive redevelopment have encountered opposition in the courts, neighborhood, the Hawaii State Land Use Commission, or the Honolulu City Council.


TEXT "follow HawaiiFreePress" to 40404

Register to Vote


808 Silent Majority

808 State Update AM940


ACA Signups Hawaii



Alliance Defending Freedom

Aloha Conservative Alliance

Aloha Life Advocates

Aloha Pregnancy Care Center

American Council of Trustees and Alumni

American Mothers of Hawaii



Antonio Gramsci Reading List

A Place for Women in Waipio

Audit The Rail

Ballotpedia Hawaii

Better Hawaii 

Blaisdell Memorial Project

Broken Trust

CAFR Hawaii

Castaway Conservative

Children's Alliance Hawaii

Children's Rights Institute

Christian Homeschoolers of Hawaii

Citizens for Recall

Cliff Slater's Second Opinion

Coffee Break

Conservative Forum for Hawaii

CSIS Pacific Forum

DAR Hawaii


DVids Hawaii

E Hana Kakou Kelii Akina

E Māua Ola i Moku o Keawe

Farmers For Choice Hawaii


Fix Oahu!

Follow the Money Hawaii

Frank in Hawaii

Front Page Magazine

Frontline: The Fixers

Genetic Literacy Project

Get Off Your Butts!

God, Freedom, America

Grassroot Institute


Hawaii Aganst Assisted Suicide

Hawaii Aquarium Fish Report

Hawaii Aviation Preservation Society

Hawaii Catholic TV

Hawaii Christian Coalition

Hawaii Cigar Association

Hawaii Coalition Against Legalized Gambling

Hawaii ConCon Info

Hawaii Credit Union Watch

Hawaii Crime Victims' Rights

Hawaii Crop Improvement Association

Hawaii Debt Clock

Hawaii Defending Marriage

Hawaii Defense Foundation

Hawaii Families for Educational Choice

Hawaii Family Advocates

Hawaii Family Forum

Hawaii Farmers and Ranchers United

Hawaii Farmer's Daughter

Hawaii Federalist Society

Hawaii Federation of Republican Women

Hawaii Firearm Community

Hawaii Fishermen's Alliance

Hawaii Future Project

Hawaii Gathering of Eagles

Hawaii History Blog

Hawaii Homeschool Association

Hawaii Jihadi Trial

Hawaii March for Life

Hawaii Meth Project

Hawaii's Partnership for Appropriate & Compassionate Care

Hawaii Public Charter School Network

Hawaii Rifle Association

Hawaii Right to Life -- Big Island

Hawaii Right to Life -- Oahu

Hawaii Shield Law Coalition

Hawaii Shippers Council

Hawaii Smokers Alliance

Hawaii State Data Lab

Hawaii Together

Heritage Foundation

HI Coalition Against Legalized Gambling



Hiram Fong Papers

Homeschool Legal Defense Hawaii

Honolulu Homeless Crisis

Honolulu Navy League

Honolulu Traffic

Horns of Jericho Blog

House Minority Blog

House Republican Caucus YouTube


Hump Day Report

I Vote Hawaii

If Hawaii News

Imua TMT

Inouye-Kwock, NYT 1992

Inside the Nature Conservancy

Inverse Condemnation

Investigative Project on Terrorism

Iowa Meets Maui

Jackson v Abercrombie

Jihad Watch

Judgepedia Hawaii

July 4 in Hawaii

Kahle v New Hope

Kakaako Cares

Kau TEA Party

Kauai Co GOP

Keep Hawaii's Heroes


Land and Power in Hawaii

Legislative Committee Analysis Tool

Lessons in Firearm Education

Lingle Years

Malulani Foundation

Managed Care Matters -- Hawaii

Malama Pregnancy Center of Maui

Mauna Kea Recreational Users Group


Middle East Forum--The Legal Project

Mililani Conservatives for Change

Military Home Educators' Network Oahu

Missile Defense Advocacy

MIS Veterans Hawaii

Muslim Brotherhood in America

NAMI Hawaii



National Christian Foundation Hawaii

National Parents Org Hawaii

National Wind Watch

New Zeal

NFIB Hawaii News

No GMO Means No Aloha

Northwest Economic Policy Seminar

Not Dead Yet, Hawaii

Now What I Really Think

NRA-ILA Hawaii

Oahu Alternative Transport

ObamaCare Abortion Hawaii


OHA Lies

Opt Out Today


Pacific Aviation Museum

Patients Rights Council Hawaii

PEACE Hawaii

People vs Machine

Pritchett Cartoons 

Pro-GMO Hawaii



Rental by Owner Awareness Assn

Republican Party -- Hawaii State

Research Institute for Hawaii USA

Rick Hamada Show

RJ Rummel

Robotics Organizing Committee

Salvage The Rail

Save the Plastic Bag

School Choice in Hawaii


SIFE Remington

SIFE W. Oahu 

Sink the Jones Act

Smart About Marijuana--Hawaii

St Marianne Cope

State Budget Solutions Hawaii

State Policy Network

Statehood for Guam

Tax Foundation of Hawaii

The Harriet Tubman Agenda

The Long War Journal

The Real Hanabusa

Time Out Honolulu

Truth About Trade & Technology - Hawaii

UCC Truths

Union Members Know Your Rights

US Tax Foundation Hawaii Info

Valor in the Pacific

VAREP Honolulu


West Maui Taxpayers Association

What Natalie Thinks

Whole Life Hawaii