How building new homes benefits everyone

by Keli'i Akina, Ph.D., President / CEO, Grassroot Institute of Hawaii

A new report from economists at the University of Hawai‘i makes a point that many of us have known all along: If we want to end the housing crisis, we need to build more homes.

That’s because each new unit creates a chain of housing openings. A family that moves into a new house leaves behind an older one that is slightly less expensive, which another family moves into, freeing up another home at a lower price point, and so on. 

This is often referred to as a “filtering effect,” and it’s not just an optimistic theory — research has revealed it to be true.

Most recently, the UH economists studied the impact of a particular condominium building next to Ala Moana Center. 

By tracking who moved into the building, who moved into the units they vacated, and so on down the chain, they found that the houses people left were “substantially cheaper than the new units and spanned diverse locations and housing types.” What’s more, they determined that the income-restricted units in the building led to fewer so-called secondary vacancies. 

Likewise, a 2019 study published by the Michigan-based Upjohn Institute found that new housing construction “reduces demand and loosens the housing market in low- and middle-income areas, even in the short run.” Additionally, a 2023 study published in the NYU Law and Economics Journal — aimed at “supply skeptics” — found this chain of moves also benefits renters by making more rental properties available and reducing or slowing rental rate increases.

These results run contrary to the belief that addressing the housing crisis requires more controls, bans, restrictions, taxes and other burdensome measures that have been shown over decades to only exacerbate the problem. 

So why are we still debating what is the best way to ease Hawaii’s housing crisis? My belief is that too many lawmakers are focused more on the definition of affordability than simply allowing people to build more homes.

The current state legislative session has unfortunately seen the death of many good housing bills, but some promising measures are still alive. The remaining reforms propose repealing school impact fees, allowing accessory dwelling units in agricultural districts, adding reforms for expedited permits, implementing a “shot clock” for historic preservation reviews and eliminating or severely restricting the use of ineffective inclusionary zoning rules.

Enacting all or any of these bills would result in more housing in Hawaii at all levels, without spending a dime of taxpayer money. All that is needed is the political will and courage to get harmful regulations out of the way.

E hana kākou! (Lets work together!)

LINK: FILTER OUT BAD HOUSING IDEAS