Maui ponders its future as leaders consider restricting vacation rentals loved by tourists
HONOLULU– Alicia Humiston bought her Lahaina condo after visiting Maui and falling in love with the rainforests, lava fields and the whales that gather off the coast. She travels there about three times a year and rents out her unit for short periods of time when she’s not in Hawaii.
“Maui was my dream place,” she said in a telephone interview from her home in Coeur d’Alene, Idaho.
But now Maui’s mayor wants to make it impossible for Humiston and thousands of other condo owners to rent their properties to tourists. Instead, he wants them to be rented long-term to Maui locals to address a chronic housing shortage that subsequently reached a new crisis point the deadly forest fire of last August burned the houses of 12,000 inhabitants.
The mayor’s proposal faces multiple legislative and bureaucratic hurdles, starting Tuesday with a meeting of the Maui Planning Commission. Still, it has fueled an already heated debate about the future of one of the world’s best-known travel destinations: Will Maui continue to focus on tourists, who drive the local economy? Or will tourism be curbed to address persistent complaints that visitors are flooding the island’s beaches and roads and making housing unaffordable?
About a third of visitors to Maui use vacation rentals. They usually cost less than hotels and are easy to reserve on websites like Airbnb and VRBO. Many have kitchens so families can prepare their own food.
They have also grown into one source of strifeespecially after last year’s fire in Lahaina – the deadliest wildfire in the US in more than a century. The fire ripped through the historic city, killing at least 101 people and leaving nothing but rubble and ash as blocks. Thousands of displaced locals were temporarily housed in hotels usually reserved for tourists, and most survivors still lack stable housing.
Even before the fire, University of Hawaii say researchers So many property owners rented to tourists — and so few new homes were built — that Maui County has suffered a net housing loss since 2019.
A property tax analysis shows that 85% of condos in Maui County are owned by out-of-state residents, said Justin Tyndall, an assistant professor at the University of Hawaii Economic Research Organization. A switch would increase Maui’s housing stock by 13%, which Tyndall said would almost certainly lead to lower purchase prices and rents.
Maui Mayor Richard Bissen believes those lower rents would keep locals on Maui under his proposal, as absentee landlords would be forced to sell their units or convert them to long-term rentals.
There are 7,000 condo units in apartment zones, including 2,200 in West Maui, near the Lahaina fire zone, and they account for about half of Maui’s legally operated short-term rentals. If implemented, the change would take effect no later than July 1, 2025 in West Maui, and January 1, 2026 elsewhere.
“We understand that it will be a matter of give and take. So the question is: what is most important?” Bissen said this at a press conference last month. “My priority is housing our local residents, especially now.”
Humiston, president of the Hawaii Rental By Owner Awareness Association, which opposes the bill, won’t sell the one-bedroom oceanfront condo she bought 20 years ago if the bill becomes law. She also doesn’t plan to rent it long-term.
“It would take my ability to use my property. And I bought it for my own use,” she said. “I love it there.”
Some warn that reducing the supply of lodging available to visitors will ruin the tourism industry on which Maui’s economy depends, although supporters of the mayor’s bill say many vacation rentals will remain and hotels will have empty rooms for visitors to stay in can stay.
Hawaiian economist Paul Brewbaker calculates that changing the rules for the affected units, which account for a third of Maui’s visitor accommodations, would result in 33% fewer tourists and cost Maui 14,000 jobs. He called it a “slow-motion train wreck” that would lead to an “economic crash and fire.”
Maui County Chairman Alice Lee said that while housing for residents is a real concern, the county must also consider legal challenges from property owners and the potential impact on tax revenues.
The county collects $500 million in property taxes annually and more than 40% comes from short-term rentals, which are taxed at a higher rate than owner-occupied properties, she said.
“We have been sued by more than 600 people because of the fire. We have so many lawsuits pending. Do we really want to put ourselves in a position to invite thousands of others?” Lee said. “I really don’t think so, because my biggest concern right now is paying the bills and keeping the lights on.”
The province has budgeted $300,000 to study the bill’s impact on tax revenues and businesses such as landscaping and janitorial services.
Jeremy Stice, a real estate agent born and raised on Maui, and his wife spent twelve years building a company that today manages more than forty vacation rental properties, primarily for other owners. About half of them would be affected, said Stice, who is also president of the Maui Vacation Rental Association.
Stice isn’t confident local residents would buy — or be able to afford — short-term rental properties even if they become available for permanent housing.
For example, a studio in Papakea, one of the proposed apartment complexes, would sell for about $600,000, he said. A 30-year fixed mortgage at current interest rates, plus homeowners’ association fees, would total about $5,000 a month for a small space, he said.
If locals don’t buy them, and tourists don’t rent them, the apartments may remain largely empty as second homes for wealthy absentee owners – an even worse outcome.
To prevent that, the county should raise taxes on second homes, create incentives to promote long-term rentals and prioritize new home construction, said Matt Jachowski, a housing data consultant in Maui.
“The only way out of this housing crisis is to do everything – do everything we can to add more housing for residents,” he said.