Rent control is not the solution for alleviating Hawaii’s housing crisis

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By Keli’i Akina

My heart goes out to our Maui ohana who are still struggling to find affordable rental housing in the wake of the devastating fires that razed much of Lahaina last year. 

But I am dismayed that several groups have called on the local government to institute rent control policies in the hopes of stabilizing rent prices. 

Last week, the Maui Housing and Land Use Committee heard testimony proposing various rent “stabilization” measures, including mandatory registration of rental units and caps on rent increases based on the Consumer Price Index.

Many of those who testified shared heartbreaking stories of their difficulties in finding housing or coping with increasing rents. In response, Chair Tasha Kama promised to introduce rent control legislation in the future.

But the reality is that such policies — as well meaning as they are — are more likely to harm the very people they are intended to help. Price control will always have the same effect: scarcity, a distorted market and higher prices.

Consider what happened in Buenos Aires in 2021. When the government announced a plan to “stabilize” rents, rent prices increased 67% in anticipation of the new government controls. 

After the new president of Argentina, Javier Milei, removed the rent controls, Buenos Aires experienced a rental boom, with thousands of new rental units returning to the market and a 40% decline in the real price of rental properties. 

Ironically, rent costs are only now stabilizing in Buenos Aires after the disastrous government program made the city too expensive for renters.

Furthermore, it has been demonstrated that, over the long-term, rent control measures drive up evictions, especially among lower-income tenants. They also reduce the supply of rental housing, and rent prices increase as the number of available rentals dries up. 

In short, it is not surprising that economists overwhelmingly oppose rent control measures.

Instead, Maui lawmakers should focus on what drove up the cost of housing in the first place. 

It is indisputable that government barriers increase housing costs. According to the Economic Research Organization at the University of Hawaiʻi, our state has the highest regulatory burden for housing in the nation, which is directly correlated to higher housing prices. A more recent study, published by UHERO earlier this year, reported that regulatory costs make up more than half the market price of a new condo. 

Hawaii’s strict, costly housing regulations have stunted housing growth across the state, guaranteeing that there are not enough units to meet demand. 

Thus, there is only one solution that will bring down housing and rental prices: Remove the many regulatory barriers that hold back building. 

If Hawaii’s politicians are serious about helping individuals and families who are struggling to afford a place to live, rent stabilization is not the answer. It will only make things worse and drive even more people out of Maui.

The best way to help is to pave the way for people to build.
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Keli‘i Akina is president and CEO of the Grassroot Institute of Hawaii.

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