Beachgoers walk by the Kapaemahu stones at Waikiki beach in Honolulu, June 28.
Photo:
Audrey McAvoy/Associated Press
Honolulu
If you’ve always dreamed of living on a beach in Hawaii, you might be surprised to learn that your retirement fantasy is a source of controversy. Instead of welcoming outsiders with open arms, many Hawaii residents these days would prefer you never buy a home here in the first place.
Like many other parts of the country, Hawaii is suffering from a housing shortage. In fact, Hawaii has both the highest median and highest average home prices in the nation. Given that the state also has the nation’s highest cost of living, policy makers are on the hunt for scapegoats.
The best scapegoat is the one who can’t vote against you, which might be why the “outsider” theory has taken hold in Hawaii. It contends that Hawaii’s housing crisis is the result of out-of-state residents coming in with their deep pockets and buying all the homes. It’s an easy explanation with an allegedly easy solution: Prevent outsiders from buying homes in Hawaii. And Hawaii isn’t the only state where the outsider theory is popular. From Georgia to California, stories abound about foreign investors gobbling up local real estate and driving up home prices.
Hawaii politicians have embraced the outsider theory. At the county and state levels, they have proposed taxes and regulations to discourage out-of-state buyers. Counties have passed ordinances banning nearly all short-term vacation rentals outside zoned resort areas on the theory that some of those houses are being bought by outsiders.
There’s just one problem: The data don’t support the claim that outsiders are responsible for Hawaii’s high housing prices.
A study by
Jensen Ahokovi
of the Grassroot Institute of Hawaii found no meaningful correlation between home prices and outside buyers—in Hawaii or anywhere in the U.S. Mr. Ahokovi analyzed home sales data…
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