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New UHERO study supports what we've been saying about housing
Photo by Charley Myers
One of the researchers stresses correlation is not causation, but it's pretty clear that heavy regulation has limited housing supply
"Measuring the burden of housing regulation in Hawaii."
It's a new policy brief that could have been written by the Grassroot Institute of Hawaii. But we are happy that it is the prestigious Economic Research Organization at the University of Hawaii stating what most economists and housing experts have known for years.
Written by Rachel Inafuku, Justin Tyndall and Carl Bonham, the report cautiously states: "One of many factors that may explain the incredibly high home prices in Hawaii is that government regulation has severely limited the ability of the housing market to create the units necessary to meet demand."
A little more strongly, it says: "High home prices in Hawaii arise from a number of factors, [but] regulation plays a key role in setting the supply of housing."
Some regulations, it adds, "can often be in the public interest." But they aren't without cost:
"Such rules come with lengthy permitting processes and other financial obstacles that create a disincentive for developers to build new homes. Furthermore, development limits are designed to outlaw large multifamily development in virtually every neighborhood, forcing developers to seek special permission if they want to provide new multifamily housing.
"The processes to secure multifamily permits can be extremely complicated, requiring coordination between many levels of government, the local community and the legal system. By raising the cost of housing production, regulation reduces the supply of new homes, and leads to higher prices."
You can read the brief here or see the news articles about it in the Honolulu Star-Advertiser ("Hawaii ranks highest in nation for housing development regulations"), Honolulu Civil Beat ("How Hawaii’s Land-Use Regulations Are Helping Drive Up Housing Prices") or Maui Now ("New report: Hawaiʻi’s high home prices tied to stiff regulations; Maui 2nd strictest in state").
In the Honolulu Star-Advertiser article, UHERO Director Bonham stresses that the study "doesn’t prove that the regulation is causing home prices to go up. It’s a correlation. It doesn’t necessarily show causation."
OK, duly noted.
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