VACATION RENTALS ARE “ALMOST” DEAD ON OAHU
Making money in the State of Hawaii is hard enough, and the City and Council of Honolulu just made it more difficult, by voting to ban “short-term” vacation rentals outside of resort areas. It’s officially called Bill 41, but it should be called the Hotel Lobby Bill, because it was created to push tourists back into overpriced hotels. Bill 41 states “rentals in residential areas allowed if stays are 90 days or more.” Previously, 30-day rentals were only allowed (yes, 30 days was considered short-term). And before that, vacation rentals were not allowed at all, but the law was not enforced for 50-plus years.
What changed everything? Well, the hotel lobby, which is very strong on Oahu, began losing market share to vacation rentals once Airbnb became popular. The hotel lobby felt the squeeze, so together, the unions and politicians made up a lie, telling their loyalists, “The reason why the cost of living was so high in Hawaii, was because vacation rentals were destroying the local rental market.” The truth is, the vast majority of the vacation rental market, consisted of multi-million dollar homes on the beach, whose monthly rental charge was well over $50,000 per month, and no starter family, with a reasonable brain, would rent out those homes. So, these vacation rentals had the opportunity to rent to tourists day-to-day, and vacationing in a multi-million dollar mansion on the beach, got a lot more affordable. For example, if a group of 10 friends wanted to rent out that same $50,000 a month mansion for the week, it would just cost them $160 a day (per person), which was half the price of a hotel (per person). And that vacationer would get a much better experience. They would still get their own room, own bathroom, but now, they could party in that mansion as though they were stuck in an episode of The Real World.
Everyone – from wedding couples, surfers, and celebrities, to families benefited from the vacation rental market; including retirees.
There were some residents, I know of a few, who rented out their extra bedrooms to tourists. It help put food on the table and pay the taxes to the over-inflated real estate market. Wanna hear something crazy. You have nice retired old folks living in homes they bought for thousands of dollars, which are now worth millions. Well, those residents rented out their rooms to tourists, which help pay for the huge property taxes. It also gave those old folks, a nice retirement, a cool way to meet people, and so forth. Now, what do they do?
Politicians blamed the cost of living in Hawaii on the vacation rental market, but it’s really all a big lie. Vacation rentals exist on other islands, other continents, other countries, and other States, and it doesn’t affect their rental market. By the way, it’s important to note here that there are vacation rentals that are grandfathered in, and are not affected by any legislative law. Many of those grandfathered in properties, are owned by politicians.
If you’re curious, one of the main reasons why real estate is so expensive here is that foreign investors and corporations are buying up homes and condos, then trading them like penny stocks. Investors want these investments ready to flip, so the vast majority of these properties are empty. Just last week, I sat in the park at Ala Moana and soaked in the panoramic scenery of expensive condos across the street. 95% of the building’s lights were off because no one lived there. What local would want to live in a small studio for one million dollars, right?
The regular rental market was always alive, robust, and fair. My family has two homes here on Oahu which we rent out to locals. We can’t rent them out to tourists because our association doesn’t allow it, and we would much rather get a good long-term tenant in our properties because it’s much less of a pain to manage. One of the risks, when you rent to tourists, is that you don’t know to who you’ll be renting your property to. You really don’t want to rent your house to college kids who will throw parties all night long (and that rarely happened).
It is becoming very expensive to live here in Hawaii, which is why many locals are moving to the mainland. The jobs pay better on the mainland. And the real estate, and cost of living, is so much cheaper. I’m not sure what to make our State, because our politicians are passing every law to make it more difficult to turn a profit. Think about how communist this bill is? The City and County have ruled that you can’t do what you want, with the property you own, because it’ll hurt the hotels, or it’ll hurt the people who may want to rent your house.
Ugh….
What does this mean for your Hawaii Wedding? Unfortunately, we may see a lot of non-hotel wedding venues disappear.
As of right now, the bill has yet to be signed into law by the Mayor. We will see what he does… But let’s just wait and see what happens.
Steve Young
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