If you’re thinking about a vacation rental in Hawaii, you should know that the market is in a topsy-turvy state right now.
Occupancy rates have dropped, but the rental
rates are continuing to rise.
It’s a strange dichotomy, to be sure. Occupancy rates for
vacation homes are markedly down, but those for hotel rooms are up.
The decline in vacation home occupancy rates can be attributed to a significant factor: Governor Josh Green's intervention. He has granted individual counties the authority to regulate the vacation rental market, including the power to eliminate certain properties.
For instance, Maui has announced plans to phase out nearly 7,000 vacation rental homes. This move is aimed at stabilizing the home-buying market for residents.
What does this mean for tourists? It means that right now there are slim pickings for vacation rental homes and the cost is prohibitive.
Vacation rentals have always been a big part of Hawaii’s tourism lure, but now there are questions about the legality of limiting or eliminating them. There is likely to be backlash from owners who bought homes for investment purposes and will no longer be able to rent them out.
The vacation rental market has experienced a rollercoaster ride in recent years. Since 2019, the year preceding the pandemic, occupancy rates have plummeted by 25 percent. In stark contrast, vacation rental home prices have skyrocketed by 45 percent in the last year alone. The average rent now exceeds $300 per night, and that’s before taxes.
The average daily rent for a vacation rental home is up nearly 60 percent since 2019.
The current state of the vacation rental market has raised concerns among tourism officials and residents alike. The lack of available properties has led to a significant increase in prices, potentially pricing Hawaii out of the vacation rental market. This worrying trend could have far-reaching implications for the local economy and the tourism industry.
The situation is so crazy that developers are even
trying to turn one of Hawaii’s famous black sand beaches into
a resort area.
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