Brief: What if Honolulu upzoned everywhere? Lessons for solving a housing crisis from Aotearoa

I’m grateful for helpful comments and suggestions from Trey Gordner and Ryan Greenaway-McGrevy.

Hawai‘i has some of the most expensive housing in the US. Residents consistently cite housing affordability as a key driver of decisions to leave the state. For example, in a 2025 survey of more than 3,000 local workers, 75% said they will leave, or are unsure whether they will stay, in the coming years (up from 70% a year earlier), with 55% ranking housing the top cost-of-living pressure (Holomua Collective, 2025).

Economics tells us that prices are set by the interaction of supply and demand, with some nuances for housing markets (Donovan & Sorensen, 2026). New construction on O‘ahu is running about 2,500 units a year (UHERO data portal, 2026), less than half the roughly 5,000 units a year the state estimates O‘ahu needs (HHFDC, 2025). Because that is a small addition to the island’s roughly 370,000 housing units, the housing stock turns over slowly, leaving it among the oldest in the country: the median home on O‘ahu was built in 1976, so roughly half are now more than 50 years old (U.S. Census Bureau, 2024a). Despite their age and modest size, the median single-family sale price on O‘ahu averaged over $1.1 million in 2025 (Honolulu Board of Realtors, 2026), and median rent is about $2,100 (UHERO Hawai‘i Housing Factbook, Tyndall et. al., 2026).

If this limited supply of new homes is the major driver of Hawai‘i’s affordability crisis, then prices decline if housing supply increases. Upzoning, expanding the legal right to build more or denser housing on a parcel, is a policy tool that cities can use to increase housing supply. Even though new homes are often relatively more expensive than existing ones, their construction creates vacancies in nearby older, more affordable homes (Fang et al., 2026; Behrens et al., 2026). Once building or buying new is an option, buyers stop paying the scarcity premium that existing homes command today. Upzoning does raise the value of underbuilt lots because the right to redevelop is also worth something, so many homeowners also come out ahead even as buyers pay less per unit.

In 2016, Tāmaki Makaurau (Auckland)^[1], in Aotearoa (New Zealand), upzoned most of the city. The reform replaced single-family zoning on roughly three-quarters of residential land with the right to build up to three dwellings per lot, and even taller apartment buildings in select transport corridors. The permitting rate rose roughly 80% above trend as a result (Greenaway-McGrevy, 2024). Even through the construction downturn that accompanied the 2024 recession, permitting stayed above earlier building-cycle peaks: the 2024 low of roughly 14,000 permits still exceeded the mid-2000s peak of around 12,500 (Stats NZ, 2026). Meanwhile, O‘ahu currently permits homes at about 1/6th the rate of Tāmaki Makaurau (author’s calculation from Greenaway-McGrevy, 2024, and DBEDT, 2024).

Suppose Honolulu City and County did what Auckland City did in 2016: upzone roughly three-quarters of residential land to allow townhomes on most lots and more apartment buildings in transport corridors.^[2] What would our housing market look like in six years’ time, if O‘ahu achieved the same housing market improvements as Tāmaki Makaurau?

What Tāmaki Makaurau actually did, and what happened

In November 2016, Auckland Council adopted the Auckland Unitary Plan: one of the largest zoning reforms ever attempted anywhere in the world. The Council was required to create the plan under a central government process and authority that ensured it did so, a mechanism this brief returns to later to consider how Hawaiʻi could do something similar. The reform lifted density caps on roughly three-quarters of Tāmaki Makaurau’s residential land, converting parcels previously under single-family-equivalent restrictions, allowing multiple dwellings per lot, with taller apartment buildings permitted in select transit corridors. The purple areas in the figure below were upzoned, the orange areas were not.

In 2021, national Medium Density Residential Standards (MDRS) went further, granting the by-right ability to build up to three dwellings of up to three storeys on nearly every residential lot in the city, regardless of underlying zone.

Prof. Ryan Greenaway-McGrevy and co-authors at the University of Auckland’s Economic Policy Centre have tracked the results for nearly a decade. The established facts, all within measured data windows, are listed below:

• 112,000 new dwelling permits^[3] issued 2017–2023, equal to 21% of the pre-reform 530,000-unit housing stock (Greenaway-McGrevy, Cityscape 2024). See Figure 2.
• Against a no-reform trend, the reform added ~21,800 additional permits in its first five years (Greenaway-McGrevy & Phillips, JUE 2023). A newer synthetic-control study points the same way: about 52,200 of the permits issued over the first seven years, roughly 46% of the total, are attributable to the upzoning, an increase of about 87% over the no-reform trend, after checking that displacement between regions does not bias the figure upward (Greenaway-McGrevy, Economic Modelling 2026).
• 2-bedroom rents were 14–22% below what they would have been without the reform six years in; 3-bedroom rents were 22–35% below (Greenaway-McGrevy, 2023, EPC WP016).^[4] The estimate is the gap between Tāmaki Makaurau’s rents and what peer cities in Aotearoa suggest they would have been without the reform. Nominal rents rose over the period; they simply rose far less than what comparable cities experienced, and fell in real terms once NZ inflation is netted out.
• Affordability improved sharply against income: Tāmaki Makaurau’s nominal incomes rose 47% while rents rose just 29% over 2016–2023; real rents (after ~27% NZ CPI) rose only ~2% over seven years, versus a no-reform path that would have seen real rents rise between 18% and 30% over the same period.
• Parcel-level price effects are heterogeneous, consistent with theory: underbuilt lots gained value from the new right to redevelop, while lots already built to their limit slipped in relative terms (Greenaway-McGrevy, Pacheco & Sorensen 2021; Cheung, Monkkonen & Yiu 2024).
• Home prices grew far less than in the rest of the country: Over 2016–2023 Tāmaki Makaurau’s real house prices were roughly flat while Wellington, Hamilton, Tauranga, and Christchurch rose 12–19% in real terms (author’s calculation from the QV House Price Index (2024) and Stats NZ CPI); its median multiple fell from about 10.0 to 8.2 (Cox, 2017, 2024). A structural estimate is consistent with this, implying that dwelling prices would have been 15.1% to 26.9% higher without upzoning (Greenaway-McGrevy, 2025).

The clearest sign that the reform caused the boom, rather than merely coinciding with one, is that construction surged only on upzoned land while permitting in non-upzoned areas barely moved (Figure 2). Comparisons with other cities that weren’t upzoned find similar results. In fact, the evidence on Tāmaki Makaurau points consistently one way: upzoning substantially increased housing supply and lowered rents, just as standard economics predicts when a city builds more homes across the board. Realizing the same on O‘ahu depends on the complementary steps discussed below, permitting, infrastructure, and companion rules, not upzoning alone.

Why is Tāmaki Makaurau a good case study for Honolulu?

Tāmaki Makaurau resembles O‘ahu in ways that go well beyond the headline numbers. Start with geography: O‘ahu’s developable land is concentrated along a narrow coastal strip and between two mountain ranges, while the Tāmaki isthmus is squished between two harbors with volcanic cones and rugged fringe ranges. These constrained geographies make outward growth costly and suggest that supply responses focus on upzoning.

The population parallels are just as striking. Both cities are Pacific metropolises with sizable Asian and Polynesian populations. Asian residents make up 42% of O‘ahu’s population and 31% of Tāmaki Makaurau’s (U.S. Census Bureau, 2024a; Stats NZ, 2023). In Tāmaki Makaurau, 11% of residents identify as Māori and 16.6% as Pacific Islanders, making it the world’s largest Polynesian population center (Stats NZ, 2023). On O‘ahu, 21% of residents are Native Hawaiian (alone or in any combination), and another 7% are other Pacific Islanders (U.S. Census Bureau, 2024a). In both cities, Pasifika communities bear the brunt of the housing crisis: 35% of O‘ahu’s unhoused are Native Hawaiians and other Pacific Islanders (Partners in Care, 2024), and Pacific renters in Aotearoa are similarly overrepresented in severe housing deprivation (Stats NZ, 2024c).

The economic and fiscal parallels run just as deep. Property tax rates in Auckland City are comparable to Honolulu: both sit around 0.3% of assessed value, and both are low by international standards. The services they fund are comparable too: because Hawai‘i funds its public schools at the state level, unlike most US jurisdictions, Honolulu’s property tax, like Auckland’s rates, pays for local services rather than schools. Both cities have large short-term-rental inventories, though the rate is higher for O‘ahu. And both cities are their regions’ primary economic centers. Tāmaki Makaurau accounts for roughly 38% of New Zealand’s GDP and around half for Te Ika-a-Māui (the North Island);^[5] the City and County of Honolulu is even more dominant within Hawai‘i, carrying a still larger share of the state’s economy and population.

Most importantly for the policy reform question, both cities started from a similar zoning floor: about three-quarters of Tāmaki Makaurau’s residential land was zoned single-house before the 2016 reform (Greenaway-McGrevy & Jones, 2025); O‘ahu’s R-3.5, R-5, R-7.5, R-10, and R-20 districts cover the overwhelming majority of the urban core today, and lot-size minimums, a 0.7 FAR cap, height envelope, and setbacks are all calibrated around one principal detached dwelling per lot, with ADUs and ‘ohana units permitted only as accessory uses.^[6]

O‘ahu’s affordability crisis looks uncannily like Tāmaki Makaurau on the eve of reform. On Demographia’s “median multiple” (median home price divided by median household income), Tāmaki Makaurau’s pre-reform ratio in 2016 was around 10.0, and fell to 8.2 in Q3 2023. The Honolulu metropolitan area sits at 10.5. So, O‘ahu now sits roughly where Tāmaki Makaurau sat in the year it chose to upzone, but has since moved down to about 8.2 (Cox, 2017, 2024). Put those parallels together (geography, demographics, fiscal setting, and comparable zoning), and Tāmaki Makaurau’s 2016 reform becomes an unusually close case study for considering large-scale upzoning here.

What if O‘ahu could achieve the same results as Tāmaki Makaurau?

To translate Tāmaki Makaurau’s experience into a projection for O‘ahu, I apply the measured rent effects from Greenaway-McGrevy and So’s study of rents in Tāmaki Makaurau. Its preferred, published specification is a quality-adjusted index; an earlier version of the same paper broke the effect out by bedroom size, which I use for unit-size-specific detail.

Both estimates transfer to O‘ahu the same way. Each is a proportional gap between Tāmaki Makaurau’s rents and a synthetic control of comparable cities in Aotearoa that were not reformed, so it carries no inflation with it: the cities share the same national inflation, which cancels out of the gap. I apply that gap to a status-quo path built from O‘ahu’s own recent rent trend (upzoned rent = status-quo rent × (1 − effect)) and report everything in today’s dollars, so savings are comparable over time. Because inflation shows up in both the trend and the deflator, the result is largely insensitive to what inflation does next.

Quality-adjusted estimate. The study’s preferred, published specification (Greenaway-McGrevy & So, 2026) applies the synthetic-control comparison to a quality-adjusted rent index. Rather than tracking the average rent for each bedroom size, the quality-adjusted index compares like-for-like rentals: it statistically holds constant each unit’s bedroom count, dwelling type (house, flat, or apartment), and neighborhood, then measures the price change left over for an otherwise-identical unit, what statistical agencies call a quality-adjusted price index. Doing so addresses two compositional concerns the average-rents version cannot fully rule out: that new builds are disproportionately rented after the reform, and that new builds are concentrated in upzoned but less expensive neighborhoods. Both would otherwise pull average rents downward in ways that are not pure price effects.

Because this method holds bedroom count constant rather than reporting each size separately, the quality-adjusted study reports a single pooled effect across all bedroom sizes. At year 6 (2022), rents in Tāmaki Makaurau were 21.6% below what they would have been without the reform under the authors’ preferred specification (which omits Rotorua from the donor pool since it would otherwise receive a dominant weighting in the comparison), or 26.1% lower under the baseline specification (the unrestricted result, kept for transparency). Equivalently, rents would have been 27.6% to 35.4% higher had Auckland not reformed. To mirror this for O‘ahu, I apply the level effect to a pooled all-rentals reference rent of $2,171/month, the 2024 ACS median gross rent, aged to mid-2026 with the BLS Honolulu rent index (its full derivation is in the calculations note). This applies a quality-adjusted, contract-rent effect to a raw gross-rent median, so it assumes the percentage carries across to O‘ahu’s all-rentals median and that utilities move roughly with rent; it is an approximation rather than a like-for-like match.

Rents: O‘ahu pooled all-rentals projection at year 6 (2032), real terms (today’s dollars), quality-adjusted specification:

I first project rents with no reform, if rents continue growing as they have in recent years: I grow today’s $2,171 rent at O‘ahu’s recent trend of about 3.4% a year. That projection is the blue line in Figure 3, where rents head over the next six years, measured in today’s dollars, if nothing changes. Applying the estimated decline of 21.6% due to upzoning gives a projected path for what rents would be if O‘ahu upzoned on Auckland’s scale and achieved comparable outcomes. The baseline specification (−26.1%) implies a larger effect; both are in the table below.

Under the quality-adjusted preferred specification, the pooled all-rentals rent of $2,171/month would, on trend, reach $2,291 in 2032 in today’s dollars; on the same assumptions, it would fall to $1,796, a real saving of $495 per month, about 21.6% below what rents would otherwise have been. The unrestricted baseline specification implies a larger effect: $1,693 by 2032, a saving of $598 per month, about 26.1% below what rents would otherwise have been. This estimate pools all rental types into one quality-adjusted series, so this is a single market-wide figure rather than a set of size-specific effects; the by-bedroom estimates below show how the reduction varies with unit size.

By bedroom size (earlier version). An earlier version of the same study (Greenaway-McGrevy, 2023, EPC WP016) reported the rent effect separately by number of bedrooms. This size-specific breakdown does not appear in the published version, but I include it in this brief to show how the effect scales with unit size.

The measured effects at year 6 (2022) for 2-bedroom rents were 14–22% below what they would have been without the reform and 3-bedroom rents were 22–35% below (Greenaway-McGrevy, 2023, EPC WP016). If O‘ahu achieved these same effects, the implications at year 6 (2032) are large. To stay conservative, I project the smaller end of each range (14% for two-bedrooms, 22% for three-bedrooms), noting the effect could run larger. Because these by-bedroom figures track average rents rather than the quality-adjusted index, they may overstate the pure price effect, so they cross-check rather than replace the quality-adjusted headline. The status-quo path is ACS median gross rent for Honolulu County by number of bedrooms, grown from a mid-2026 baseline (each size’s 2024 median aged forward with the BLS rent index) at each size’s recent trend; the calculations note gives the exact growth rates and arithmetic.

Based on current trends, a two-bedroom unit on O‘ahu, renting for a median of about $2,166 today, is on track to reach about $2,303 a month by 2032 in today’s dollars (its nominal growth barely outpaces inflation). If O‘ahu upzoned on Auckland’s scale and achieved comparable outcomes, that rent would instead be about $1,981, roughly 14% below where it was otherwise headed, or as low as $1,796 (22% below) under the fuller specification. A three-bedroom unit, otherwise headed for about $3,226, would instead rent for about $2,516, roughly 22% below the no-reform path, or as low as $2,097 (35% below) under the fuller specification. These are large gains in purchasing power: nominal rents may still rise, but far less than they otherwise would, and could even fall.

Rents: O‘ahu projection at year 6 (2032), real terms (today’s dollars), verbatim range:

What about home prices?

Objections to upzoning usually come from people who already live in the neighborhood, worried about their home’s value or about neighborhood character. Both concerns are understandable, but they weigh the preferences of today’s residents while leaving out those who would live there if they could, including the children and grandchildren of current residents priced out of staying.

Rents and home prices respond differently to upzoning because they are the price of quite different things, and the apparent paradox dissolves once two kinds of value are separated. Rent is the price of living in a unit, and part of the cost of rent and the price of owning a home is its scarcity value; the premium paid if the supply of homes is constrained. Upzoning erodes that premium, pulling both rents and prices down. But the price of owning a home (not just renting it) also reflects the value of everything the owner can do with the lot, including the right to redevelop it. Upzoning creates new option value by expanding what can be built (keep the house, or redevelop into three or four units). Buyers face a declining scarcity premium, while owners of existing homes, especially on underbuilt lots, face a falling scarcity premium and a rising option value. Affordability for buyers and land value for owners can therefore move in opposite directions, because they are prices of different goods.

The change in option value is not automatic: it exists only where the finished units would sell or rent for more than the cost of buying the lot, clearing it, and building. On lots where this pays off, land values rise, and redevelopment goes ahead; even as the rental value of the existing home declines. On lots where construction costs are too high or the change in rent after construction is too low, nothing changes on that lot. Parcels already built densely, to capacity, have little additional option value, but underbuilt parcels, which include most areas previously zoned for single-family homes, have significantly more. So, the effect varies across the city, by location and by what a lot already holds: underbuilt lots in central areas rise in value, and the new homes built there add supply at relatively more affordable prices per unit; farther out, prices could instead fall, especially on lots that are already fairly dense, widening affordable options in those areas too (Greenaway-McGrevy, Pacheco & Sorensen, 2021).

On the same assumptions, many homeowners would not lose value, and many would gain, while buyers find more affordable options in places they want to live across the city. The evidence shows that a typical underbuilt lot (a single-family home on a large section) appreciates after upzoning, because the right to redevelop becomes a real source of value. So, many homeowners do not need to be concerned about upzoning. For buyers, unit prices can be lower, especially for first-home buyers. A parcel that once held one home now holds three or four, and the per-unit price is well below the price of the original house before upzoning.

The one group that may see relative declines is owners of parcels already built to capacity: older condos and dense complexes that can’t be redeveloped further. As newer homes come online, it is the oldest, lowest-quality buildings that face the most competition, so their rents and values soften the most. That softening comes through competition, not demolition: it is rarely worth tearing down a serviceable building before the end of its useful life, so the main effect of new supply is steadily lower rents across the older stock, preserving naturally occurring affordable housing while making housing cheaper in general. That is arguably the policy’s most valuable feature rather than a flaw: those older buildings are often where lower-income renters live, so the effect works as targeted, market-delivered affordability.

The bottom line: if O‘ahu upzoned on this scale and achieved comparable outcomes, upzoning would be mostly win-win. Renters would save hundreds of dollars a month: about $322 per month for a two-bedroom (up to $507 under the fuller specification) and $710 for a three-bedroom (up to $1,129) on the conservative estimate, measured in today’s dollars. That would be a real and substantial pay increase for many households. And many homeowners would gain value as redevelopment becomes a real option on their lot. Buyers would get cheaper entry-level units. Few housing policies offer such strong evidence of this kind of large, broad benefit.

The refresh effect

Tāmaki Makaurau’s construction wave was heavily teardown-and-replace: aging single-family homes converted into three- and four-unit townhome lots. Applied to O‘ahu using Auckland City’s 80% permit-rate uplift on top of O‘ahu’s own baseline of ~2,200 permits per year:

By year 6 (2032), if O‘ahu upzoned on this scale and construction responded as it did in Auckland, O‘ahu would issue roughly 23,800 permits, about 10,500 more than the ~13,200 the current trend would deliver over the same six years. At a 92% permit-to-completion rate, that is roughly 21,900 completed units versus ~12,100 on trend, about 9,700 additional homes. Those cumulative completions would make roughly 6% of the island’s stock brand-new by 2032, versus about 3.3% under the status quo, with an estimated ~5,000 aging single-family lots redeveloped into roughly 15,000 of those new homes. The refresh shows up in how much of the stock is new. By 2032, roughly 8% of O‘ahu’s homes would be less than a decade old under upzoning, against about 5% on trend; sustained at that pace, close to 9% of the stock would stay under ten years old versus about 5% on trend, nearly doubling the flow of fresh housing into a stock half of which predates 1977. The median home’s age moves only slowly over six years, since new building is a small share of a large stock, but the gap widens with sustained building.

What makes this estimate realistic, conservative, or optimistic

The projections above blend three kinds of assumptions: some anchored to published evidence, some deliberately conservative, some that would need local follow-through to realize in full.

Realistic anchors: Tāmaki Makaurau’s measured rent gap comes from a synthetic-control study built on rental costs in other cities in Aotearoa (Greenaway-McGrevy, 2023, EPC WP016), and I apply that gap directly to O‘ahu’s own rent trend, in the same form the paper reported it. The projection ends at year 6 (2032), within the study’s observation window, so there’s no extrapolation beyond what the studies directly measure. The O‘ahu status-quo path continues each bedroom size’s recent rent trend forward from a current (mid-2026) baseline (3.6%/yr for two-bedrooms, 3.3%/yr for three-bedrooms; ACS median gross rent, Honolulu County), a 2015–2023 trend window deliberately chosen to capture what the typical O‘ahu renter has actually experienced. And inflation barely enters the transfer: The gap was measured against cities sharing the same inflation, so it cancels out. Honolulu CPI (2.5%/yr, DBEDT 2008–2024) is used only to express upzoned outcomes in today’s dollars.

Conservative choices that likely understate the effect: Several choices push the projection downward. It reports the paper’s full range rather than a single midpoint, and the low end of each band uses the smaller measured effect (14% for two-bedrooms, 22% for three-bedrooms), so nothing rests on the top of the range. Demand growth also runs in O‘ahu’s favor: Tāmaki Makaurau’s population grew about 1.5% a year over this period while O‘ahu’s is roughly flat, so the same supply expansion meets weaker demand here, and the rent effect is likely to be larger than in Tāmaki Makaurau, not smaller. Applying Tāmaki Makaurau’s percentage gap directly therefore potentially understates O‘ahu’s outcomes, particularly for family-sized units: the three-bedroom effect is the largest, consistent with zoning reform binding hardest on the dwellings most restricted by single-house rules.

The construction projection is conservative as well: it applies an 80% lift in the permit rate, the low end of the roughly 80% to 87% increase found in the studies above. The flat population that makes the rent effect likely larger than Tāmaki Makaurau’s cuts more than one way for building, though, and the net is genuinely ambiguous: weaker demand growth could thin development margins, slow absorption, and dull redevelopment pressure, holding the construction response below Auckland’s; but O‘ahu’s flat population may itself be a symptom of high housing costs, in which case better affordability would draw demand and building back up. I do not net these against each other. Two effects are left out altogether. Home prices are not projected, because the parcel-level evidence is mixed (underbuilt lots gain value while fully built lots decline in relative terms) and a credible citywide median would require lot-mix assumptions I am not prepared to make.

Optimistic assumptions (each addressable through local policy): Permitting speed is a gap. The median residential permit in Honolulu still ran about nine and a half months in 2024, with little overall improvement despite the department’s reported progress (Honolulu Civil Beat, 2025): DPP says it cut its plan-review stage to a few days, but the total time did not fall, and much of the elapsed time, though logged as time with the applicant, reflects responding to the City’s own information requests. Auckland works to a 20-working-day statutory clock, met for about 98.5% of consents before the reform (Office of the Auditor-General, 2015); permit volumes have since roughly doubled, so its post-reform timeliness under that load is less certain, though the gap in baseline speed is still wide. The whole application pipeline has to move, not just plan-review capacity; without that, early-year supply effects would be muted if process rather than zoning is the binding constraint. Companion regulations also continue to bind after zoning is loosened (height limits, parking minimums, coastal setbacks, and sewer and water capacity, etc.) so upzoning without liberalizing those rules and investing in utility capacity leaves substantial potential on the table. One difference is largely outside local control, though: land-use litigation is more obstructive and more available to third parties in the United States than under New Zealand’s Resource Management Act framework, which could make broad rezoning slower to enact on O‘ahu and more exposed to legal challenge than it was in Auckland.

The pace and scale of the construction response will depend on local construction capacity. That capacity may adjust more slowly on O‘ahu than in Tāmaki Makaurau, where skilled-migration policy helped expand the workforce. On the other hand, we’ve seen the industry expand rapidly with state and federal contracts in recent years, and some of that capacity may also be freed as public and military construction eases in the coming years

On infrastructure, other research in New Zealand argues it is usually cheaper to provide too much capacity than too little: a shortage gets baked into land and house prices and is slow to undo, while land you zone but don’t yet service is cheap, since it stays just an option until a developer builds (Colegrave, 2026). The specific concern differs on O‘ahu, where water comes from a finite aquifer, but the same logic likely applies: water capacity is mostly a one-off cost, deferred rather than wasted if demand is slow to arrive, while the shortage it prevents is paid by every renter and buyer, year after year. On that reasoning, building water access infrastructure ahead looks like the cheaper mistake, at least up to the point where O‘ahu would need a desalination plant, which adds a large step in cost at that capacity; near that threshold it may be more efficient to let the constraint bind briefly, but not sooner or later.

Short-term rental absorption is a separate channel: some share of new supply on O‘ahu would be captured by vacation rentals before reaching local renters: seasonal and vacation-rental units already make up roughly 6.9% of Honolulu County’s housing stock (HHFDC, 2025). This demand-side channel could blunt the effective supply response as prices fall, since second-home purchases or vacant units could absorb some new units without serving local households. A vacant-homes tax (Honolulu City Council Bill 46, 2024) and enforcement of existing STR rules might help to mitigate the issue, though I cannot say how effective those efforts would be. Nonetheless, with such a large supply response, a lot of the new homes get occupied by residents.

Overall: Read the projections as: if Honolulu upzones on the scale Auckland City did and O‘ahu achieves comparable outcomes (which also requires accompanying steps to ensure the supply response can actually happen on O‘ahu), real rents would fall meaningfully, about 14% for two-bedroom units and 22% for three-bedroom below what they would otherwise have been (more under the fuller specifications), the price-to-income ratio would fall, many homeowners would gain value as redevelopment becomes a real option on their lot, and roughly 9,700 additional homes would be completed over six years (about 10,500 permits). Without the accompanying steps, the effect would be meaningfully softer, but still in the same direction.

Why upzoning does more for market affordability than inclusionary zoning

Inclusionary zoning (IZ), which compels or incentivize developers to set aside a percentage of units in new projects at below-market prices, are currently Hawai‘i’s main housing-affordability tools (including, for example, county ordinances, the city’s Bill 7, and the state’s 201H). On O‘ahu, the City and County typically requires developers to reserve 10–30% of units in qualifying new developments as below-market housing, targeting households at ≤80% of Area Median Income (AMI) for rentals and ≤120% for for-sale units, with the affordable units allocated by lottery (Revised Ordinances of Honolulu, ch. 29).

Four programs do most of the work. The first is the inclusionary zoning requirement triggered as a condition of a zone change (Affordable Housing Rules for Unilateral Agreements, as amended 2010). The second requires most for-sale developments of ten or more homes to include affordable units (Ordinance 18-10, 2018; ROH ch. 29). A third program (Bill 7, 2019) and a fourth, state-run one (201H) both use a density bonus rather than a flat requirement to induce IZ. Under Bill 7, developers of rental projects on lots up to 20,000 square feet can earn a density bonus (up to 2.5 times the units zoning would normally allow) plus property-tax exemptions, height bonuses, fee waivers, and direct grants, if at least 80% of apartments are rented at below-market rates to households at or below O‘ahu’s median income, and held that way for fifteen years. The 201H program, administered by the state’s Hawai‘i Housing Finance and Development Corporation, exempts approved projects from state or county zoning and density limits case by case, in exchange for a lower, 50%-plus-one set-aside. After seven years, Bill 7 has delivered only 189 occupied units across six completed projects (Honolulu DPP, 2026), while 201H produces roughly 1,000 units a year (Iseri-Matsubara, in Hawaii Business Magazine, 2024).

The case for unconditional upzoning is not merely that inclusionary zoning is insufficient; the two work in fundamentally different ways. IZ operates at the development level: it makes a share of the units in a project affordable to lottery-selected households, while the expensive market-rate units alongside them cross-subsidize that affordable share. For the lottery winners, that is more help than upzoning offers. But the cross-subsidy works only while market-rate prices remain high, because those high prices are required to fund the subsidy. So IZ presupposes, and even entrenches, the very unaffordability it is meant to relieve: it monetizes the shortage rather than ending it, and scaling it up does not scale unaffordability down but deepens the market’s reliance on high prices (the set-aside can even nudge market-rate prices higher; see below). Upzoning operates at the market level: it expands supply broadly enough to bend the entire rental trajectory downward, benefiting O‘ahu renters and buyers broadly, not only those lucky enough to win a lottery-awarded affordable unit, but the much larger majority of cost-burdened households who do not qualify for, or never receive, one.

The scale gap is also stark. IZ produces a small annual count of below-market units allocated by lottery; the Auckland-scale upzoning sketched above would deliver a real rent reduction of about 21.6% below what rents would otherwise have been across the entire rental market under the quality-adjusted specification (26.1% under the unrestricted specification), plus roughly 9,700 additional completed units (about 10,500 permits) on top of trend over six years. IZ also works against the small-scale infill that drove Tāmaki Makaurau’s supply boom: the cross-subsidy is per-unit prohibitive on a four-unit teardown-and-replace project but easily absorbed by large multifamily projects, pushing development toward fewer, slower, bigger projects. Upzoning unlocks the broad-based infill that produced the bulk of Auckland’s permits, and it aligns with many homeowners’ interests by raising the land value of underbuilt lots through the option value of redevelopment.

The empirical literature on inclusionary zoning is mixed, but a recurring finding is that it can raise market-rate prices to cross-subsidize the affordable share, with often market-dependent effects on overall production (Bento, Lowe, Knaap & Chakraborty, 2009; Schuetz, Meltzer & Been, 2011; Soltas, 2024). That effect may be lower when developers receive a value uplift through localized rezonings. But in general, IZ relies on the market as a whole being less affordable, even as a small number of units become more affordable for the lucky residents awarded through the lottery.

Tāmaki Makaurau itself had a similar set-aside policy: the Auckland Housing Accord (2013–2016) required 10% affordable units in Special Housing Areas in exchange for accelerated consenting. But Fernandez, Sánchez & Bucaram (2021) found the program delivered little affordable housing, partly because of weak enforcement. Tāmaki Makaurau’s rent moderation came from unconditional upzoning, not from IZ set-asides.

Hawai‘i’s other financing tools, such as LIHTC, the Rental Housing Revolving Fund, and HHFDC’s other gap-financing programs operate on a different logic entirely. They directly subsidize construction costs  rather than requiring developers to cross-subsidize affordable units from market-rate ones, so they don’t depend on high prices to work, and they complement rather than compete with upzoning: more allowable density just means more units per site for that subsidy to spread across. The critique here is specifically about set-aside-style IZ, not Hawai‘i’s affordable housing toolkit as a whole.

Honolulu’s own inclusionary zoning program produces a small number of modestly below-market-priced units for specific recipients, but it does not appear to increase supply broadly and may even reduce affordability for market-priced units. Measurable price-reduction effects require large increases in supply, which do not appear to be achievable through inclusionary zoning, even with density bonuses within current zoning; they require broad, unconditional upzoning like the policy change in Tāmaki Makaurau that lifted density caps on the vast majority of residential land.

While the state’s 201H program delivers much more than Bill 7 with a lower set-aside, both programs still depend on the same artificial scarcity that broad upzoning would eliminate. If anything, the volume of housing delivered under 201H is an argument favoring large-scale upzoning because developers found it worthwhile to subsidize a thousand “affordable” units a year out of the large margin on already-expensive market-rate units, and to go through a slower discretionary approval process, just to access the density that broad upzoning would grant for free. Removing the price of that density should produce at least as many units and unlock more that didn’t pencil out under 201H.

What could blunt, or amplify, the response

Several local factors determine whether Honolulu realizes the full effect.

Permitting speed is a major bottleneck. The median residential permit in Honolulu ran about nine and a half months in 2024, with little overall improvement despite the department’s reported gains (Honolulu Civil Beat, 2025): DPP says it cut plan review to a few days, but the total time has not fallen, and much of the elapsed time, though logged as time with the applicant, reflects responding to the City’s own information requests. The fix is to bring the whole application timeline down, not simply add reviewer capacity. Auckland runs building consents on a 20-working-day statutory clock met for about 98.5% of applications before the reform (Office of the Auditor-General, 2015); volumes have since roughly doubled, so its post-reform timeliness under load is less certain, but the contrast in baseline speed is stark. Unless the City and County bring that timeline down, upzoning will not produce the supply response these projections depend on, because process rather than zoning would remain the true limit on how fast homes get built. Similarly, height limits, parking minimums, coastal setbacks, and sewer capacity can all bind after zoning is loosened (Blaschke et al., 2024). Upzoning without companion reforms leaves substantial potential on the table.

Some new supply will be absorbed by vacation rentals before it reaches local renters. Tightening STR enforcement (Ordinance 22-7 and successors) and a vacant-homes tax (Honolulu City Council Bill 46, 2024) might help direct more new supply to residents, though how effective either would be isn’t something I can establish here. Nonetheless, with such a large supply response, many of the new homes would be occupied by residents.

How Tāmaki Makaurau got there, and how O‘ahu could too

None of this happened with Auckland Council acting alone. I was living in Tāmaki Makaurau in 2010 when the original political push unfolded. The central government forced the merger of Tāmaki Makaurau’s eight councils into one, in part, to fix a slow fragmented planning system for the city. The law gave the new council a fixed deadline to produce a single combined plan that had to accommodate the city’s long-term projected housing needs. Whatever upzoning didn’t provide had to come from expanding the urban boundary. To prevent backsliding, the government also appointed an independent panel to review the plan. Once the Council accepted or rejected the panel’s recommendations, its decisions could only be challenged on points of law, not fought suburb by suburb. This gave due process to plan objections, without fighting them in court for years.

O‘ahu doesn’t have the same problems as Tāmaki Makaurau, as the City and County already governs the whole island. Hawai‘i also has unusually strong state-level land-use institutions^[7], and its legislature could use that authority to require counties to accommodate greater housing capacity, even if getting there would look different in the details. So, much of what would be needed could likely be built from powers the state already has, ranging from administrative choices within existing authority to a more deliberate legislative push, the way Aotearoa did. Tāmaki Makaurau reduced its housing costs by upzoning because the central government held the authority and decided housing supply was a priority. Hawai‘i’s state government appears to have similar authority. Planning reform now requires the political willpower to wield it.

Bottom line

Applying Tāmaki Makaurau’s measured rent gap to O‘ahu’s own trend, the synthetic-control specification implies that if Honolulu adopted broad upzoning and O‘ahu achieved the same outcomes as Tāmaki Makaurau, median rent would be about $500 a month below trend in today’s dollars by 2032 (up to $600 under the fuller specification, and more for larger homes). Add roughly 9,700 additional homes (about 10,500 permits) built on top of trend over six years, with about 5,000 aging lots redeveloped into ~15,000 townhomes, refreshing a housing stock that has aged for half a century. Many homeowners would gain value as redevelopment becomes a real option on their lot. Real rents fall, lot values rise, and more kama‘āina grandchildren will have the opportunity to grow up in Hawai‘i.

For tenant households, those monthly savings are more consequential than the sticker figure suggests. Because rent comes out of after-tax income, $322 a month for a two-bedroom is equivalent to a pre-tax raise of roughly $5,500 a year, and for a three-bedroom, $710 a month works out to $12,200 a year, pre-tax, assuming a combined marginal income-tax rate of about 30% (roughly the 22% federal bracket plus Hawai‘i’s ~8% marginal rate, and setting aside payroll taxes). At the pooled median saving of about $500 a month, the pre-tax equivalent is roughly $8,500 a year. Currently, about 58% of O‘ahu renters spend more than 30% of their income on rent (the federal cost-burden threshold), and about 30% spend more than 50% (author’s calculation from ACS 2019–2023 5-year PUMS, Honolulu County; consistent with the UHERO Hawai‘i Housing Factbook, 2024). Applying the pooled rent reduction to how O‘ahu renters are actually spread across those burdens, roughly 18,400 renter households (about 14%) would drop below the 30% cost-burden line by 2032 under the preferred specification, and about 21,700 (17%) under the unrestricted specification, with the severely cost-burdened share falling from about 30% to roughly 22% (or about 20% under the unrestricted specification).

A rent cut of this size is, for all practical purposes, a massive pay rise; one that housing policy can deliver even when wage growth does not.

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Calculations and data sources

O‘ahu baseline parameters. Housing stock ~370,000 (U.S. Census Bureau, 2024a); median year built 1976 (ACS). New building permits ~2,200/yr average 2018–2024 (Honolulu DPP permit data; Hawai‘i DBEDT Data Book, Table 21.07), with completions running close behind. ACS median gross rent, Honolulu County (Census B25031 by bedroom): trend from 2-BR $1,566 (2015 5-year) to $2,071 (2023 5-year), nominal CAGR 3.56%/yr, and 3-BR $2,240 to $2,894, 3.25%/yr; baselines are the 2024 1-year medians by bedroom, aged to a mid-2026 level with the BLS Honolulu rent index (CUURS49FSEHA; 2024 annual average 408.3 to July 2026 443.0, a factor of 1.085), giving starting rents of $2,166 (two-bedroom) and $3,087 (three-bedroom). Honolulu CPI-U, 2008–2024: 2.51%/yr long-run average (BLS series CUURS49FSA0; DBEDT Data Book). Implied real rent CAGRs: 2-BR ~1.0%/yr; 3-BR ~0.7%/yr. The 2015–2023 window is the longest for which the by-bedroom table is available in the Census API. The latest ACS medians are aged forward two years with the observed rent index rather than carried unchanged, so the starting rent reflects a current (mid-2026) level; the two-year adjustment uses realized rents, not a forecast, while the forward path from 2026 grows at the long-run trend. A flat-real alternative would imply a larger percentage reduction but a smaller dollar saving.

Tāmaki Makaurau reform effect on rents. Synthetic-control estimate from the EPC WP016 working-paper version (published as Greenaway-McGrevy & So, 2026), year 6 (2022): 2-bedroom log-rent gap 14–22% below the synthetic control; 3-bedroom 22–35%. Estimate is CPI-free by construction; Tāmaki Makaurau and the synthetic control share NZ-wide CPI, so economy-wide inflation cancels out of the gap. Reported as a proportional level effect: upzoned rent = status-quo rent × (1 + level effect). Tāmaki Makaurau’s actual 2-bedroom rent index grew 29% nominal over 2016Q4–2023Q4; NZ CPI rose ~27% over the same window (Stats NZ, 2024a; 2024b). After deflation, real rents rose ~2% over seven years, versus a no-reform real rise of 18%–30% under the verbatim level-effect range.

Quality-adjusted specification (EPC WP016 quality-adjusted working-paper version, March 2024; published as Greenaway-McGrevy & So, 2026). Pooled all-rentals quality-adjusted rent index, year 6 level effect of −21.6% (preferred specification, Rotorua omitted from donor pool), or −26.1% under the baseline (unrestricted) specification. Applied to O‘ahu using a pooled rent baseline of $2,171/month (the 2024 ACS median gross rent, all rentals; B25064, aged to a mid-2026 level with the BLS Honolulu rent index, ×1.085). Status quo projected forward at 3.4%/yr nominal CAGR (ACS Honolulu County gross rent, B25064, 2015–2023 5-year) and deflated by 2.5%/yr Honolulu CPI. 2032 status quo real (today’s dollars): $2,291. Upzoned real: $1,796 (preferred) or $1,693 (baseline). Real saving vs trend: $495/month (preferred) or $598/month (baseline).

Rent-to-price translation. Not used. The text explains why no single-number price projection is produced; the reader is pointed to Greenaway-McGrevy, Pacheco & Sorensen (2021) for parcel-level evidence and Greenaway-McGrevy (2025) for the aggregate structural estimate (dwelling prices 15.1% to 26.9% higher without upzoning).

Tāmaki Makaurau house-price comparison. QV House Price Index (CoreLogic NZ) average current values, Q1 2017 (a proxy for end-2016) to Q4 2023: Tāmaki Makaurau $1,045,362 → $1,285,521 (+23.0% nominal); Wellington region $595,501 → $858,227 (+44.1%); Hamilton $532,888 → $784,920 (+47.3%); Christchurch $497,120 → $752,974 (+51.5%); Tauranga $676,381 → $1,035,546 (+53.1%). Deflating by Stats NZ CPI (all groups), which rose about 28% over this window, gives real changes of Tāmaki Makaurau ≈ −4% (roughly flat), Wellington +12%, Hamilton +15%, Christchurch +18%, and Tauranga +19%. Real % = (1 + nominal) / (1 + CPI) − 1. The rent lines above use CPI over 2016Q4–2023Q4 (~27%); the small difference reflects each source’s base period. Tāmaki Makaurau’s Demographia median multiple fell from about 10.0 in 2016 to 8.2 in 2023 (Cox, 2017, 2024).

O‘ahu rent trajectory math. 2-BR: baseline $2,166 × (1.0356)^t gives the nominal status quo; 2032 (t=6) status-quo nominal = $2,672. Upzoned 2032 nominal = $2,672 × (1 + e × min(t/6,1)) where e ∈ {−0.14, −0.22}; range $2,298 to $2,084. Deflate by (1.025)^t for today’s dollars: range $1,981 to $1,796. Vs today’s baseline $2,166: −8.5% to −17.1% real. 3-BR analogous: baseline $3,087, CAGR 3.25%, 2032 status-quo nominal = $3,740, upzoned nominal range $2,917 to $2,431 with e ∈ {−0.22, −0.35}; today’s-dollar range $2,516 to $2,097, or −18.5% to −32.1% vs today.

Refresh math. Auckland City’s reform produced an 80% increase in permits above trend over the six years that followed (Greenaway-McGrevy, 2024). Applied to O‘ahu’s baseline rate of ~2,200 permits/yr, the upzoned rate is 2,200 × 1.80 = 3,960/yr. Over six years (to 2032): 3,960 × 6 = 23,760 permits (~23,800) versus a trend pipeline of 2,200 × 6 = 13,200, so ~10,560 additional permits (~10,500). At a 92% permit-to-completion rate, that is 21,859 completed units under upzoning (~21,900) versus 12,144 on trend (~12,100), about 9,700 additional completed homes. Cumulative completions make ~6% of O‘ahu’s 370,000-unit stock brand-new by 2032 (21,859 / 370,000 = 5.9%) versus ~3.3% under trend (12,144 / 370,000 = 3.3%). Redevelopment lots: assuming ~70% of the ~10,560 additional permits are teardown-and-replace infill at ~3 units per lot (consistent with Auckland City’s Mixed Housing and Terrace Housing zones), 10,560 × 0.70 / 3 ≈ 2,500 upzoning-induced redevelopment lots, plus ~2,500 baseline teardowns (~420/yr over six years) now redeveloping to 3+ units ≈ ~5,000 aging lots replaced, yielding ~5,000 × 3 ≈ 15,000 new homes on those redeveloped lots (a gross figure: it counts every home built on a redeveloped lot, not the net addition versus trend). The infill-share assumption is author-supplied and not directly measured in the literature. Share of stock under a decade old (ten years of building over the stock): about 5% at the trend rate, roughly 8% by 2032 and near 9% if the upzoned rate is sustained.

Permit timelines, STR absorption, and vacant-homes tax are included as qualitative caveats; none are quantified as treatment-effect adjustments in the numbers above.

Cost-burden math. I apply the pooled quality-adjusted effect (the preferred −21.6% and unrestricted −26.1% specifications), the same estimate behind the rent headline, to the observed distribution of O‘ahu renters by rent burden, using ACS 2019–2023 5-year microdata (U.S. Census Bureau (2024b), ACS PUMS, the eight Honolulu County PUMAs; gross rent as a share of household income), which records each household’s burden individually, so no bucket interpolation or open-ended-category assumption is needed. Of about 128,000 renter households paying cash rent (those for whom burden is computed), about 58% pay 30% or more of income on rent today and about 30% pay 50% or more. A rent reduction to a fraction f of today’s rent moves a household below a threshold t if its current burden is below t/f. At the preferred effect (rents at about 83% of today’s level, f ≈ 0.83), roughly 18,400 households (about 14% of renters) move out of cost burden and the severely burdened share falls from about 30% to roughly 22%; at the unrestricted effect (about 78% of today’s level, f ≈ 0.78), about 21,700 (17%) move out and the severe share falls to about 20%. These PUMS rates (about 58% cost-burdened, 30% severely burdened) match the UHERO Hawai‘i Housing Factbook (2024) figures the text quotes. The by-bedroom effects drive Figure 4 but are not used here; a market-wide affordability count is better anchored to the pooled estimate, which is also the paper’s statistically significant specification. These counts are point estimates: PUMS replicate-weight standard errors are not computed, and the top burden code (households paying 101% or more, about a tenth of renters, some with near-zero measured income) is counted in the severe base, so treat the figures as approximate.

Note on the use of AI

AI was used in preparing this work. This was a deliberate choice, undertaken in part to explore how far current AI tools can support economic research. All data trace to the cited primary sources and all calculations are documented and verified in the calculations note.

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^[1]   Throughout this discussion, the traditional Te Reo Māori name for the Auckland region is used. The term Auckland City or Auckland is used to refer to the local government. Similarly, we use the term O‘ahu for the Honolulu metropolitan area, and City and County of Honolulu to refer to the county government.

^[2]  Near some Skyline stations, transit-oriented development (TOD) special districts already allow greater density, but not by right: it takes a case-by-case permit, and the bonuses require below-market units beyond the City’s affordable-housing rules, a cost that can weigh against feasibility. Take-up has been limited so far (Honolulu Civil Beat, 2026).

^[3]  Permits are referred to as Building Consents in Aotearoa.

^[4]  The three-bedroom (family-sized) effect is the statistically robust one; the two-bedroom estimate is weaker, significant only in some model specifications.

^[5]   Te Ika-a-Māui (The Fish of Māui) is the traditional Māori name for the North Island of Aotearoa. According to Māori pūrākau (legend), the demigod Māui fished up the North Island using a magical fishhook fashioned from his grandmother’s jawbone, while his waka became the South Island. In Hawaiian mo‘olelo, Māui fished the islands up from the sea floor with his hook Mānaiakalani; he warned his brothers not to look back as they paddled, but one did, the line snapped, and the islands were left scattered rather than joined into one.

^[6]   ADUs and ‘ohana units are capped at 500–1,000 sq ft and cannot be sold separately (no CPR); as of Ordinance 25-2 (effective September 30, 2025), a lot may combine a main house, an ‘ohana unit, and an ADU, though some form of owner or family occupancy requirement still applies to at least one unit. Duplexes are by-right only on R-5 lots above 7,500 sq ft, and §21-8.20A’s eight-unit allowance requires a lot of at least 40,000 sq ft on R-5; these thresholds prevent duplexes on most residential parcels.

^[7]   For example, the State Land Use Commission already gives Hawai‘i more control over county land use than any other state has, and HHFDC’s 201H authority already shows the state can grant real exemptions from county zoning when it chooses to, though currently with a county veto.