UHERO Insights

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

September 10, 2026

Steven Bond-Smith Economic Development Housing Insights

INSIGHTS ARE PRELIMINARY MATERIALS CIRCULATED TO STIMULATE DISCUSSION AND CRITICAL COMMENT.
The findings and recommendations are those of the author(s) and do not reflect the views or official positions of UHERO, the University of Hawai’i, or any funding or supporting organization.

By Steven Bond-Smith

@misc{bondsmith2026,
  author  = {Steven Bond-Smith},
  title   = {What if Honolulu upzoned everywhere? Lessons for solving a housing crisis from Aotearoa},
  year    = {2026},
  month   = {September},
  howpublished = {\url{https://uhero.hawaii.edu/what-if-honolulu-upzoned-everywhere-lessons-for-solving-a-housing-crisis-from-aotearoa/}},
  note        = {UHERO},
  url     = {https://uhero.hawaii.edu/what-if-honolulu-upzoned-everywhere-lessons-for-solving-a-housing-crisis-from-aotearoa/}
}

Read the Companion Brief

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

Hawaiʻi has some of the most expensive housing in the country. The median single-family home on Oʻahu sold for over $1.1 million in 2025 (Honolulu Board of Realtors, 2026), and median rent now runs about $2,100 a month (UHERO Hawaiʻi Housing Factbook, Tyndall et. al., 2026). Residents consistently name housing costs as a top reason they leave. For example, in a 2025 survey of workers, 75% said they will leave, or are unsure whether they will stay, in the coming years (up from 70% in 2024), with 55% ranking housing their number-one cost-of-living pressure (Holomua Collective, 2025).

Housing prices, like any price, are set by supply and demand, with some nuances particular to housing (Donovan & Sorensen, 2026). And supply on Oʻahu is short. We build about 2,500 homes a year (DBEDT, 2024; Honolulu DPP, 2024), well short of the roughly 5,000 units a year the state now says Oʻahu needs. (HHFDC, 2025). That is a small addition to the island’s roughly 370,000 homes, so the housing stock also turns over slowly, leaving it among the oldest in the nation. The median home was built in 1976, so about half are more than 50 years old (ACS 2019–2023).

If this limited supply of new homes is a major driver of the affordability crisis, then increasing supply brings prices down. Upzoning, expanding the legal right to build more or denser housing on a lot, is one of the most direct tools a city has to increase supply. New homes can cost more than old ones, but building them also frees up cheaper, older units as residents move (Fang et al., 2026; Behrens et al., 2026). And with more newly built housing available, buyers stop paying the scarcity premium that existing homes command today.

We don’t have to guess how this plays out. One of the largest zoning reforms ever attempted anywhere in the world, in Aotearoa (New Zealand), offers a remarkably close parallel.

What Tāmaki Makaurau actually did, and what happened

In 2016, Auckland Council adopted the Unitary Plan, upzoning Tāmaki Makaurau (Auckland)^[1]. The council was required to create the plan under a central government process and authority that ensured it did so, a mechanism I return to at the end to consider how Hawaiʻi could do something similar. It replaced single-family zoning on roughly three-quarters of the city’s residential land, allowing multiple dwellings per lot, plus taller apartment buildings along transit corridors (Greenaway-McGrevy & Jones, 2025). Figure 1 maps the scale of upzoning: the purple areas 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 stories on nearly every residential lot in the city, regardless of underlying zone.

Dr. Ryan Greenaway-McGrevy and colleagues at the University of Auckland have tracked the results for nearly a decade. Across the studies, the findings point the same way:

• Building surged.  The city issued 112,000 new dwelling permits (referred to as building consents in NZ) from 2017 to 2023, equal to 21% of its entire pre-reform housing stock (Greenaway-McGrevy, 2024). A follow-up study attributes about 46% of that construction to the reform itself (Greenaway-McGrevy, 2026). Permitting ran roughly 80% above its prior trend (Greenaway-McGrevy, 2024), and even through the 2024 downturn stayed above the peaks of past building cycles (Stats NZ, 2026).
• Rents grew much less than the trend. Comparing like-for-like units, rents came in about 22% below where they would have been without the reform (Greenaway-McGrevy & So, 2026). Put differently, rents would have been more than a quarter higher had Tāmaki Makaurau not upzoned. The gain is even clearer when measured against incomes. From 2016 to 2023, incomes in Tāmaki Makaurau rose 47% while rents rose just 29%. After inflation, real rents were only slightly down, whereas the no-reform path pointed to double-digit increases.
• Home prices stopped rising. From 2016 to 2023, real house prices in Tāmaki Makaurau were essentially flat. Over the same years, 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 price-to-income ratio fell from about 10.0 to 8.2 (Cox, 2017, 2024).

The clearest sign the reform caused the construction boom rather than merely coinciding with it is that construction surged only on upzoned land, while permitting on non-upzoned land barely moved (Greenaway-McGrevy & Jones, 2025).

Why Tāmaki Makaurau is a good case study for Honolulu

The two cities line up unusually well. Both are Pacific metropolises squeezed by geography (Oʻahu’s developable land hemmed by two mountain ranges and the sea; the Tāmaki isthmus between two harbors), which makes outward sprawl costly and pushes supply inward. Both have large Asian and Polynesian populations, and in both, Pasifika communities bear the brunt of the housing crisis (ACS 2019–2023; Stats NZ, 2023). Property-tax rates are comparably low (around 0.3% of value in each), and each city dominates its region’s economy.

Most importantly, both started from the same zoning floor. About three-quarters of Tāmaki Makaurau’s residential land was zoned single-house before reform (Greenaway-McGrevy & Jones, 2025); Oʻahu’s residential districts are similarly calibrated around one detached home per lot^[2], with accessory and ʻohana units allowed only as add-ons.^[3] And the affordability picture is nearly identical. Demographia’s “median multiple” divides the median home price by median household income. Tāmaki Makaurau stood around 10.0 in 2016, the year it chose to upzone, and has since fallen to 8.2. Oʻahu today sits at 10.5 (Cox, 2017, 2024). In other words, Oʻahu is roughly where Tāmaki Makaurau was on the eve of its reform.

What it could mean for Oʻahu

If Oʻahu upzoned on the same scale as Auckland and achieved comparable outcomes, the effect on renters would be large. To see this, I take the estimated relative effect of upzoning on rents in Tāmaki Makaurau, and apply it to Oʻahu’s own rent trend.^[4] The median rent is on a trajectory to reach $2,657 a month by 2032 ($2,291 in today’s dollars). The rental savings from upzoning, if it matched the outcome in Tāmaki Makaurau, would bring it to $2,083 ($1,796 in today’s dollars): a real saving of around $500 a month in today’s dollars, or closer to $600 on the study’s alternative, less conservative reading.An earlier version of the study tracked each size directly and found bigger savings for bigger homes: about $325 a month for a two-bedroom and $700 for a three-bedroom.^[5]

Those savings matter more than the sticker figure suggests, because rent comes out of after-tax income. At a marginal tax rate of about 30%, a $500-a-month cut versus where rents would otherwise head is equivalent to a pre-tax raise of roughly $8,500 a year. For a family in a three-bedroom home the $700-a-month saving is equivalent to about $12,000 pre-tax. Today, about 58% of Oʻahu renters spend more than 30% of their income on rent, and about 30% spend more than 50% (author’s calculation from ACS 2019–2023 5-year microdata, U.S. Census Bureau, 2024b; in line with the UHERO Hawaiʻi Housing Factbook, 2024). Apply that cut to how Oʻahu renters are actually spread across rent burdens, and roughly 18,000 households would drop back below the cost-burden line by 2032, or almost 22,000 on the study’s less conservative reading. The severely cost-burdened share would edge down from about 30% to roughly 22% of households.

And building new homes itself refreshes an aging island. To put a number on it, I take Auckland’s roughly 80% increase in the pace of homebuilding and apply it to Oʻahu’s roughly 2,200 building permits a year. Over six years, if Oʻahu upzoned on the same scale and construction responded as it did in Auckland, that would add about 10,500 permits, or roughly 9,700 completed homes, above trend. Much of it would be teardown-and-replace: older single-family lots redeveloped into three- and four-unit townhomes. That gradually renews Oʻahu’s half-a-century-old housing stock.

But what about homeowners and home prices?

This is the question that often stops upzoning conversations: homeowners don’t want to see their home’s value fall as more supply becomes available nearby. Worries about neighborhood character are part of the same instinct, yet both concerns tend to count the preferences of today’s residents while leaving out the people who would live there if they could, including the children and grandchildren of current residents. But the evidence from Aotearoa is that upzoning is mostly win-win: renters gain from lower rents; most owners, sitting on underbuilt lots, gain land value from the new option to redevelop; and many buyers can pay less, as new supply is added across the city and the price of units on lots already built to capacity declines.

Rents and home prices respond differently because they price different things. The apparent paradox (prices up, rents down) comes from mixing two kinds of value. Rent is the cost of living in a unit, so more supply pulls rents down for everyone. Part of this rental price is a scarcity premium: the extra that buyers and renters pay when the supply of homes is limited. Upzoning erodes that premium paid for living somewhere. But the value of owning a home also reflects the value of the right to redevelop it, which upzoning creates by allowing three or four units where only one stood before. That option value appears wherever redevelopment pays off: where the new units would be worth more than the cost of buying the lot and building them. So, rents and land prices can move in opposite directions in places where redevelopment makes sense. The parcels that gain most are the underbuilt ones: the single-family homes on standard lots that make up most of the island. Tāmaki Makaurau’s property-level data bears this out: typical underbuilt lots appreciated after upzoning (Greenaway-McGrevy, Pacheco & Sorensen, 2021). On the same assumptions, many homeowners would not lose value, and many would gain.

For buyers, prices can still be lower, especially for first-home buyers, because a lot that once held one house now holds three or four that are now available at a much lower price per unit.

The group that may see relative declines is owners of parcels already built to capacity: older, dense complexes that can’t be redeveloped further, but where units are still valuable enough that redevelopment isn’t worth it. As newer homes come online, it’s the oldest, lowest-quality buildings that face the most competition. But that’s arguably the policy’s best feature, not a flaw: those older buildings are where lower-income renters live, and first-home buyers are looking, so the effect works as targeted, market-delivered affordability.

Why upzoning is likely to beat inclusionary zoning

Hawaiʻi’s most visible affordability tools today are inclusionary zoning (IZ) programs (county ordinances, the city’s Bill 7, and the state’s 201H), which compel or incentivize developers to set aside a share of units at below-market prices. Those below-market units are far fewer in number than the households that qualify for them, so they are rationed by lottery. For the winners, that is more help than upzoning offers. But upzoning bends the whole rent and price trajectory down broadly, not just for lottery winners, and it enables building at every scale, including the small-scale infill that a set-aside would smother. IZ works only at the development level. The below-market units are paid for by higher prices on the market-rate ones, so the policy quietly depends on the very unaffordability it’s meant to relieve. IZ can never scale unaffordability down because it relies on high market-rate prices to cross-subsidize the affordable units.

Affordable housing requirements under Bill 7 and 201H use a density bonus to incentivize IZ. But the density bonus doesn’t get IZ out of this bind because the bonus’s value comes from withholding density that upzoning would otherwise grant directly. Studies generally find that inclusionary zoning raises market-rate prices to fund the below-market share, with mixed effects on overall production (Bento et al., 2009; Schuetz, Meltzer & Been, 2011; Soltas, 2024). Notably, Tāmaki Makaurau had a set-aside program too (the Auckland Housing Accord), and studies found it largely failed to deliver affordable housing (Fernandez, Sánchez & Bucaram, 2021). Honolulu’s own experience shows how the cost of the density bonus shapes construction. The state’s 201H program pairs a large, uncapped bonus with a comparatively lower affordable housing requirement than Bill 7 (50%-plus-one, versus 80%) and has produced roughly a thousand units a year (Iseri-Matsubara, HHFDC, in Hawaii Business Magazine, 2024), while Bill 7 delivered just 189 occupied units over seven years (Honolulu DPP, 2026). In both cases, the value of the density bonus depends entirely on restricting density overall, exactly the dependency broad upzoning is designed to eliminate. Broad, Aotearoa-style upzoning removes the artificial scarcity that IZ requires to work at all.

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 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.

The bottom line

None of this is automatic. To get Tāmaki Makaurau’s results, Honolulu would also need to fix what binds after zoning, which I suspect is permitting speed, above all else. The median home permit in Honolulu still ran about nine and a half months in 2024, with little overall improvement despite the city’s reported progress on plan review (Honolulu Civil Beat, 2025). Auckland, by contrast, works to a 20-working-day statutory clock met for 98.5% of applications before the reform (Office of the Auditor-General, 2015). Upzoning worked in Tāmaki Makaurau, in part, because permitting was not a bottleneck. The pace and scale of the construction response will also depend on local construction capacity. That capacity may adjust more slowly on Oʻahu than in Tāmaki Makaurau, or it may adjust more easily as capacity is freed when public and military construction eases in the coming years.

On infrastructure, the other potential bottleneck, other research in New Zealand argues it is usually cheaper to provide too much capacity than too little (Colegrave, 2026). An infrastructure shortage gets baked into land and house prices because land you zone but don’t yet service just sits there as an option until someone builds. Oʻahu’s concern may differ a little, especially since its water comes almost entirely from finite aquifers, but the logic likely still applies:^[6] water access is mostly a one-off cost, deferred rather than wasted if demand is slow. The shortage it prevents, by contrast, is paid by every renter and buyer, year after year. Building the water infrastructure ahead looks like the cheaper mistake.

Some share of new supply on Oʻahu would be captured by vacation rentals before reaching local renters: vacation-rental units make up around 2.5% of Honolulu County’s housing stock (UHERO Hawai‘i Housing Factbook, Tyndall et. al., 2026). This demand-side channel could blunt the effective supply response for residents. An empty-homes tax and tighter 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, many of the new homes would be occupied by residents.

Auckland Council didn’t do this on its own. The central government in Aotearoa forced the eight councils in Tāmaki Makaurau to merge and produce a single combined plan that had to accommodate the city’s long-term projected housing needs. Oʻahu doesn’t have that fragmented-council problem, since the City and County already governs the whole island. Hawaiʻi also has unusually strong state-level land-use institutions, 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 got its upzoning because the central government held the authority and decided housing supply was a priority. Hawaiʻi’s state government appears to have similar authority. Planning reform now requires the political willpower to wield it.

The evidence of increased supply and improved affordability with zoning reforms is unusually strong. If Oʻahu upzoned on the same scale as Auckland and achieved comparable outcomes, the payoff is broad: real rents fall meaningfully (a real saving of around $500 a month in today’s dollars, or closer to $600 on the study’s alternative, less conservative reading), many homeowners gain as redevelopment becomes a real option on their lot, first-home buyers find cheaper entry points, and thousands of families climb out of housing cost burden. Getting there takes more than rezoning. It depends on the permitting and companion reforms that let new supply actually get built. But the outcome is a housing market that is generally more affordable than today’s. A rent cut of that size is, for all practical purposes, a major pay raise of about $8,500 a year for the median renter household that housing policy can deliver even when wages don’t.

A companion UHERO brief lays out the full projections, methodology, and data sources behind these figures.

Note on the use of AI

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

References

Behrens, D., Gibbons, T., & Maltman, M. (2026). What local land use reform does, and doesn’t, do (e61 Working Paper No. 3). e61 Institute.

Bento, A., Lowe, S., Knaap, G.-J., & Chakraborty, A. (2009). Housing market effects of inclusionary zoning. Cityscape, 11(2), 7–26.

Colegrave, F. (2026). Beyond Sufficiency: The economic case for enabling more development capacity. Working Paper, 29 June 2026. Insight Economics.

Cox, W. (2017). 13th Annual Demographia International Housing Affordability Survey: 2017 (Q3 2016 data). Performance Urban Planning.

Cox, W. (2024). Demographia International Housing Affordability: 2024 Edition (Q3 2023 data). Urban Reform Institute and Frontier Centre for Public Policy.

Donovan, S., & Sorensen, K. (2026). How to model a housing market. Inflection Points. https://inflectionpoints.work/articles/how-to-model-a-housing-market

Fang, L., Kim, E., & Tyndall, J. (2026). The downmarket impact of new multifamily housing: Evidence from a Honolulu condo tower. Real Estate Economics. Advance online publication. https://doi.org/10.1111/1540-6229.70049

Fernandez, M. A., Sánchez, G. E., & Bucaram, S. (2021). Price effects of the Special Housing Areas in Auckland. New Zealand Economic Papers, 55(1), 141–154.

Greenaway-McGrevy, R. (2023). Can zoning reform reduce housing costs? Evidence from rents in Auckland (Economic Policy Centre Working Paper No. 016). University of Auckland.

Greenaway-McGrevy, R. (2024). Causes and consequences of zoning reform in Auckland. Cityscape, 26(2), 413–434. U.S. Department of Housing and Urban Development.

Greenaway-McGrevy, R. (2026). Can zoning reform increase housing construction? Evidence from Auckland. Economic Modelling, 160, 107592. https://doi.org/10.1016/j.econmod.2026.107592

Greenaway-McGrevy, R., & Jones, J. A. (2025). Can zoning reform change urban development patterns? Evidence from Auckland. Urban Studies, 62(12), 2415–2435.

Greenaway-McGrevy, R., Pacheco, G., & Sorensen, K. (2021). The effect of upzoning on house prices and redevelopment premiums in Auckland, New Zealand. Urban Studies, 58(5), 959–976.

Greenaway-McGrevy, R., & So, Y. (2026). Can zoning reform reduce housing costs? Evidence from rents in Auckland. Economic Inquiry. Advance online publication. https://doi.org/10.1111/ecin.70075

Hawaii Business Magazine. (2024, June 27). Here’s how affordable housing policies have impacted Hawaiʻi’s housing supply. https://www.hawaiibusiness.com/affordable-housing-hawaii-workforce-policy-impact/

Hawaiʻi Housing Finance and Development Corporation. (2025). 2024 Hawaiʻi Housing Planning Study. Hawaiʻi Department of Business, Economic Development and Tourism. https://dbedt.hawaii.gov/hhfdc/files/2025/10/2024-HHPS-with-Addendum.pdf.

Holomua Collective. (2025). 2025 Hawaiʻi Affordability Survey. Honolulu, HI. https://holomuacollective.org/survey-25/

Honolulu Board of Realtors. (2026). Annual residential resales data, Oʻahu: 2025 median single-family sale price.

Honolulu Civil Beat. (2025). Speedier reviews, quicker Honolulu building permits? Not so fast. Honolulu Civil Beat, April 2025. https://www.civilbeat.org/2025/04/speedier-reviews-quicker-honolulu-building-permits-not-so-fast/

Honolulu Department of Planning and Permitting (DPP). (2026). Building permit process backlog & ROH Chapter 32 (affordable rental housing) status [Document D-0136(26)]. Presentation to the Honolulu City Council Committee on Zoning and Planning, March 5, 2026.

Office of the Auditor-General. (2015). Auckland Council: How it deals with building consents. Wellington, New Zealand. https://oag.parliament.nz/2015/auckland-building-consents

Quotable Value (QV) / CoreLogic New Zealand. (2024). QV House Price Index (average current property values). https://www.qv.co.nz/price-index/

Schuetz, J., Meltzer, R., & Been, V. (2011). Silver bullet or trojan horse? The effects of inclusionary zoning on local housing markets in the United States. Urban Studies, 48(2), 297–329.

Soltas, E. J. (2024). The price of inclusion: Evidence from housing developer behavior. The Review of Economics and Statistics, 106(6), 1588–1606.

Stats NZ. (2023). 2023 Census population counts by ethnic group, age, and Māori descent and dwelling counts.

Stats NZ. (2024). Consumers Price Index (national), 2016Q4–2023Q4.

Stats NZ. (2026). Building consents issued: December 2025. Statistics New Zealand. https://www.stats.govt.nz/information-releases/building-consents-issued-december-2025/

Tyndall, J., Gordner, T., Inafuku, R., & Park, J. (2026). The Hawaiʻi Housing Factbook 2026. University of Hawaiʻi Economic Research Organization (UHERO). https://uhero.hawaii.edu/the-hawaii-housing-factbook-2026/

University of Hawaiʻi Economic Research Organization (UHERO). (2024). The Hawaiʻi Housing Factbook 2024. University of Hawaiʻi at Mānoa.

U.S. Census Bureau. (2024a). American Community Survey 1-year estimates, 2024: Honolulu County (median gross rent).

U.S. Census Bureau. (2024b). American Community Survey 5-year estimates, 2019–2023: Honolulu County.

U.S. Census Bureau. (2024c). American Community Survey 5-year Public Use Microdata Sample (PUMS), 2019–2023: Honolulu County (gross rent as a percentage of household income).

[1] Throughout, the traditional Te Reo Māori name for the Auckland region is used. The term Auckland Council, Auckland City, or Auckland refers to the local government. Similarly, Oʻahu refers to the Honolulu metropolitan area, and City and County of Honolulu or Honolulu, for 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] ADUs and ʻohana 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 ʻohana 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.

[4] See calculations using Greenaway-McGrevy, 2023, EPC WP016 in the companion brief.

[5] The family-sized (three-bedroom) effect is the statistically robust one; the two-bedroom estimate is weaker. Both are included here to help readers interpret the quality-adjusted estimate for their own situation.

[6] At least up to the point that Oʻahu needs a desalination plant which creates a large step in infrastructure costs at that exact capacity, meaning it may be more efficient to allow an infrastructure bottleneck to bind, briefly, at that time, but not sooner, or later.