A surge in post-wildfire insurance costs and new short-term rental bans have created a glut of Maui, Hawaii, condominiums with few qualified buyers, according to Mino McLean, broker with Island Sotheby’s International Realty. The shift, driven by the August 2023 Lahaina wildfires and the passage of Bill 9, has left thousands of units effectively out of reach for residents and first-time buyers.
The 2023 wildfires triggered major changes in Maui, Hawaii’s housing policies. Bill 9 aims to convert between 4,000 and 7,000 short-term rental (STR) condos into long-term housing by 2028 to 2029. The hope was to ease Maui’s ongoing affordability crisis and provide homes for residents displaced by the fires. Instead, regulatory changes and sharply higher insurance premiums have pushed monthly homeowners association (HOA) fees to unprecedented levels, often between $1,200 and $1,700, on top of mortgage payments.
“Insurance rates doubled, tripled, even quadrupled in many of the condo markets,” McLean says. “People who live and work here can’t afford to buy those units based on those fees.”
Bill 9 removed the right of thousands of condo owners to operate Airbnb and VRBO rentals, forcing them to either sell, convert to long-term rentals, or use the units as second homes. The policy intended to increase housing for residents, but the timing of the insurance crisis has changed the math. Insurance carriers reassessed wildfire risk across Maui after the fires, resulting in steep premium hikes that condo associations passed directly on to owners.
Before the wildfires, many Maui, Hawaii, condos had manageable HOA fees, making them feasible for local buyers and first-time homeowners. The sudden jump in insurance premiums has forced associations to raise fees sharply, closing the door to buyers who could have afforded the units a year ago. The increased costs have also eliminated the financial cushion that investors once relied on, since STR income previously covered a significant share of expenses.
Now that STR rights have been revoked, many investors are listing their units for sale. The buyer pool has shrunk. Residents cannot afford the high monthly fees, and long-term rental rates on Maui, Hawaii, do not generate enough cash flow to cover mortgage payments, HOA dues, and property taxes. Units that could have served as entry-level housing are lingering on the market or selling only to second-home buyers who don’t need rental income.
McLean warns that this dynamic is shifting the market away from local ownership. “I worry that our condo market becomes only a game for second-home owners,” she says. “I don’t see our local people being able to afford the fees that come with those properties.”
The outcome highlights the limits of supply-side housing policy when underlying costs rise sharply. Bill 9 was designed to expand affordable housing by converting STR units to long-term rentals or owner-occupied homes. Steep operating costs have made these units inaccessible to buyers; the policy was designed to help.
Some displaced Lahaina residents have relocated to upcountry Maui, but the numbers are smaller than expected. Many remain in West Maui or are waiting for rebuilding efforts to move forward. Meanwhile, the condo market faces a double squeeze from lost STR income and higher monthly costs, with no easy solution in sight.
This situation also underscores the risk of regulatory changes that do not account for secondary cost drivers. Insurance, property taxes, and HOA fees are beyond the reach of housing policy, yet they determine whether a unit is truly affordable. When costs rise alongside new regulations, the intended beneficiaries can be priced out entirely. Rising property taxes compound the problem further. Following the loss of Lahaina’s tax base, Maui County has increased rates, with second-home and investor owners bearing a disproportionate share of the burden.
With most local buyers unable to afford the new carrying costs, the market is increasingly dependent on second-home purchasers. These buyers can pay cash or absorb high fees without relying on rental income. These buyers can also take advantage of lower property tax rates by claiming long-term exemptions, making ownership more attractive for them than for investors or primary residents.
While this shift may help stabilize prices in some segments, it does not address the original goal of expanding access for residents. If second-home buyers dominate the market, housing supply for Maui’s workforce remains unchanged, and the impact of Bill 9 is muted.
Some owners hope that Bill 9 will be overturned or revised. Lawsuits are pending, and speculation about possible changes before the 2028 to 2029 deadline is widespread. The uncertainty has not stopped owners from listing their units in anticipation of losing STR rights, nor has it brought hesitant buyers off the sidelines. The market continues to soften as inventory rises and sales are concentrated among buyers unaffected by the new economics.
The Maui, Hawaii condo market now faces a prolonged period of adjustment. Inventory is climbing, but most units are out of reach for local buyers. Whether the market finds a new balance or prices fall further will depend on insurance costs, property tax trends, and the outcome of regulatory challenges over the next two years.
The gap between policy intent and market reality remains wide. The effort to expand affordable housing has collided with the economics of post-disaster insurance and rising fees, leaving Maui, Hawaii’s condo market with rising inventory and few buyers who need a permanent home.
About the Expert: Mino McLean is a broker with Island Sotheby’s International Realty, specializing in upcountry and North Shore Maui, Hawaii residential real estate. Born and raised in the community she serves, McLean has been an active practitioner in the Maui market since 2001.
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