Kailua Kona Real Estate Blog

Will the housing market here on the Big Island of Hawaii Change now that Bill 123 on Accessory Dwelling Units is approved?

Well today I am going to jump into this subject and give you an update on this important matter.

In May of this year Governor Green signed into law Senate Bill 3202 Requiring counties to adopt or amend ordinances by December 31, 2026, to allow for at least two accessory dwelling units (ADUs) on all residentially zoned lots. The bill also prohibits private covenants from including certain restrictions, supporting the efficient use of limited residential lands and making housing more attainable for residents. 

This my friends is a game changer so let’s briefly talk about accessory dwelling units if you are not familiar with them.

An Accessory Dwelling Unit or ADU is an additional living space situated on your property that can either be attached or detached.  It will have a full legal kitchen including, range, oven, sink, refrigerator and bathroom that you can use yourself or rent it out.  The rational for approving this bill is because the entire state of Hawaii has a housing shortage along with a limited supply of long-term rental properties. 

This big push is to allow accessory dwelling units on a property was brought about by the fires in Lahaina last year.    With the amount of destruction that occurred, there was no places for those home owners to find housing if they were affected by the fires.  This Bill does not necessarily help the residents of Maui at this point, but it does put into place future changes that will ease the housing shortages Hawaii has been experiencing for many years

Up till now it has been difficult to get an ADU approved on the Big Island and people have worked around that by creating unpermitted accessory dwelling space. Yes, it has been pretty common to find home owners creating these spaces, renting them out to off set their mortgage payments and for the most part skirt the county with regards to tax dollars. 

The Big Island has plenty of vacant land so why aren’t there more housing developments being built to accommodate the housing shortage?  That is a great question.   Yes we have the land however the majority of it is undevelopable based upon the hard volcanic soil and the inability to provide services to those area.

This month Hawaii County Mayor Roth approved Bill 123.

Bill 123 allows homeowners in residential and agricultural properties to build up to three ADUs on their properties. ADUs can be connected to or detached from the primary property and can be used to house long-term residents.

Even though Senate Bill 3202 states home owners could build 2 ADU’s on their property, Mayor Roth approved up to 3 ADU’s on a property because property sizes on the Big Island tend to be larger than some of the other Hawaiian Islands

Some key points to the approval of Bill 123 are.

• Allowing accessory dwelling units, whether detached or attached, to be built alongside single-family homes in residential, duplex, residential-agricultural, agricultural and family agricultural districts. to be built on a single lot, as long as that lot is within a zoning district that permits ohana units

• Limiting each property to a maximum of three accessory dwelling units.

• Only one ohana unit on any given site would be permitted for use as a short-term vacation rental under the bill.

• Ensuring compliance with infrastructure and safety standards, including requirements for sewage disposal and water supply.

• Restricting the use of accessory dwelling units for transient accommodations, with limited exceptions.

Yes Bill 123 will allow you to legally do 1 short term rental

So lets talk about the Pros of this bill. 

On the surface this all sounds great for buyers, sellers and renters.

This will allow more rentals to come to the market and address the islands long term rental housing shortages. 

Pro #2 Collecting rents on ADU’s will assist home owners with their mortgage payments because of the high interest rates or high monthly payments for living here in Hawaii plus it will be supplementing their income with rental dollars

Pro #3 it is will create additional space for you if you have family or friends visiting.  Then they will have their own space and won’t feel like they are intruding on you.

Pro #4 it allows you to increase the value of your property by adding 1 to 3 ADU’s that people have been asking for over the years and now they will have that opportunity.

So those are the pros of adding an Accessory Dwelling Unit to your existing property now let’s talk about the cons and there some to consider

#1 this potentially will change the look and feel of your neighborhood  You bought into a community that was laid back, quite, not a lot of activity and now you will see more cars probably parking on your street and instead of home owners living around you, you will now have a sizeable amount of renters and that could change a neighborhood quickly

Con #2 adding on the con #1 that increase of people living in your neighborhood will also increase the amount of traffic you will see on a daily basis and does that impact the look and feel of your community?  I was say yes.  It will become more transient and not so stable

Con #3  depending upon whether you are a buyer or seller, it will definitely increase prices of properties for those who add ADU’s which it will make it harder for buyers to purchase

Con #4 the infrastructure of the community could be adversely impacted.  As we know Helco has been doing rolling black outs this year because they don’t have enough power to go around.  Adding ADU’s in communities will definitely put a strain on electricity.  Then there is cesspool and septic system issues not to mention sewer problems with and increase of residents around the island

Con #5  If the Department of Planning & Zoning isn’t already slow enough, putting these new procedures will definitely impact property owners when submitting plans for permit approvals when trying to add ADU’s to your property or even a deck for that matter.   My guess we will see this negatively slowing down everyone whether its trying to get and ADU or a bathroom approved by the zoning department

Okay here is my opinion, as a home owner and Realtor who assists people buy and sell real estate, this a fantastic and needed opportunity to help with our housing shortages.   I think everyone who owns a home will definitely consider adding an ADU if they have the space and their infrastructure can accommodate 1, 2 or 3 ADU’s because it will increase the values of their existing properties, give them a solid revenue stream that they can offset their expenses and provide long term housing opportunities for people who can not find suitable places to live. 

My fear is the adding of ADU’s to properties could further challenge the buying opportunities here on the Big Island because prices will go higher and as we all know they are high right now and people can not afford to purchase a home here.

Hopefully there will be some regulations put in place on where you can build these ADU’s so they don’t ruin the look and feel of our quite laid back communities throughout the big island

I know we have a housing shortage throughout the islands, but adding ADU’s does not solve the problem of people here on the islands not being able to afford to purchase a home instead of continuing having to rent.   I am not a politician, but hopefully somewhere down the road the people in power will look for ways to offer some affordable housing options for 1^st time home owners to locals can enjoy home ownership as well and get out of the rental market.

Have questions or need some help with your real estate matters, we would like to hear from you with your questions or concerns,

Hit us up at one of our contract sources stephen@realestatekailuakona.com, therese@realestatekailuakona.com or 808-300-9393

 Until next time  Aloha!