Reflections on Honolulu’s Growth Trajectory -Why housing, culture, transit, and military realities must shape the city’s future
I’m spending a week in Oʻahu—my first time here—and have been struck by the visible impact of Honolulu’s housing crisis. Encampments sheltering Oʻahu’s nearly 4,500 unhoused residents are hard to miss (according to the City & County of Honolulu’s 2024 Point-in-Time Count), as are the broader infrastructure and industrial challenges that complicate inclusive growth. For an island as small as Oʻahu, I was surprised by how often travel required navigating congested, six-lane, Los Angeles–style freeways—an indicator of how land constraints and planning decisions collide in daily life.
You don’t need to spend much time in Waikīkī to understand the central role tourism plays in Honolulu’s economy. Tourism accounts for roughly one-quarter of Hawaiʻi’s GDP and a significant share of employment (Hawaiʻi Department of Business, Economic Development & Tourism). But the city’s growth pressures extend well beyond visitors. Housing demand is also driven by the families of service members stationed at five major military bases and installations on the island, with defense representing one of the largest sources of federal spending in the state (U.S. Department of Defense – Hawaiʻi Economic Impact). Tourism, military presence, and demographic change all compete for the same finite land, housing, and infrastructure. As an island city, Honolulu cannot sprawl outward. Every policy choice has immediate consequences for who gets to live here—and who does not.
Growth Isn’t the Problem—Displacement Is
Honolulu’s economy has grown for decades, but that growth has not translated into broad economic security. The Honolulu metropolitan area’s GDP has steadily increased, reaching roughly $66 billion in recent years (U.S. Bureau of Economic Analysis), yet housing costs consume an extraordinary share of household income. Median home prices routinely exceed $800,000, and many renters spend far more than the recommended 30% of income on housing (HUD; Zillow Honolulu Market Data). This is on top of the additional costs Hawaiians bear from living on an island where most goods must be imported.
Honolulu is one of the most diverse cities in the United States, with deep Native Hawaiian and Pacific Islander roots and long-standing Asian immigrant communities. Yet Native Hawaiians and long-time local residents are disproportionately impacted by rising housing costs and displacement, with Native Hawaiians experiencing higher rates of housing insecurity and homelessness (HUD; Hawaiʻi State Department of Health).
Wages lag behind comparable mainland metros when adjusted for cost of living, and many residents are leaving the island because they simply cannot afford to stay. Hawaiʻi has experienced net domestic out-migration in recent years, particularly among working-age adults and families (U.S. Census Bureau Population Estimates).
The result is an aging population, fewer multi-generational local families in many neighborhoods, and a population increasingly bifurcated between high-income transplants and short-term military households. This demographic shift did not happen by accident; it is the predictable outcome of policy choices that allowed growth without adequately protecting residents.
Housing Must Come First
In Honolulu, housing is the linchpin of inclusive growth. Without stable, affordable housing, workforce development, transit investment, and economic diversification cannot succeed. Inclusive growth means building housing for the people who already live and work here: teachers, healthcare workers, service workers, public employees, and caregivers. It means allowing more multi-family housing in neighborhoods historically limited to single-family homes, especially near major transit corridors. And it means using publicly owned land to create permanently affordable, mixed-income communities, rather than relying solely on market-rate development to solve a structural shortage.
Public Transit as a Test of Equity: Honolulu’s New Rail Line
Honolulu’s new public transit line—the Skyline rail system—represents one of the most consequential infrastructure investments in the city’s modern history. Planned to span roughly 20 miles and connect West Oʻahu to downtown Honolulu, the system has required an investment of more than $9 billion to date (Honolulu Authority for Rapid Transportation).
Beyond its well-documented cost overruns and delays, the rail’s real significance lies in what it makes possible: a shift away from car dependence in a city where land is scarce and congestion is costly. Transportation is the second-largest household expense for many Honolulu residents, particularly those commuting long distances from more affordable areas (Center for Neighborhood Technology – H+T Index).
As transformational as this new public transit infrastructure could end up being for the metro, it does not guarantee inclusive growth. National research shows that rail investments can accelerate displacement if housing protections do not keep pace (Brookings Institution; Federal Transit Administration). Stations surrounded by luxury development without affordability requirements risk pricing out the very residents the system was meant to serve. The public sector should pair transit investment with zoning reform, affordable or mixed-income housing mandates, and community land stewardship can anchor long-term affordability and access.
The Military’s Role in Honolulu’s Housing Market
Honolulu’s military presence brings federal investment and stable employment, but it also has real consequences for the housing market. Military housing allowances are tied to local market rents, which can place upward pressure on prices, while frequent rotations increase demand for short- and mid-term rentals. Many military families also compete directly with civilians for off-base housing, particularly in neighborhoods near schools and essential services. Together, these dynamics shape Honolulu’s housing market as much as tourism does. Inclusive growth therefore requires deliberate coordination among city, state, and federal actors to ensure military housing needs are met without unintentionally displacing civilian residents.
Tourism Should Support the City, Not Compete With It
Tourism will always be part of Honolulu’s economy. The issue is not its presence, but its scale and structure. A city that locals cannot afford is not sustainable—no matter how attractive it is to investors or newcomers.
Research shows that short-term rentals can reduce long-term housing supply and increase rents in high-demand markets (Urban Institute; Hawaiʻi State Auditor). Inclusive growth means shifting from volume to value: regulating short-term rentals, protecting residential zones, and directing tourism-generated tax revenue toward housing, transit, and environmental protection.
Growth Without Cultural Loss
During our stay, we attended a lūʻau at the Polynesian Cultural Center and learned more about Queen Liliʻuokalani, the last reigning monarch of Hawaiʻi, who was overthrown in 1893 by American and European businessmen with U.S. military backing. She remains a profoundly important cultural figure for her leadership, resistance to the loss of Hawaiian sovereignty, and enduring contributions to Hawaiian music, language, and identity (National Park Service – ʻIolani Palace).
Future development in Honolulu should actively work to prevent further cultural erasure. This begins with land. Land here is not just real estate—it carries historical, cultural, and spiritual meaning. Inclusive growth requires that Native Hawaiian organizations have real authority in land-use decisions, not symbolic consultation.
Measure What Matters
Honolulu’s economic success cannot be measured solely by hotel occupancy rates, construction cranes, or population growth. Inclusive growth requires tracking:
Housing affordability for local workers
Resident retention and return rates
Native Hawaiian and local homeownership
Wage growth relative to cost of living
Cultural preservation
Environmental health
Honolulu’s constraints—geographic, cultural, and demographic—make inclusive growth harder than in most cities. But they also make it more urgent. The city can continue prioritizing outside demand and short-term residency, or it can choose a path that recognizes housing as infrastructure, transit as an equity tool, culture as irreplaceable, and residents as the foundation of prosperity.