Maui County’s housing crisis is so acute that even homes deemed “affordable” are often out of families’ financial reach, spurring a group of elected officials to look into ways to change how the government decides sales prices.

The rule of thumb is that families should spend no more than 30% of their total income on housing, including utilities, so that they have enough money left over to at least cover basic necessities like groceries, health care and transportation. But on Maui, it’s not uncommon for families to spend far more than that, even when they’re living in homes where sales prices are set by the county and sometimes subsidized by taxpayer dollars.

Because making homes affordable often means selling them for less than what it costs to build them, governments like Maui County can subsidize development in exchange for requiring developers to sell them at set prices. But right now, when deciding what families can afford, Maui County doesn’t factor in related expenses like property taxes, homeowner association fees and home and mortgage insurance. That’s what a group of council members is pushing to change.

“We’ve all heard from residents over and over again — and justifiably — that even Maui’s affordable homes are not affordable to them,” Council member Gabe Johnson, chair of the county’s affordable housing committee, told colleagues during a Monday meeting.

For decades, Maui has struggled with a lack of housing for working families, a shortage that’s only gotten worse in recent years. In 2020, the County Council hired a housing consultant for roughly $300,000 to come up with a plan to build 5,000 new affordable units in the next five years. Among its recommendations: Raise taxes on investment homes to pay for affordable housing development and change the way that Maui decides what’s affordable so more families can get into those homes with the help of federal loans programs.

Federal mortgage programs are geared toward helping families build wealth and own homes by requiring lower down payments and allowing more people to qualify for loans. When calculating what families can afford to spend, those programs also factor in other expenses that homeowners can expect to face, like property taxes, insurance and homeowners association fees.

Maui County, however, has a different way of deciding what fits into family budgets — it only accounts for monthly mortgage principal and interest. For a family earning around $140,000 per year, for example, the county says a three-bedroom home is affordable at around $700,000, with a 5% down payment and 5% mortgage interest rate.

But that formula doesn’t allow for all of the other monthly homeownership costs that come up, a reality that makes it harder for families to qualify for loans in the first place -- and can leave them scrambling if they’re lucky enough to secure one, according to housing advocates and home loan experts at Monday’s meeting.

“While you may get a mortgage, you're going to be priced out -- and you may not be able to afford it long term,” said Keaka Aumua, who works at Hawaiian Community Assets, a nonprofit that promotes economic justice and helps prepare families for homeownership.

Over the last year, Aumua said, the lowest sales price for a two-bedroom, one-bath apartment in an affordable housing project stood at $395,000. Meanwhile, the cheapest affordable single-family home was $618,010.

Her nonprofit works to educate future homeowners, help them save up for a down payment and search for other forms of financial help. But even with outside support, those prices are still too high for many of the families her nonprofit serves: Most of them earn between $57,000 and $92,000 per year, she said. And only about 28% of them qualify for a mortgage.

If county officials were targeting affordable housing prices based on the reality of Maui families’ earning power, Aumua said the cost of an apartment would range between $150,000 and $250,000, while single-family homes would go for between $350,000 and $450,000.

“We need to lower the prices of our homes,” Aumua said, or else “a home becomes a burden instead of a blessing.”

Faith Armanini, a mortgage loan officer for Homebridge Financial Services, said a typical two-person household will struggle to make ends meet with the current affordable housing price guidelines.

Still, she’ll do anything she can to help Maui residents secure a mortgage -- including coaching them to ask their friends and family for help -- because it might be one of the only homeownership opportunities they'll get with how much housing costs have soared in recent years. The median sales price of a home on Maui now stands at more than $1.2 million.

As a lender, Armanini can approve a loan that would cover housing costs that reach up to 49% of a family’s income. But if an unexpected medical emergency or sudden job loss were to occur, that means they’re precariously close to bankruptcy or foreclosure, she said.

“I have some clients that work two full-time jobs just so that they can buy a house,” said Armanini. “In fact, I'm signing one (family) right now where the husband works two full-time jobs, the wife works two full-time jobs, and then the son actually is working also.”

“It's like five full-time jobs to purchase a home,” she continued.

Next month, the County Council is scheduled to continue the discussion and weigh whether to change the rule that sets affordable housing prices. The effort comes as council members are in the process of increasing taxes on investment homes and hotels as a way to raise $58 million for the county’s affordable housing fund, which can be tapped to pay for affordable housing and the roads, sewers and water lines needed before it can be built.

If home prices are lowered, the county will face more pressure to subsidize housing so developers' projects pencil out, which could range from giving developers land to build on to covering the cost of sidewalks to buying down the costs of homes.

“We may be at a point where we should pivot, and look at ourselves in the mirror,” council member Yuki Lei Sugimura told her colleagues during Monday's meeting. “What more can we do?”

Civil Beat’s coverage of Maui County is supported in part by grants from the Nuestro Futuro Foundation and the Fred Baldwin Memorial Foundation.