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With the median price of a single-family home on Oahu now almost $1 million dollars, we may be approaching a very dangerous moment in our local economy.

For the last two decades, Hawaii residents have been locked in an unbearable push/pull relationship with housing. On one hand, people recognize that it is important for housing to be affordably priced because it’s only fair that Hawaii be owned by locals, not outsiders renting to Hawaii residents.

During the early days of the COVID-19 pandemic, Hawaii’s housing crisis revealed itself as a public health risk. The high number of people living in multigenerational households meant individuals who caught the virus at work or at school could easily infect their entire family, due to close living conditions and an inability to socially distance or quarantine.

On the other hand, there are also many people in Hawaii who not only like the high cost of housing, but hope it will go even higher because they view homes not as places to live but as a form of investment.

Many of my friends who are in Hawaii real estate are in now and are telling everyone to buy a house right now, no matter what it takes, “because the price can never go down.”

Mind you, a few months from now, candidates for governor and the Legislature are going to emerge for the 2022 election cycle, and they will face immense pressure from special interest groups, particularly in banking and real estate, to support policies that will keep housing prices high in Hawaii.

Hawaii never seems to be able to move forward on anything because most of our local issues are less about partisan politics or cultural idiosyncrasies and more about maintaining the dystopian, where the rules are rigged, but you’re taught to play by the rules anyway.

But Oahu is in a very precarious situation with the median prices of homes skyrocketing in such a short amount of time. Last year, I spoke at a real estate conference and reminded attendees of billionaire that “price is what you pay, value is what you get.”

While things may seem like a free-for-all right now, with a shack of corrugated tin roofing, termite-infested wood and a strip of dead grass priced at $1 million dollars on Oahu, the market ultimately knows that just because that property is priced at a million doesn’t mean it holds $1 million dollars in value. That should worry all of us.

The business cycle consists of a boom of investment followed by a series of market disruptions that reveal some investments as profitable and others as unprofitable or unsustainable. Further, creates an imbalance as it diverts money away from other economic activities. As this occurs, the more severe the imbalance, the more severe the corrections that occur as businesses sell off risk, reduce production, lay off staff and so on.

I hate to break it to some of you, but an Oahu shack isn’t a Veblen good, and it is only a question of time before the market reveals this in a very embarrassing and painful way for everyone.

It would be better to fix this situation now, while we still can, than to let this runaway train go off the rails and destroy things for everyone.

Oahu’s government officials need to recognize that we are in a housing emergency and before things get any worse, Honolulu officials need to hold a kind of housing summit where city and state officials can hold hearings and collect expert and community advice on urgent next steps to remedy the situation.

This might consist of, say, a week of joint information briefings with an aim to produce regulatory and legislative changes, held by the Legislature and Honolulu City Council. After the briefings, a “Help for Oahu” bundle of proposed municipal and state bills – as well as a list of benchmarks they aim to accomplish by certain definitive timelines – could be published on a website for the public to view. These bills could be introduced either this year in a special session or next year.

Hawaii House Vice Speaker John Mizuno says he believes such a joint housing summit would be prudent, where policymakers could identify “the top three to five priorities the state and counties can do to ensure more affordable housing.”

“Hopefully we have learned from the Great Recession,” Mizuno said. “Other issues to review would be smartly building greater density affordable housing – not monster homes – with adequate sewage systems. Affordable housing should be paired with essential employment such as housing for teachers with an agreement or obligation to continue teaching while renting in or living in an affordable housing unit, and the same with agriculture workers, which would benefit Hawaii’s agriculture industry and help with food security.”

These are dangerous times. We need to think outside of immediate perceived profit and start thinking about the preservation of our way of life as a whole. We need to act – now.