Paradise, If You Can Afford It: Hawaii Dusts Off a 1980s Housing Program to Help Young Locals Buy In

By Maya Mukherjee

Hawaii is known for its natural beauty, its beaches, its poke bowls and countless pop culture phenomena like White Lotus and Lilo and Stitch. But behind its reputation as a tropical paradise lies a real problem: the cost of living has become so high that many locals cannot afford to stay in the state.

Hawaii has the nation’s highest housing prices, with the median cost for a single-family home reaching $975,500 in 2026. In turn, it has the lowest youth home ownership rate — less than 2% of residents under 34 own a home. 

A range of underlying factors has contributed to Hawaii’s rapidly rising costs. Land available for new housing is limited by Hawaii’s geography, environmental protections and land use restrictions. Building materials generally need to be shipped from the mainland. And the tourist lure of the state means that locals are competing in the housing market alongside major developers and people looking to purchase second homes. Together, these dynamics often squeeze young locals out of the market, sending them to the mainland to pursue futures. 

When young people cannot afford to stay, the state feels the impact. The islands lose talented young workers who might otherwise build their lives and careers in Hawaii. Rep. Greggor Ilagan, D-4, highlighted this “brain drain” and noted its detrimental effect on Hawaii in an interview with Future Caucus.

As co-chair of Hawaii Future Caucus, Ilagan saw this problem firsthand among his friends, colleagues and community members and knew he had to take action to support his young constituents. 

“Our affordability crisis is twofold: we don’t have enough high-paying jobs and our everyday costs, including housing costs, are massive,” Ilagan told Maui Now. 

Among those advising Ilagan was Perry Arrasmith, director of policy at Housing Hawai‘i’s Future, who flagged a long-dormant program designed to help young residents buy their first homes. The Individual Housing Account (IHA) program is an initiative to help residents set aside pre-tax income for a down payment on their first home.

The IHA initiative was originally begun in the 1980s, but it was never updated to account for Hawaii’s rapidly rising costs. Since the original annual caps became insufficient to help young locals save for a down payment, many financial institutions got rid of the IHA program, effectively killing it. 

Ilagan and his colleagues in the Hawaii Future Caucus spearheaded the effort to revive and modernize the IHA program. The legislators proposed measures to significantly raise the annual cap for IHA contributions from $5,000 to $25,000 for individuals and from $10,000 to $50,000 for couples. The higher contribution limits would make the accounts a more practical tool for saving toward a first home.

During the 2025 legislative session, Ilagan and Minority Leader Lauren Matsumoto, R-38, also a Future Caucus member, had both introduced this measure to update the IHA program. Although they belong to different parties, Ilagan allowed his version to fall aside in favor of Matsumoto’s — as long as the bill got passed, he did not mind which party or legislator’s name was on it.

After Matsumoto’s bill failed to pass in 2025, Ilagan tried again in the following session. Still committed to a bipartisan approach, he introduced the bill as part of a bipartisan Future Caucus legislative package. Fellow Hawaii Future Caucus member Sen. Troy Hashimoto, D-5, introduced a companion bill with essentially identical provisions in the Senate. Although Ilagan’s House bill stalled, Hashimoto’s measure, SB2552, advanced through the legislature. Now, it just needs the governor’s signature to become law. 

“During the session, there was a lot of excitement among young people about this measure,” Arrasmith told Future Caucus. “A lot of young people could visualize using this program to help save up to make a down payment on a home.”

If the governor signs the bill into law, Housing Hawai’i’s Future plans to work with financial institutions across the state to revive the long-dormant program.

“We’re really just anxious to start working with financial institutions across the state to make sure that they begin offering Individual Housing Accounts,” Arrasmith added.

Housing was only one of the Hawaii Future Caucus’s key issues during the session: SB2552 was introduced as part of a legislative package alongside two bills (HB1871 and HB1977) that address maternal health. Ilagan participated in Future Caucus’ Prenatal-to-Three Innovation Fellowship program and wanted to bring that experience to the state legislature. He partnered with Future Caucus member Rep. Jeanne Kapela, D-5, to introduce the two maternal health bills in the House. Both of those bills are still moving through the legislature. 

For many young Hawaii residents, the dream of buying a home and establishing a future on the islands has moved increasingly out of reach. The young legislators who worked to get SB2552 passed hope that the revival of the IHA program will make that dream a little more attainable. By working across the aisle in a pragmatic way and collaborating with external partners, Ilagan and his colleagues took a step toward helping locals stay in Hawaii.