Hawaiʻi’s Act 121: What It Means for
Potential Homeownership
For many Hawaiʻi residents, homeownership has felt increasingly out of reach. Rising home prices, limited land, and fierce competition have made purchasing a home difficult, even for middle-income working families. Act 121, signed into law by Governor Josh Green in June 2026, aims to change that.
The law updates Hawaiʻi’s 99-year leasehold condominium program by expanding eligibility and increasing flexibility for buyers. While the program is not without its limitations, it represents one of the state’s most ambitious efforts to create attainable homeownership opportunities on publicly owned land.
So what does this mean for someone hoping to buy a home?
The Goal of Act 121:
Rather than selling state-owned land to private developers, the State of Hawaiʻi retains ownership of the land while allowing condominiums to be built and sold under a 99-year ground lease. By removing the cost of land from the purchase price, homes can be offered at significantly lower prices than comparable fee simple condominiums.
The first project is planned for the corner of Kapiʻolani Boulevard and Ward Avenue in Honolulu and will include approximately 370 condominium units.
Benefits for Owner-Occupants:
1. Lower Purchase Prices
The most significant advantage is affordability.
Because buyers are purchasing the home rather than the land beneath it, purchase prices are expected to be substantially lower than similar homes in Kakaʻako or nearby urban Honolulu.
For many first-time buyers, this could mean entering the housing market years earlier than would otherwise be possible.
2. An Opportunity to Build Equity
Unlike renting, monthly mortgage payments help build ownership over time.
Even if appreciation is more modest than fee simple properties, homeowners still have the opportunity to accumulate equity while enjoying the stability of owning their residence.
3. Living in a Desirable Urban Community
The initial development places residents within walking distance of employment centers, shopping, restaurants, healthcare, parks, and future rail access.
Living closer to work can reduce commuting costs and improve overall quality of life.
4. Predictable Housing Stability
Homeowners gain the security of remaining in their home without worrying about annual rent increases or a landlord deciding to sell the property.
For many local families, that stability is just as valuable as the financial benefits.
5. Expanded Eligibility
Act 121 broadens the pool of eligible buyers compared with the original legislation.
In addition to units reserved for working families earning up to 140% of the Area Median Income, a portion of the development will be sold at market rates, creating a more diverse community and increasing opportunities for local residents to participate.
Challenges Buyers Should Understand:
1. You Do Not Own the Land
This is the biggest distinction from traditional homeownership. Purchasers own the condominium under a 99-year lease but not the land beneath it. While 99 years is longer than most people will own a home, leasehold ownership can affect resale value over the long term as the remaining lease term decreases.
2. Potential Resale Restrictions
Affordable units may include resale limitations designed to preserve long-term affordability.
These restrictions could affect:
Who can purchase the unit
How much the unit can be sold for
Whether appreciation is limited
Prospective buyers should carefully review these requirements before purchasing.
3. Rental Limitations
Although Act 121 provides greater flexibility than earlier versions of the program, buyers should not assume they can freely convert their unit into an investment property.
The development is intended primarily to support owner-occupancy, and restrictions on rentals, especially short-term vacation rentals, are expected to remain.
4. Financing Considerations
While many lenders finance long-term leasehold properties, financing options may differ from fee simple homes.
Buyers should compare mortgage products and work with lenders familiar with Hawaiʻi leasehold transactions.
5. Long-Term Uncertainty
Because this program is new, some operational details, including future homeowners association policies, resale procedures, and administrative rules, will continue to evolve.
As with any first-of-its-kind program, buyers should stay informed as additional guidance becomes available.
Is This Program Right for You?
Act 121 is not designed to replace traditional fee simple homeownership. Instead, it offers another pathway into the housing market for residents who may otherwise be priced out.
For buyers planning to live in their home for many years, the lower purchase price, ability to build equity, and stability of ownership may outweigh the limitations associated with leasehold ownership.
Those seeking maximum investment flexibility or unrestricted appreciation may still prefer fee simple properties.
Final Thoughts
No housing program is perfect, but Act 121 represents a meaningful attempt to address one of Hawaiʻi’s greatest challenges: making homeownership attainable for local residents.
Success will ultimately depend on thoughtful implementation, transparent rules, and continued public confidence. For many families, however, this program could provide an opportunity that has been unavailable for decades, the chance to own a home in the community they call home, while building equity.
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