Not only does the military have a significant presence in O’ahu’s rental market, but it also contributes to upward pressures on Hawai’i’s housing prices because of the tax-free stipends—known as Basic Allowance for Housing or BAH—that active-duty service members receive on a monthly basis.
Local residents have difficulty competing with compensation packages bolstered by BAH payments, making military renters more attractive to landlords.
An E5 Sergeant, a rank of enlisted personnel who have been promoted to lead a small team or section, with dependents and 4 years experience had a base pay of $40,388 and a BAH of $39,852 in 2024 for a total of $80,240. This is $10,000 more than the average annual salary of an urban Honolulu worker, who earned $70,179 (a mean wage of $33.74) in the same year. This difference does not include food allowances and bonuses that military personnel also receive.
The graph below demonstrates that E5 non-commissioned officers with and without dependents can comfortably afford a one- or two-bedroom apartment while more than half of Hawai’i’s working-class residents are cost-burdened, i.e. they spend more than 30 percent of their income on rent and utilities. Other households struggle to afford to rent and are forced to leave Hawai’i altogether, particularly to Nevada, which is often jokingly referred to as Ninth Island.
It is clear that the BAH contributes to rental market tightness, and thereby higher prices. However, further analysis is stymied by a lack of data transparency from the Department of Defense. We know the DoD spent $27.9 billion to endow the BAH program in 2024, but we have no information on how those resources are distributed state-by-state nor how much BAH money enters the rental market.
Our report estimates that the DoD spent $1.1 billion on BAH just in O’ahu with more than half of that money—$648.9 million—entering the private rental market. The average BAH monthly payment per service member is $3,679 and we estimate this dynamic caused rents to increase by 7.1 percent in 2024. As a result, non-military tenants in O’ahu spent an estimated $234.8 million more in rent that year.
To help alleviate the inflationary impacts of military rental demand on the Hawai’i’s housing market, our report recommends that all active-duty service members be housed on-base.
Vacancy rates at military installations should be zero percent and the number of service members in the private market should also be zero. The U.S. military should disclose how many on-base housing units they own, operate, and monitor. And new, dense military housing should be built if necessary.
Critical tenant protections like rent control need to be implemented in order to provide immediate relief for renters. And the development of permanently affordable social housing is necessary to deliver high-quality and inexpensive housing. Sixty-five percent of all new units need to be set at 80 percent of area median income and market-based solutions have proven incapable of delivering affordability to lower-income households.
Our findings demonstrate that the military plays a significant role in Hawai’i’s affordability crisis, but there are steps that can be ta
