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When Eric and Heidi Arrington first moved into their home in Nanakuli in 1996, they thought it would be their forever home.
The two-story house with a big mango tree on a cul-de-sac is part of Princess Kahanu Estates, one of several homesteads dedicated to people who are half Native Hawaiian through a century-long trust. They raised all their children there plus six grandkids.
“We lived there for 23 years and not a single day went by … that I didn’t turn the corner of Kaleiwohi Street, and feel like ‘Thank you Lord, thank you Lord,’ because it was such a blessing,” Heidi says.
But this year, more than two decades after getting their dream home, the Arringtons did the unthinkable: moved to the mainland and put their homestead up for sale. The home was listed for $499,000 and is expected to close this week.
Hawaiian homesteads are often in the news because they’re in such high demand. About 28,000 people are on various wait lists statewide hoping for a chance to purchase property of their choice. Residential homesteads on Oahu are particularly coveted — they cost just a fraction of the median home price on Oahu, which exceeds $775,000 for a single family home.
But the Arringtons are among a group of Native Hawaiians who each year quietly relinquish their homesteads. The real estate transaction is longer and more involved than a typical home sale.
It’s also emotionally fraught given the significance of homesteads — and what they represent — to Hawaii’s indigenous people, who are increasingly priced out of their homeland.
So far this year, 16 Hawaiian homesteads were sold on Oahu alone as of Oct. 30, according to data on home resales from MLS Listings provided by local realtor Michael Bates. The median home price was $420,000.
“By buying a market sale home like this, that’s the way to shortcut staying on the list for, who knows, decades, possibly,” says Bates. “You can buy today if you can afford to buy this house rather than wait for new construction.”
Buying homesteads allows some Native Hawaiians to skip DHHL’s extensive wait list. It’s not uncommon for people who spent years waiting for a homestead to miss their chance because they can’t qualify for a mortgage.
On the open market, wealthier families can skip the wait altogether.
It’s also a way to help ensure your children receive homesteads. Someone who is 50% Hawaiian can receive a residential homestead property, give the house to one of their children who are only 25% Hawaiian and aren’t qualified to get on the homestead wait list themselves. Then they can either go back on the list to wait for another house or buy another homestead property.
DHHL rules say a beneficiary — who is at least 50% Hawaiian — can own only one residential homestead at a time. But that rule doesn’t limit how many times a person can receive a homestead and pass it down to a relative.
That scenario is actually more common than people realize, allowing some families to own multiple homesteads in the same neighborhood, according to Bates and Stephanie Namuo, the Arrington’s realtor.
Buying a homestead is also a way for Hawaiians who are part of the mainland diaspora to come home. Bates says one of his clients is a Hawaiian woman who grew up in Texas and is hoping to move to Hawaii for the first time to retire.
The Arringtons had only been on the wait list for about 18 months when they got a call from DHHL in 1996 that the homestead was available. A couple of families had been awarded the house before them but had changed their minds, Heidi says.
Both Eric and Heidi had grown up in Ha’ula and never imagined living on the west side. But once they saw the house they knew they had to have it. They got it for about $160,000 plus $1 for a 99-year lease.
They aren’t exaggerating when they say they thought the house would be in their family forever.
“We looked at it as not just (for) us but generations, not just our kids but our grandkids’ grandkids,” Heidi says, adding: “It’s such an important and profound thing to have the opportunity to own a home there and be 50% Hawaiian and qualify for that.”
But as their children grew up, one by one they moved away. All three of their children have good jobs: one is a nurse, another is a commercial truck driver, a third is both an insurance agent and financial advisor.
But none of them have enough Hawaiian blood to qualify for their own homesteads, and none could afford the reality of home-buying in Hawaii’s open market.
“They all went to college in the mainland and they saw you can still buy a gallon of milk today for $1.59 … They chose to move away and with that went our grandkids,” Heidi says. “So our mo’opuna (grandchildren) were all gone.”
One summer Heidi and Eric spent $6,000 to bring their grandkids home. Heidi was juggling two full-time and three part-time jobs to afford the airline tickets, including teaching at a community college and driving for Uber. It was too much.
They realized living on the homestead didn’t make sense if they could only see their grandkids once a year. They decided to sell theirs and buy a house in Ohio.
“Ohana is everything,” Heidi says.
But selling a homestead isn’t easy. The sales tend to take longer – it’s tough to find buyers who meet the blood quantum, and the lease transfers must go through multiple state approvals.
Homesteads for sale are often posted in the Office of Hawaiian Affairs’ newspaper, but DHHL doesn’t notify people on its wait lists when the houses are available. A spokesman for the department said the transaction is considered a private sale and DHHL doesn’t get involved until it’s time to transfer the lease.
It’s not uncommon for a house to be in escrow for four months to six months, says Bates, the longtime Hawaii realtor. The Hawaiian Homes Commission must review the lease transfer three separate times before approval and their meetings happen just once a month.
If the buyer is not on the DHHL wait list, they must prove that they meet the blood quantum requirement to purchase the property. That requires finding genealogy records.
Only certain banks are willing to lend to people buying homesteads because the loans are technically long-term leaseholds, since the Department of Hawaiian Home Lands maintains ownership of the land beneath the houses.
Banks also won’t lend more than a property is appraised. In Hawaii, old or dilapidated houses may sell for more than a million dollars if they’re on a piece of large, valuable land.
But because homestead sales involve only the building — not the ground beneath — banks won’t lend more than the houses are appraised for. That requires buyers to come up with more cash or sellers to lower their prices.
Even simple cash-only sales get more complicated. Bates worked on a sale once where the buyer was ready and willing to pay cash for the property but the seller had changed her name more than once and it took years to prove to DHHL that she was the same person.
There are other rules too. Homestead owners can sell their houses for profit but can’t sell vacant land for profit, Bates says. But someone who owns a residential homestead can still be awarded an agricultural homestead.
Still, some areas sell quick. Bates says Papakolea, located between Pauoa and Manoa neighborhoods in Honolulu, and Waimanalo homesteads are particularly in demand.
Namuo, Eric and Heidi’s realtor, lives just down the street from the Arrington’s old house. Even though she’s making her living selling homesteads, she cannot imagine giving up her own.
“I personally don’t believe in selling the homestead that I have,” Namuo says. “I want to give it to my children.”
The Arringtons say they’re committed to ensuring their grandchildren grow up with Hawaiian values even if they can’t live in their ancestral homeland.
“I wanted those mo’opuna to be raised in their culture,” Heidi says. “But you know what, no matter where you go you’re going to find Hawaiians.”
There’s even an L&L Hawaiian Grill in San Antonio, Texas, where one of her daughters lives.
Still, Eric, who is more than half Hawaiian, says it hurts to give up owning a place in Hawaii. The first week he got to Ohio, he kept thinking about the house and all the blood and sweat they put into it.
“It was hard. It was not an easy decision,” Eric says.
“Not an easy decision, no,” Heidi echoed.
Civil Beat multimedia producer Ku’u Kauanoe contributed reporting to this story.
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