Oahu homeowners keep up on mortgages
STORY SUMMARY »
Honolulu's real estate market might be a far cry from its glory days, but continued home appreciation combined with relatively strong economic fundamentals seems to be keeping the mortgage blues away.
Low-risk mortgage markets
1. West Palm Beach-Boca Raton-Boynton, Fla.
2. Orlando-Kissimmee, Fla.
3. Fort Lauderdale-Pompano-Deerfield, Fla.
4. Virginia Beach-Norfolk-Newport News, Va.
5. Washington-Arlington-Alexandria, D.C.-Va.-Md.-W.Va.
6. Phoenix-Mesa-Scottsdale, Ariz.
7. Bethesda-Gaithersburg-Fredericksburg, Md.
8. Richmond, Va.
9. Salt Lake City
Source: First American CoreLogic
A national survey of mortgage risk by California-based First American CoreLogic found Honolulu to be 10th lowest among 100 major U.S. markets studied.
Lower-than-average unemployment, higher wage growth and moderate home price appreciation in Honolulu has kept the market's mortgage risk low. Many of the riskiest markets in the survey were in parts of Michigan, Ohio and Tennessee where lagging economies have worsened real estate woes.
Nick Griffin, Commissioner of the State's Division of Financial Institutions, said Hawaii also might be better insulated from mortgage risk because most island buyers have shunned the more exotic types of mortgages that are now causing problems for many mainland markets.
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Honolulu is the 10th-lowest-risk major market for mortgages in the nation, according to a survey released yesterday by a national research firm.
TOP 10 HIGHEST-RISK MORTGAGE MARKETS
(For the 10 lowest-risk markets, which include Honolulu, see Page A1.)
1. Detroit-Livonia-Dearborn, Mich.
2. Warren-Troy-Farmington Hills, Mich.
3. Youngstown-Warren-Boardman, Ohio-Pa.
4. Dayton, Ohio
5. Toledo, Ohio
6. Cleveland-Elyria-Mentor, Ohio
7. Grand Rapids-Wyoming, Mich.
8. Memphis, Tenn.
9. Akron, Ohio
10. McAllen-Edinburg-Mission, Texas
Source: First American CoreLogic
Honolulu was ranked 90th out of 100 major markets, and 373rd out of 381 markets overall, in the survey by First American CoreLogic, a unit of Santa Ana, Calif.-based First American Corp.
While 88 out of the 381 markets monitored in the company's Core Mortgage Risk Monitor were depreciating, Honolulu's value held true, suggesting that higher mortgage risk is mostly concentrated in markets where both property values and economic fundamentals are on the decline.
The report's highest-risk markets, spread across Michigan, Ohio and Tennessee, were in regions with high foreclosure and mortgage fraud rates, combined with higher-than-average unemployment and lower-than-average wage growth.
By contrast, less risky markets like Honolulu have experienced lower-than-average unemployment, higher wage growth, moderate house price appreciation, low foreclosure rates and minimal fraud and collateral risk.
Other low-risk markets came from economically strong pockets of Florida, Virginia, West Virginia, Maryland, Arizona and Utah.
Of these markets, Honolulu posted the second-strongest home appreciation, behind Salt Lake City. According to the survey, Honolulu valuations rose 10.94 percent as compared with the 13.48 percent sustained in Salt Lake City.
The relative strength of the Honolulu real estate market has made mortgage risk less likely, said Scott Higashi, executive vice president of sales for Prudential Locations LLC.
"What you see happening here is that even with the crisis in the mortgage industry across several mainland markets, our prices are sustaining themselves," Higashi said. "We haven't seen the dramatic rises and dips that are making national news. We've been chugging along. It's not glamorous, it's not the go-go days, but it's steady."
From July to September, Honolulu's single-family home prices grew 2.4 percent and condominium prices rose 3.3 percent as compared with the same period a year ago, Higashi said.
"As values continue to hold, you won't see folks abandoning products because they can't afford to make payments," he said.
Nick Griffin, commissioner of the state's Division of Financial Institutions, said Hawaii could be better insulated from mortgage risk because most island buyers have shunned the creative finance products and easy-money deals that are now causing problems for many mainland markets.
"People in Hawaii have had more common sense than folks on the mainland," Griffin said. "In addition, there is great motivation to make the payment for the house. I know foreclosures are increasing percentagewise, but it's still not that big of a number in Hawaii."
Even those Hawaii residents who used creative financing and are facing mortgage resets might find that they are better off than their mainland counterparts, said Stephen Higa, a mortgage broker with Point Financial.
"People's property values here are not decreasing as much as they are on the mainland," Higa said. "If they put some money down and still have equity in their homes, there are still products that will help most of them."