Foreclosures tripled in year


POSTED: Thursday, November 13, 2008

While the number of foreclosures in Hawaii increased a staggering 201.5 percent in October from the previous year, the state moved down 10 rungs to the No. 30 spot in a nationwide ranking of foreclosure rates among states.





No place to call home

        Hawaii's monthly foreclosures over the past year, including the year-over-year percentage gain:


MonthTotal% Change
October395 +201.5%
September594 +340.0%
August336 +131.7%
July229 +169.4%
June134 +18.7%
May164 +27.1%
April216 +227.3%
March120 +84.6%
February143 +142.4%
January123 +24.2%
November113 +52.7%
October131 +101.5%

        Source: RealtyTrac


The number of foreclosures in Hawaii dropped to 395 last month from a record 594 foreclosure filings in September, according to research firm RealtyTrac, which released its monthly foreclosure report today. The October foreclosure rate in Hawaii was down 33.5 percent from September's high; however, the total number of foreclosures last month was the second-worst tally of the year.

“;Looking back, we had a surge of activity in August and September, and the numbers are now more aligned with what we had seen in the beginning of the year,”; said Daren Blomquist, marketing and communications director for RealtyTrac. “;However, I don't want to discount October's increase. Overall, foreclosures are going up in Hawaii.”;

The increase in foreclosures, for whatever reason, appears to be coming a bit later to Hawaii, Blomquist said. But now that they are here, the market could take some time to recover, he said.

“;The trend in many areas that saw a big jump a year ago is that the activity is still continuing to play out,”; Blomquist said. “;It takes months to even years to see improvements.”;

It took seven years for the national market to recover from the last foreclosure surge in the 1990s, he said.

“;This seems worse to me than the 1990s when real estate in Hawaii slowed because of the Japanese market,”; said real estate analyst Stephany Sofos. “;Back then the U.S. mainland and Europe were OK, and people could still get mortgages. This time around, the problem is more global.”;

Despite the increase in foreclosures reported by RealtyTrac, Hawaii's financial institutions appear to be strong, said Commissioner Nick Griffin, who heads the state Division of Financial Institutions.

“;We've noticed that the bulk of the foreclosures are being conducted by mainland lenders, and we feel that this reflects favorably on the safety and security of our state institutions,”; Griffin said. “;The financial institutions in Hawaii have foreclosed on very few properties, and they are still making loans.”;

While it is difficult to fully gauge the breadth of foreclosure problems in Hawaii, when it does occur the impact is devastating, said Wendy Burkholder, executive director for Consumer Credit Counseling Service of Hawaii.

“;I feel so sorry for the consumers who are grappling with their mortgages,”; Burkholder said. “;Every time there is an announcement about a new federal program, they get excited, but the options are very lender-driven.”;

The number of clients that sought help from the agency for housing woes in October increased five times from the prior year, Burkholder said. Likewise, the agency saw a 50 percent climb in the percentage of clients that needed bankruptcy counseling, she said.

“;Our numbers are climbing every month, and I think that it's going to get a whole lot worse,”; Burkholder said. “;We aren't seeing so much of the subprime loans right now. We are seeing good, solid, hard-working families that have lost income.”;

Nationwide, October foreclosures increased 5.1 percent from the previous month and posted a 24.6 percent year-over-year increase, according to RealtyTrac. A total of 279,561 foreclosures, or one for every 452 households, was filed in the U.S. in October, the survey said.

While legislation in some states has slowed the rate of foreclosure increase, nationwide foreclosure activity continues to grow, said James J. Saccacio, chief executive officer of RealtyTrac.

“;October marks the 34th consecutive month where U.S. foreclosure activity has increased compared to the prior year,”; Saccacio said.

But while Hawaii has been insulated from many of the problems on the mainland, issues with nearby California and Nevada could weigh on the real estate market across the islands, Blomquist said.

Nevada, a favorite leisure destination for Hawaii residents, continued to top the nation's foreclosure rate in October. But while the market is well known to Hawaii, its overbuilt housing market has little in common with the building constraints in most neighborhoods across the islands. Foreclosure filings were reported on 14,483 Nevada properties during the month, an increase of 119 percent from October 2007.

Likewise, California - long a feeder market for Hawaii's second-home buyers - posted the top foreclosure totals in October. California foreclosure activity in October decreased 18 percent from the previous month, but the state still posted 56,954 foreclosures - the highest number of any state.

“;Struggling California and Nevada real estate owners who own a second or third home in Hawaii likely are going to walk away from their secondary home first,”; Blomquist said. “;If there are a lot of people from California that own homes in Hawaii, the state has to feel it.”;