Isle foreclosures set record


POSTED: Thursday, June 11, 2009

Foreclosures in Hawaii soared 397.6 percent last month to a record high and pushed the state to its highest national ranking since 2005.





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




        Source: RealtyTrac


Rising unemployment and mass condominium defaults led to Hawaii leading the nation for growth in the rate of foreclosures in May with one for every 621 households.

Total filings rose to 816, nearly five times higher than the prior year, according to a survey released yesterday by RealtyTrac, which begin tracking foreclosures in 2005.

Hawaii's rate of foreclosure growth is still low compared to top-ranked Nevada, where one in every 64 homeowners is in foreclosure; however, the state moved up in the ranking in May to the No. 15 spot from No. 37 last year. Hawaii's foreclosures-per-household ratio also increased from April, rising 19.3 percent.

Nationwide, May foreclosures rose 18 percent to 321,480; however, the number of foreclosures dropped 6 percent from those that were reported in April.

“;Hawaii's foreclosure activity has been consistently increasing at a faster pace over the last few months than the national average,”; said Daren Blomquist, marketing communications manager for RealtyTrac.

Even the Hawaii HomeOwnership Center, a nonprofit which helps Hawaii families purchase and keep their homes, did not expect the scope of foreclosures, said Dennis Oshiro, the center's executive director.

“;We projected 108 counseling appointments for the whole year, and since January our (three) counselors have seen about 30 cases each,”; Oshiro said.

Still, Hawaii is a long way from being considered a foreclosure “;hot spot,”; Blomquist said. The top 10 states — California, Nevada, Florida, Arizona, Michigan, Ohio, Illinois, Georgia, Texas and Virginia — made up nearly 77 percent of U.S. foreclosures, he said.

“;There's a lot of difference between the No. 15 spot and a top 10 spot,”; Blomquist said.

While Hawaii's distressed real estate market is growing, it has not surpassed the collapse after the Japanese bubble, said Georgia Roberson, REO director for Coldwell Banker Pacific Properties.

“;Right now, I have 85 bank-owned properties,”; Roberson said, adding that she had around 300 properties in 1999 or 2000.

Hawaii's declining real estate, loan recasts and rising unemployment have ramped up foreclosures. The state's dependence on California and the large portion of condominiums in the real estate market have played a role, too.

Hawaii's lenders were still making subprime loans in 2007, said Nani Medeiros, the executive director of Housing Hawaii, a nonprofit that creates and preserves affordable housing.

“;We are just starting to see the fallout in 2009 and it will continue into 2010,”; Medeiros said.

Loss of jobs and work hours in Hawaii also drives foreclosures, she said. Hawaii's April unemployment ranged from 5.7 percent on Oahu to 9.7 percent on the Big Island, according to the latest report from the state Department of Labor and Industrial Relations.

Tourism and construction are way down and 14,000 state employees may see a loss of pay from furloughs, Medeiros said.

“;Once they begin receiving less money, we expect that it will put some of them over the edge,”; she said.

The collapse of California, which supplies many of Hawaii's tourists, business investors and second-home owners, also has taken its toll, Roberson said

“;We usually follow California by two years,”; she said.

The softening condominium market, which saw sales fall by more than 45 percent on Oahu during the first quarter, as well as the difficulty in securing condominium financing, also contributed to the problem.

“;There was a big wave of foreclosures at condominium properties in Hawaii last month,”; Blomquist said, adding that 32 percent of Hawaii foreclosures were at condominiums.