The number of Hawaii households facing foreclosure rose nearly 427 percent in June compared with the same month last year — its second worst rate in a year.

And with more than 87 percent of total filings in the earliest stages, experts say the worst is yet to come.

Hawaii's market, which saw total filings last month climb to 706, is only just beginning to feel the harsh effects of foreclosure, which have hammered many mainland markets, said Daren Blomquist, marketing communications manager for Irvine, Calif.-based RealtyTrac, which released its latest monthly foreclosure numbers yesterday.

As many as 615 out of Hawaii's total June foreclosure filings have yet to revert to the lender, Blomquist said.

“;Hawaii's main increases are in default notices and auction notices, the first and second stages of foreclosure,”; he said. “;That tells us that the full impact of foreclosures hasn't hit the market.”;

Hawaii's foreclosures are spread across neighborhoods and price points, but some sectors have been harder hit than others, said Georgia Roberson, REO director for Coldwell Banker Pacific Properties. Condotels — condominium properties that can be part of a hotel rental pool — have been devastated by the drop in tourism as well as the drying up of funding sources, she said.

“;Nobody on the island will lend on a condotel, and there just aren't that many cash buyers for them in this market,”; Roberson said. “;I've had several listings in the Ilikai and there are a few more coming up.”;

The median sales price for most Oahu neighborhoods has dropped substantially from a year ago, with much of the fall foreclosure related, said John Riggins, owner of John Riggins Real Estate, who has estimated that 75 percent of his business is now in distressed properties.

Median-priced, single-family homes on Oahu have fallen in value anywhere from $50,000 to well more than $100,000 from a year ago, Riggins said.

“;You could already be experiencing price declines in neighborhoods, but you won't feel the full brunt until the lenders take back their properties and put them on the market,”; Blomquist said.

In the second half of 2008, RealtyTrac noted a huge increase in the number of REO, or bank-owned foreclosures, among states like California, Nevada and Florida, which have consistently led the nation's foreclosure activity, he said.

“;At a certain tipping point, REOs will pull down home prices more, and that creates a vicious cycle,”; Blomquist said. “;Since foreclosures in Hawaii only began to increase in July of 2008, it's safe to say that you are still early in a cycle that will last years rather than months.”;

That's why Riggins, who has worked in Hawaii real estate since 1974, expects to see Hawaii foreclosures set a record high this cycle.

“;Unless we can fix the lending situation, turn around consumer confidence or create more jobs, I think we are going to see things get much worse,”; Riggins said. “;I think this cycle will be worse than the downturns that we experienced in the 1970s, the 1980s and the 1990s.”;

Still, Blomquist said, the spread between Hawaii and the top troubled spots on the mainland remains wide.

One in every 718 households in Hawaii experienced a foreclosure last month, giving the state the 19th-worst ranking in the nation for rate of foreclosures. Hawaii's 426.9 percent spike in foreclosures last month was its worst since March when it jumped 503.3 percent. However, the total number of distressed properties dropped a little more than 13 percent in June from the prior month.

“;I can't guarantee that Hawaii won't end up in the top 10, but I don't think it will happen,”; Blomquist said. “;There's a pretty big delta between the top 10 states and all of the others. The top nine states were the only ones above the national average in June.”;

For the first half of the year, Hawaii experienced 3,603 foreclosures, which was a 296.8 percent rise in total properties from the year-ago period. In comparison, there were 391,611 foreclosure notices mailed out during the first half of the year in California, the state with the highest number of foreclosures in the nation.

Hawaii's foreclosure rate for the first half of the year is still low compared to top-ranked states like Nevada, where one in every 16 homes received a foreclosure notice. Arizona, Florida, California, Utah, Georgia, Michigan, Illinois, Idaho and Colorado rounded out the list of states with the top foreclosure rates.

States with the highest foreclosure totals after California at midyear included Florida, Arizona, Illinois, Nevada, Michigan, Ohio, Georgia, Texas and Virginia.