Maui has recently been swept by a storm of debt that has left a high rate of foreclosures and bankruptcies in its wake. Although Maui County was previously thriving and enjoying a time of prosperity, the global recession has finally hit the Hawaiian Islands and is clearly beginning to take its toll. One of the most telling signs of the effect that the recession has had on Maui is the sky rocketing rate of foreclosures that are affecting more and more Maui County residents of all socioeconomic classes.
While less than 100 properties in Maui County were going through foreclosure this time last year, there are currently more than 350 properties in that state. In addition to this growing list, properties are also staying in foreclosure for longer periods of time. The reason behind this startling increase in foreclosures is that homeowners are simply no longer able to make their mortgage payments.
Widespread layoffs, a tourism downturn and the collapse of the building boom have all contributed to the financial troubles of homeowners and the depressed real estate market. It’s therefore easy to understand why the number of bankruptcies is also on the rise in Maui County. In fact, for many homeowners foreclosure and bankruptcy go together, with many families now owing an amount on their property that is higher than the actual value of the property.
While the elevated number of foreclosures caused by the high unemployment rate is, perhaps, an expected symptom of the economic recession, it unfortunately serves to depress real estate prices even further. Another concern with Maui County’s real estate market has to do with the fact that as homes are remaining in foreclosure longer, they are also going unmaintained longer. The result of this is that the state of the properties degrades, making them far more expensive to restore in the future.
While there has been the occasional upscale home foreclosure in Maui County, these problems are mostly affecting working families who live in single-family homes with values of between $400,000 and $700,000. Also, the most highly affected area in Maui County has been North Kihei, although areas such as Wailuku, Kahului and Lahaina have also seen their fair share of single-family home foreclosures as well.
As the number of homeowners facing foreclosure and bankruptcy continues to rise, there is one positive trend to note. Unlike in the past, lenders are far more willing to negotiate debt payments. By allowing for renegotiated mortgages or modified payment schedules, lenders are being more flexible and are making it more viable for families and homeowners to avoid bankruptcy.
However, it is still unmistakably clear that the recession that has swept the global economy has now caught up to Maui County and is wreaking havoc on homeowners and businesses alike. And while rising foreclosure rates are just one sign of the fury of the current downpour of debt, they indicate that Maui will still have to weather the storm a little longer before relief appears on the horizon.