Compared to a year ago, January foreclosures in Hawaii have nearly tripled. The 174% rise represents 337 foreclosures filed in the first month of 2009, making this the seventh consecutive month with a triple-digit increase in foreclosure rates. The continuing real estate woes make a recovery highly unlikely. There are far too many risky loans and the impacts of unemployment are just beginning to show. While foreclosures in January are down roughly 30% from December, there is no indication that this is anything but an anomaly. Lenders temporarily suspended new foreclosures but experts expect activity to resume by spring.
Currently, the government is attempting to create solutions to the foreclosure problem and as such many lenders have taken a wait-and-see approach but more and more evidence suggests that this is just the beginning of a cycle. Many buyers have taken on more debt than they can handle and as such the number of foreclosure, short sale, and distressed property sales is growing rapidly in Hawaii. Moreover, with home prices dropping as foreclosures rise it has been incredibly difficult for homeowners to avoid losing their homes. Owners are unable to save their homes through equity or quick sale and there are other economic factors coming into play. Overall, the tourism and construction industries in Hawaii are also suffering and this brings business closures as well as layoffs. All these factors combined, foreclosures, falling house prices, weakening industry and subsequent layoffs and closures, support the theory that recovery is not in the near future.
Still, there is a glimmer of hope in the sense that Hawaii is faring better than the rest of the nation. While the national average for foreclosure rates exceeds 2 per cent, the same rate in Hawaii is less than 1 per cent. In fact, Hawaii ranks 30th nationwide with respect to foreclosure rates. In addition, there is a great amount of variation in foreclosure rates from neighborhood to neighborhood. While most neighborhoods are affected by foreclosures, Honolulu, Ewa Beach, Kailua Kona, Kihei, Waianae, Kapolei, Kahului, Hilo, Lahaina, Wailuku, Waipahu and Waikoloa have seen the most activity.