Front page news today in the Honolulu Advertiser: Home Foreclosures Tripled In Hawaii.  Yes, there is a concern whenever we see a rise in the number of foreclosures, but overall the Hawaii real estate market is stable and strong compared to most areas of the country.  Lets take a look at a few of the items in the article:

Home foreclosure filings in Hawai’i more than tripled in August from a year earlier. Foreclosures are rising nationwide because many consumers can’t keep up with mortgage payments and face difficulty trying to refinance or sell their property as the housing market slows and prices drop in some areas. In many cases, defaults are rising because interest rates are resetting at dramatically higher rates for exotic loans heavily marketed to sub-prime borrowers over the past several years.

This is a concern, but Hawaii has a pretty strong real estate market with only 5.5 months of inventory on the market (a balanced market is 6-7 months of inventory, and our months of inventory remaining are just above the lowest inventory levels that were seen during the height of the Japanese market boom of the late 80’s early 90’s.)  Our prices have held steady for the last 8 months, in fact, we are up over 1% from a year over year standpoint.

However, the company said the year-over-year change may have been inflated because of expanded data coverage for the state compared with a year ago.

Ok…does that not make the data completely unreliable and untrue? 

Hawai’i has the 10th-lowest foreclosure rate in the nation.  In the mid-1990s, Hawai’i foreclosures ranged between 4,000 and 5,000 a year, said Nick Ordway, professor of Financial Economics & Institutions at the University of Hawai’i and chair of Hawaii Real Estate Research & Education Center at UH. When told of the 145 Hawai’i foreclosures last month, Ordway said, “That’s nothing”.  Hawai’i has maintained a relatively low foreclosure rate thanks to mostly stable home prices and a strong job market. Local lenders also say Hawai’i borrowers generally were more conservative, and didn’t take out as many of the riskier loans compared with some Mainland markets.

Now that tripling of home foreclosures doesn’t look as bad now does it?  I was at the counter at the gas station today and the clerk looked down at the newspaper I was buying and more specifically at the headline of this article and said, “Good thing I don’t own a home.  I don’t have to worry about that.”  Thanks for the laugh.

Yes, there is a problem, but it isn’t nearly as bad as the headline would make you think or as bad as the news coming out of some areas like Michigan, but then again, who wants to live in Michigan?