How is the market in Hawaii? (for sale, foreclosures, renting)

[smilingfarmr]

Is Hawaii seeing the high foreclosure rates being seen in FL, CA, etc?

Just curious...

[Steve40th]

Nope, Because they sell it right back to one of the other 2 families living in the house. So foreclosures wont be as dramatic as mainland people.

[whynot?]

While foreclosures are up statewide, there's hardly a panic. I think Hawaii remains in the bottom 20% of states affected by foreclosures. The rates reported in the local papers are increased -- for Hawaii -- but hardly when compared to other states' numbers.

[hotzcatz]

A lot of the mortgages here were "jumbo" mortgages because of the price of the houses so the mortgages had the higher loan requirements for jumbo loans versus the lower priced "sub-prime" loans. A lot of the foreclosures are investment properties and not homes folks are living in, although some are people's homes. There are still lot of folks in a world of hurt by rising mortgage payments. I know of some folks who just walked away from their mortgage as well as some folks that are barely scraping by and probably have about a 20% chance of holding onto their house.

I've heard some cities have whole blocks of houses vacated and then razed when the cities weren't able to keep the area secure. So far, that hasn't happened here. House values are dropping but even the foreclosure prices are still way above the values. Banks are very reluctant to write off the mortgages and the houses are just sitting there with "for sale" signs on them.

I'm seeing a new trend of folks taking their houses off the market since they aren't selling and renting them out instead.

[Steve40th]

I am going to sell mine next year. I will ask a fair amount, and hold out till it sells, as I could care less about the market. If people come here, to Hawaii, thinking its a buyers market, they are in for a surprise. These are the most expensive trailer homes on conrete slabs I have ever seen.
Actually, land value is generally worth more than the home.

[alohakat]

Originally Posted by hotzcatz

A lot of the mortgages here were "jumbo" mortgages because of the price of the houses so the mortgages had the higher loan requirements for jumbo loans versus the lower priced "sub-prime" loans. A lot of the foreclosures are investment properties and not homes folks are living in, although some are people's homes.

Actually the jumbo mortgages had no stiffer requirements in California at least (and I presume loans in Hawaii had similar lender guidelines -- they wouldn't have changed things that much state to state), and before this mess Jumbo's could be had with Stated Income also along with a couple of bank statements and a decent credit score, usually at that time of 640 or higher. It was Alt A and A paper that had the stiffer requirements, not Jumbo. Jumbo just had higher interest rates. In California we saw more people doing what was referred to in the industry as "2/28's" -- 2 year fixed loans, along with "Neg Am" loans or "Pick a Pays" -- the ones where you could choose from 4 different payment amounts each month, one not covering interest. It was the 2/28's and the Neg Am's that got us into this mess, for if people had chosen loans they could afford that were fixed for a long time, they wouldn't have had to bail at the reset time when there wasn't enough equity to refi.

How much Hawaii is affected will depend on the percentage of the population that chose 2/28's and Neg Am's to fund the purchase, whether investment or primary residence. No matter which, they will need to refinance before or by the reset time, and if those reset times are still largely coming and if there is a significant amount of them, there will be more foreclosures and more decline of pricing. Hopefully there are not many in their primary residence, because that is heartbreaking to see.

If someone had stats on the kinds of loans still sitting in the Hawaiian market, we could determine how long until Hawaii hits bottom. In California, there are another bulk of resets to come in 2009, and a smaller set in 2010, so then we should start to see daylight (as long as there are still banks left to lend!).

Edit: Quickly checking on the national "Loan Reset" updated timeline, it is subprimes that are finishing a bulk of resets in 2010, and now that A paper is coming into play in this mess, the scene drags on further through 2011, shown by graphs such as this one (where we are at about the number 22 month along the bottom of the graph from what I can tell; the gray bars show subprime, and the green bars show "Option Arm's" or "pick a pays" and some of these loans may have already been called if they've reached their max neg am amount already):
http://www.irvinehousingblog.com/wp-content/uploads/2007/04/adjustable-rate-mortgage-reset-schedule.jpg (broken link)

[alohakat]

And I will add that the remedy from lenders of "fixing" interest rates is aiding such a small percentage of those in distress that up to now it is not having measureable positive impact on the situation. Perhaps that will change, we'll have to wait and see. But to really fix the situation, they need to convert to 30 year fixed for the client at the payment they can afford, not just a year or two which only postpones the inevitable, and I've not heard much of that 30-year conversion at the initial teaser rate happening. The quoted rates are too high to help from those I've heard. So that life boat doesn't seem to be really sailing, but again, perhaps that will change.