The number of completed foreclosures in the state of Hawaii decreased substantially in the third quarter of 2010. This is one of several indications that the economy of Hawaii, in particular the Hawaii real estate market, has started to recover more strongly.
According to a December 2, 2010 report from Pacific Business News:
Third-quarter foreclosure sales in Hawaii fell by nearly 25 percent from the previous quarter, mirroring a national trend, according to a report from RealtyTrac. There were 404 foreclosure sales — homes that either were repossessed by the lender, or in default and scheduled for auction — during the three-month period from July through September. That’s 24 percent fewer sales than the second quarter of this year, and 28 percent fewer sales than the third quarter of 2009. Foreclosure sales accounted for more than 12 percent of all home sales in Hawaii during the third quarter, with an average price of $353,540, which represented an average discount of 25.5 percent when compared to properties that weren’t in the foreclosure process, according to Irvine, Calif.-based RealtyTrac. Nationally there were 188,748 foreclosure sales during the third quarter, a 25 percent decrease from the second quarter and a 31 percent decrease from the year before.
This decline in homes foreclosed on is particularly curious, because it coincides with record-high levels of foreclosure activity. According to a December 2, 2010 article in the Honolulu Star-Advertiser, this might have been the result of a larger, national trend or a reaction to earlier scandals in the foreclosure business.
The report by Andrew Gomes states:
Even as foreclosure activity in Hawaii reached a record high in the third quarter, the number of homes sold out of foreclosure declined. California-based RealtyTrac suggested the drop in sales of distressed homes was part of a national trend due, in part, to a general drop in home sales activity during the third quarter after the expiration of a federal tax credit. RealtyTrac said sales rose in only three states for which it had data. Sales declined in 36 states. RealtyTrac didn’t have sufficient data for 11 states. Another factor likely was improper foreclosure processing by some lenders that led them to halt sales in many states, including Hawaii, late in the quarter. The decline in foreclosure sales occurred despite a 48 percent rise in the number of foreclosure actions against Hawaii properties in the third quarter. The drop in sales followed an 81 percent increase in second-quarter foreclosure sales to 526 from 290 in last year’s second quarter. RealtyTrac’s report covers two kinds of foreclosure sales — sales by lenders after they repossess homes, and short sales in which homeowners facing foreclosure get lender approval to sell their homes, often for less than the outstanding mortgage. The average price for all third-quarter Hawaii home foreclosure sales was $353,540. RealtyTrac said that was 26 percent less than the average for all nonforeclosure home sales in the quarter.
Despite lingering uncertainty about single family home sales, government officials are expressing confidence that the state’s economy will improve in the upcoming months and years. This is especially good news for the Hawaii real estate market, because it means that Hawaii homes and condos for sale will likely be sold at a higher rate as the economy improves.
According to a November 19, 2010 piece from Bloomberg Businessweek:
State officials are more optimistic about Hawaii’s economic forecast this year and next. The Department of Business, Economic Development and Tourism said Thursday that it expects increasing tourism arrivals and spending will help speed the recovery of Hawaii’s economy. Department Director Theodore E. Liu says he’s pleased to see most economic indicators showed positive growth during the third quarter of this year. He says the growth of the two largest industries — tourism and the federal government — is “very healthy.” Liu says the state is expecting more than 7 million visitors this year, and with the increase in federal spending, Hawaii’s economy continues to perform better than the nation in many major areas.
There are, however, lingering negative effects of the recent recession in the commercial and industrial real estate sectors. A December 4, 2010 article in the Honolulu Star Advertiser noted:
A shakeout in Hawaii’s saturated self-storage market has begun, with a large project in Kapolei changing hands after financial struggles. Local self-storage facility operator Hawaii Self Storage recently acquired Aloha Island Self Storage in Kapolei after the 100,000-square-foot complex was repossessed by a lender in August. The purchase is a second example of self-storage industry consolidation on Oahu, following a purchase of a Waipio facility in August by national giant Public Storage. Some industry observers predict there will be more consolidation as stronger competitors acquire weaker rivals in a market that was saturated or overbuilt just as a recession unfolded. Hawaii’s self-storage market for most of the last decade was viewed as dramatically underserved, which led developers to build new facilities at a rapid pace. The amount of self-storage space in Hawaii doubled from 1.56 million square feet in 2005 to 3.16 million square feet this year, according to a report by local real estate appraisal and consulting firm Lesher Chee Stadlbauer Inc. But the recession reduced demand for storage space and has prompted some self-storage facility owners to significantly discount prices.