Hawaii Housing Market Projection: Single-Digit, Steady Appreciation

Despite a continued run-up in home prices and declining sales, the Honolulu housing market - and all of Hawaii - rank near the bottom for foreclosures in a recent national survey.

Hawaii mortgage foreclosures could grow by as much as a third in 2007 as more consumers default on loans and lenders tighten their underwriting standards, according to projections released by RealtyTrac, a leading online marketplace for foreclosures.

But while Hawaii foreclosure rates have continued growing along with the nation as a whole, mortgage foreclosures still have but a limited footprint on the islands.

Continued price appreciation and strong demand for properties in the Hawaii housing market appear to have insulated the Aloha state from developing the foreclosure conditions that many mainland markets are experiencing.

“Typically when market conditions start to drive foreclosure rates, we’ll see a flattening or a depreciation in home prices which doesn’t seem to be happening there,” said Rick Sharga, marketing director for RealtyTrac. “If sales are still strong, that tends to keep properties out of foreclosure.”

The forecast for Hawaii’s real estate market in 2007 is single-digit appreciation for both single family-homes and the condo market, with a continued decline in sales volume in 2007, said Scott Higashi, V.P. of sales for Prudential Locations.

“The most obvious comparisons for Hawaii would be California and Florida, but even there, market conditions are very different,” Sharga said. “There aren’t a lot of places where real estate is growing or appreciating.”

Hawaii reported 59 foreclosure filings in February, a rate of one mortgage loan default per every 7,806 households, according to RealtyTrac.

The state’s foreclosure activity, which ranked 43rd in the new RealtyTrac rankings, decreased nearly 40 percent from the prior month but was up 7.27 percent from February 2006.

“Month-to-month variations need to be taken with a grain of salt,” Sharga said. “However, if Hawaii’s local economy stays strong, and unemployment and mortgage interest rates remain low, you should stay below average.”

Nationally, foreclosures are up 12 percent year-over-year.

“Based on our numbers for the first two months of 2007, foreclosure rates are running at a level that would project to a 33 percent increase over 2006,” said James J. Saccacio, CEO of RealtyTrac.

The report showed a national foreclosure rate of one foreclosure filing for every 884 U.S. households during the month. Nevada, California and Florida posted the highest foreclosure rates in the nation along with Georgia, Michigan, Tennessee, Ohio, Texas, Arizona and Indiana.

SOURCE: Honolulu Star-Bulletin