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Steady Rise in Hawaii Foreclosure
In times like these, the last thing anyone wants is more bad news. With the economic recession affecting countries around the globe and with the recent spread of the H1N1 virus, everyone wants to hear some good news for a change. Unfortunately, economic downturns and worldwide influenza outbreaks have widespread effects, and Hawaii is still experiencing the impact and consequences of both those occurrences. The most recent effect on Hawaii has been a steady rise in local foreclosures.
With families around the country having less disposable income to spend on traveling and vacations, Hawaii’s tourism industry has suffered. This decline in tourism has been further exacerbated by Japan’s depressed economy as well as the effect of H1N1 or swine flu on the number of tourists arriving from Japan. In fact, the University of Hawaii Economic Research Organization (UHERO) estimates that the number of total visitors to the state will drop from 6.7 million in 2008 to 6.25 million this year, a decline of 6.8 per cent. Also, the occupancy rate for Hawaii hotels is expected to stay below 70 per cent for the next two or three years, with this year’s occupancy rate averaging 66 per cent.
Unsurprisingly, this drop in tourism is contributing to rising unemployment rates and declining personal income. A significant decline in the construction industry is also having a major effect on these falling rates. And together, all of these problems have led to Hawaii having the 15th highest number of foreclosure filings per household in May, the state’s worst ranking since RealtyTrac began reporting foreclosure rankings in January 2005. Specifically, Hawaii had 816 foreclosure filings in May, which is equal to one foreclosure filing for every 621 households. Of this total number, 399 were Honolulu foreclosure filings while the Big Island had 168 filings and Maui had 171 filings.
While 816 foreclosure filings is still better than the country’s national average of one filing per every 398 households, it represents an approximately fivefold increase as compared to May 2008. However, it’s important to keep in mind that RealtyTrac’s data includes commercial properties such as condotels and time-share units. With the recent decline in tourism, many of these properties have been affected by foreclosure. Also, not every foreclosure filing leads to the homeowner losing their home as some homeowners are able to resolve the situation before that happens, either by paying the default, refinancing or by selling their home.
Of course, looking on the bright side, for purchasers who are in the market for distressed properties, there are many opportunities for great deals at the moment. Moreover, despite all of the recent gloomy forecasts, the situation is not completely devoid of hope. Economists believe that the United States is reaching the trough of a business cycle and that national economic recovery is on the horizon. While Hawaii will likely lag somewhat behind national progress as a result of state contraction, it has been predicted that the start of a trend toward Hawaiian economic recovery is not far off.