Monday, January 9, 2012

Foreclosures in Hawaii

We follow foreclosures, short sales, and regular real estate transactions on Hawaii Island by watching the MLS, newspapers, websites like, and attending auction sales. Recently, we have noticed a substantial change in the island’s real estate market from numerous federal organizations liquidating a large number of local properties.

Properties are being offered by the Department of Housing and Urban Development (HUD), Fannie Mae, Freddie Mac, the Department of Agriculture, and other federal organizations from their websites. Most of the organizations have rules as to who can purchase them, giving preference to owners that occupy the properties over property investors. Financing is offered, but has special requirements to qualify. In most cases, the properties we see are being offered at substantially lower prices than sales by owners, short-sales, and bank-owned property sales in the same neighborhoods and condo complexes.

The liquidation of properties by the US government agencies seems to be creating a secondary and somewhat hidden real estate market with lower prices than properties being offered by owners and banks. In order to get a handle on the real estate situation and prices on the island, we are dependent on real estate and federal websites to assess the number of properties on the market and the actual sales transactions. We find it disturbing to find conflicting data on various websites. For example, shows 545 foreclosed properties available from HUD on the island of Hawaii whereas the official HUD website shows only 2 properties available. Some of the listings on websites “disappear” as you try drill into the data about the property or the price goes up dramatically. The website that we have found to be the most reliable is the by Fannie Mae. Over the past 6 months, the website has listed up to 3 homes a day. In most cases, the properties quickly change status to “under contract” to buy. The fast turnaround may be why other websites are less reliable, because they cannot or are not willing to remove the listings as they go under contract.

Our best guess is that these are properties that went through foreclosure years ago, were sold by the banks to federal agencies, and are finally coming on to the market. Many people we talk to that are looking at real estate on the island are not even aware that these properties exist. Most of the buyers in the area are folks from Canada and Europe looking for ways to obtain assets with their local currency or boomers looking for retirement homes. Cash sales seem to be the most common transactions, so the lower valuations of properties from the federal house sales do not seem to be a concern or even noticed.

Though prices of real estate are lower than we have ever seen them, the fact that they are being purchased so quickly seems to indicate that the appeal of having property in Hawaii is as strong as ever. The question we have is how much inventory is there to go through. Since Hawaii real estate is a limited commodity, prices will most surely go back up once the federal inventory runs out.

Recommended websites: (Fannie Mae) (HUD) (Freddie Mac) (VA homes) (FDIC homes (IRS sales) Army Corp of Eng) (Treasury Auctions) (USDA property sales)


Hawaii the Big Island just ranked #1 in the WORLD said...

Great blog, I am a Realtor on the Kona side, and are sales are stronger than they have been in years, in fact you have to go back to 2006 to find more sales than we had in 2011

notjonathon said...

Realtor didn't mention that prices are down.

You may find that many of those foreclosures are being clandestinely sold at fire sale prices to insiders who intend to resell them (flop-flip?). That means they will be back on the market in the near future. I wouldn't count on a really rapid recovery.

notjonathon said...

I should add that, according to Trulia, sales are down 22% year-on year, and price per square foot is down over 7%. Some 55 homes were sold during the period Oct. 24-Novv. 23 (the most recent period covered), and a number of those recorded "sales" were actually foreclosures, which are counted as sales.
Add to that continued unease over the world economy, a protracted foreclosure process as a result of Hawaii's requirement for judicial review, as well as future shortages of jet fuel and you have a recipe for years of slumping prices.

Dave Velasco said...

This could probably be just the start for more foreclosures and changes in the real estate market for 2012.

With sales going up and down, I think this year would be quite a good stabilizing year for more sales that we need to wish to come. Also, the fact that a lot of individuals are getting courses at different real estate school and online universities where they took their chances of being involved in the housing market.

foreclosuresus said...

Great information! Very useful and

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