Hawaii homeowners are getting further underwater on their mortgages as the rest of the country is gradually making its way to the surface.
While foreclosures around the country are helping to thin the ranks of U.S. homes with mortgages that exceed what the properties are worth, a new report released yesterday shows that Hawaii homeowners are digging a deeper hole for themselves.
In Hawaii, 24,765 of 230,548 homes with mortgages — or 10.7 percent — were underwater at the end of June, according to real estate data provider CoreLogic. That’s up from 22,594, or 9.8 percent of 230,248, at the end of March.
Another 8,204 Hawaii homeowners with a mortgage at midyear had less than 5 percent equity in their home, making them more likely to end up underwater if home prices drop further. There were 7,751 at the end of March.
But it was a different story nationwide.
At the end of June, there were 11 million homes in the U.S. underwater, down from 11.2 million at the end of March. That represented the second consecutive quarterly decline.
The number of underwater mortgages typically rises when home prices are falling.
Foreclosures, rather than rising home prices, accounted primarily for the declines.
"They basically were just flushed out of the system," said Sam Khater, CoreLogic’s senior economist. "There is a small decline and that’s good news. The bad news is it’s occurring via foreclosures."
The higher the number of homes with underwater mortgages, the greater the probability of more defaults.
In all, 23 percent of U.S. homes with mortgages were underwater at the end of June. Another 2.4 percent of homeowners with a mortgage had less than 5 percent equity in their home.
The total number of underwater mortgages represent roughly $2.9 trillion in mortgage debt, according to the firm.
Years of falling home values combined with longtime homeowners borrowing against the equity in their home has left millions owing more on their home than it’s worth.
The majority of the underwater mortgages are concentrated in five states: Nevada, Arizona, Florida, Michigan and California. Among those, Nevada had the highest rate at the end of June, with 68 percent of its residential mortgages underwater.
In Honolulu, 13,272 of 162,307 homes with mortgages — or 8.2 percent — were underwater at the end of June. Another 5,516 homeowners with a mortgage had less than 5 percent equity in their home. CoreLogic didn’t have any Honolulu data for the first quarter.
The Associated Press contributed to this story.