Foreclosures account for 21% of all Hawaii home sales

Mortgage finance companies were busy selling Hawaii homes caught up in foreclosure during the second quarter, according to a report released today.

One of every five homes sold during the April-June period statewide were sold by lenders, the report from real estate research firm RealtyTrac said.

The volume of foreclosure sales totaled 743, or 21 percent of all home sales in Hawaii in the quarter. That was up from 526 foreclosure sales representing 10 percent of the market a year ago and 362 foreclosure sales or 14 percent of the market in the first quarter.

The second-quarter increase ran counter to a national trend, as Hawaii was one of only nine states with a year-over-year rise in foreclosure sales out of 42 states for which RealtyTrac had sufficient data.

It’s unclear whether Hawaii’s increase was in part spurred by lenders trying to beat the enactment of a new state law that prohibits repossessing homes or filing new foreclosure cases against owner-occupants until a foreclosure mediation program is running.

The law took effect May 5. The mediation program is expected to begin by Oct. 1.

Many of the second-quarter foreclosure sales were in the works long before the law took effect.

RealtyTrac counts two types of foreclosure sales: homes in foreclosure that are sold by homeowners with lender approval before an auction, and homes sold by lenders either at auction or afterward.

Owner sales, also referred to as short sales, represented 274 of the second-quarter sales, and were in foreclosure for an average of 236 days before selling. Lenders sold 469 homes that took, on average, 138 days to sell after being repossessed.

The average price of all Hawaii foreclosure sales — single-family homes and condominiums — was $347,428 in the second quarter. RealtyTrac said that was 24 percent less than the average for nonforeclosure sales. In the second quarter of 2010, the average discount on foreclosure sales was 13 percent.

The discount, however, can be influenced by a variety of factors including the condition, size and location of homes sold, which muddies comparisons between foreclosure and nonforeclosure property values.

Still, foreclosure sales affect the housing market, in some ways helping attract buyers but also generating downward pressure on prices.