Hawaii foreclosures hit a record 990 in July

Hawaii broke the record in July, foreclosing on 990 homes, a 332 percent increase over a year ago, according to the RealtyTrac U.S. Foreclosure Market Report.

A year ago, Hawaii's foreclosure rate ranked No. 40 in the nation, but by May 2009 Hawaii leapt to No. 15 -- its highest ranking since 2005 -- and it held that position through July.

With the densest population of all counties, Honolulu had the largest number of July foreclosures, at 542. However, given the number of foreclosures per housing units, Maui County leads the state. The 180 foreclosures generated on the Valley Isle last month means one in every 361 housing units is affected by foreclosure activity. In Hawaii County it was one in every 394; for Kauai, one in every 411; and in Honolulu, one in every 618 homes.

For the entire state, one in every 512 housing units was in foreclosure in July. By comparison, Nevada had the highest foreclosure rate at one in every 56 units.

Despite the gloomy foreclosure record, glimmers of hope have shone through recent economic reports, including one yesterday by the National Association of Realtors. Second-quarter sales of existing homes were up over the first quarter in the majority of states and price declines increased affordability in most metro areas, the group said.

Still, RealtyTrac said there is "a sense in many areas that we're seeing a false bottom. People have been snatching up properties ... at what they think are rock-bottom prices, but you may have this whole new wave of foreclosure inventory coming online that people aren't really taking into account as they make their purchase decisions."

The biggest increase in Hawaii foreclosure activity in July was in homes taken back by banks. Eventually, those will be put up for sale, creating another wave of homes hitting the market and forcing down prices.