Here are 3 reasons in my opinion why foreclosure rates are low in Hawaii:
1. It is Hawaii. Especially this time of year, you see all the news about bad weather, snow storms, floods, etc. on the mainland. I think people work harder to keep a home here in paradise with good weather.
2. You can't just pack up the car & drive to another state. To move back to the mainland, takes time & money, most of which people going into foreclosure don't have. Better off trying to make it work here.
3. We are not a Non-recourse state. There was a great article put out the AP featured in our Sunday's Honolulu Advertiser. It made a lot of sense & shed light on why states that have non-recourse laws have higher foreclosure rates. Those states are Alaska, Arizona, California, Connecticut, Florida, Idaho, Minnesota, North Carolina, North Dakota, Texas, Utah and Washington. Homeowners in those states are more likely to "walk away" from their home because apparently the lenders can't sue them & go after other assets. That's why there's more foreclosures there & not here. That's also why you can get a better deal on foreclosures there vs. here.
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David-I would argue that a huge factor is a lower level of sub prime financing. Take for instance the vacation rental condo market, few people were able to get away with 100% financing due to condotel loan requirements. Down payments of 25% down kepy means fewer owners who owe more than their condos value. On Maui, I would also argue that slower approval processes for development kept us from having as many purely speculative developments. I know of places in areas like Arizona and Florida where developers were throwing up developments that ended up having very limited occupancy. The majority of the buyers were flippers and investors. When appreciation stopped and the market slowed, these flippers were stuck and many couldn't make payments.