Kauai Foreclosures Not Just for Subprime Borrowers
There has been so much publicity over the last year about the implosion of the Subprime loan market,Â Alt-A Type of loans, and Pay-Option ARM loans. Investors who purchased in the islands often procured these types of riskier loans. Today I saw a Houston Chronicle article with some great statistics about the increase in foreclosures in the jumbo loan arena, for Kauai this means any loan above $722,000. It appears that the number of Kauai foreclosures for expensive properties is continuing to increase.
According to Princeville foreclosure data compiled by RealtyTrac, the number of U.S. homes valued at more than $729,750 entering the foreclosure process jumped 127 percent during the first 10 weeks of this year from the same period of 2008. The rate rose 72 percent for homes valued at less than $417,000 and 78 percent for all homes.
Just this week a new Princeville REO listing went on the market. This 4 bedroom home is located on Kaweonui Rd. The Princeville home was purchased by a gentleman in 2006 for $1,015,000 and many upgrades were added to improve amenities including a certified hurricane shelter at the rear of house. I went to a seminar last year where a company was offering and promoting fractional ownership of this same home. The 2 month fractions were placed on the market for $260,000 (fractional ownership is gathering momentum on Kauai, but the current market has effected interest in fractional properties and limited financing options). If the owner had succeeded, he could have grossed $1.56 million made a 30-40% profit on his investment. That’s pretty typical for a fractional developer. Unfortunately, the owner got foreclosed on. When the property listed two days ago, the listing price was $679,000. That’s almost a million below the potential top-end of what the Princeville home could have sold for.Â The next day, 3 offers arrived for the newly listed REO home on Kauai’s North Shore.
As more homeowners are subject to their loans adjusting we will continue to see more of these REO properties in this particular niche of the market. This will continue to create some excellent values for buyer’s. Subscribe to my newsletter on my website to receive instant notification of these deals.