Mortgage delinquencies in Lahaina and surrounding areas spiked in the aftermath of last year’s Maui wildfires, far surpassing the highest levels reached during the COVID-19 pandemic, according to a preliminary review of loan-level data by the University of Hawaii Economic Research Organization.
As UHERO data scientist and research economist Daniela Bond-Smith noted, many Lahaina homeowners still have mortgages on properties that were damaged or destroyed by the fires.
“As of the 2020 Census, almost three-quarters (74%; 1309 out of 1773) of Lahaina homeowners did not own their home free and clear,” Bond-Smith wrote in a report posted to the UHERO blog. “Even with various housing assistance programs in place, additional costs for temporary shelter and daily expenses are mounting for displaced West Maui residents, and it is no surprise that many of them struggle to make regular mortgage payments.”
Analyzing proprietary data for the 96761 zip code compiled by the mortgage and real estate analytics company Black Knight, UHERO found that 296 mortgages were delinquent sometime between August and November 2023. Only 17% of these delinquencies had been carried over from the month prior to the August 8, 2023 fires.
The biggest spike occurred in September 2023, eclipsing the peak of delinquencies in November 2020. UHERO called the jump “the most severe in recent history.”
UHERO noted that while new delinquencies trailed off in October and November 2023, the overall number of delinquent loans remains high.
“Further data analysis shows that once mortgages in Lahaina had become delinquent, homeowners tended to remain unable to make payments,” the report stated. “Only 30% of the mortgages that had become delinquent in the aftermath of the Maui wildfires have become current again by November 2023, the end of the reporting period. All the while, arrears balances have climbed over time.”
According to the Black Knight data, the median arrears balance for Lahaina mortgages that have become delinquent since the Maui wildfires and remained delinquent for four months was $9,360.
“With the majority of mortgages remaining delinquent over time, the balance in arrears will keep rising,” the report stated. “Over the four-month period observed in the data, the total arrears balance for mortgages in Lahaina that have become delinquent since the Maui wildfires already stands at more than $1,200,000.”
Acknowledging that the period examined was short and that more data is needed to predict future trends, UHERO said it is likely that affected families will experience financial difficulties “for the foreseeable future.”
Michael Tsai covers local and state politics for Spectrum News Hawaii. He can be reached at michael.tsai@charter.com.