Melody Wright writes about mortgage finance and real estate markets. She wrote a Substack article titled Paradise Lost about Hawaii (16 June 2025).
« I talk ad nauseam about the short-term rental infestation. I don’t often get a chance to talk about the cultural destruction that accompanies it and what it does to local communities. »
« The median listing price in Hawaii is $770,000 and the median household income is $98,317. A household making $100K a year could safely afford a mortgage for a home priced around $400K assuming a 20% downpayment and relatively low outstanding debt, using the Fannie Mae affordability calculator. »
« In Q4 2024, debt-to-income levels for the Fannie Mae portfolio are at 38%, just about where they were in Q4 2006… But, what of those lower delinquency levels today versus 2006? That’s because Fannie Mae and Freddie Mac have been doing non-performing loan sales since 2015 to push those delinquent loans to the shadows where often they are not reported to credit. »
« For those not paying attention, what’s happening (and happening quickly) in Hawaii should be a wake-up call and an object lesson in the danger of stimulus and speculation gone wild. Like many destination spots, Hawaii featured large in our COVID fever dreams. Recently, one of my colleagues who has been researching Paycheck Protection Program (PPP) loan forgiveness and home purchases to uncover potential fraud, dove into Maui. This colleague has been working with authorities uncovering fraud in other locales across the country through elbow grease and data analysis. This is no small feat as each county does things a little differently and often the technology is abysmal. What was shared is concerning and similar to what has been found in other cities – evidence that home purchases were made using funds meant to pay employees. And, even if the funds themselves were not directly used for the purchase, these folks certainly were not hurting, calling in to question why the $757 billion in PPP loans were forgiven if they could have been paid back. And, if the loans were paid back how many home purchases would not have been made and would home prices have had such a meteoric rise? »
« Superprime trouble is also evident with multiple, recent foreclosures on homes priced above $8M. »
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