Texas sees jump in home foreclosures

[TexasLawyer]

http://www.texasrealestate.com/web/3/36/index.cfm

Texas sees jump in home foreclosures
By Stacey Lawson, ISSUES columnist

While the nation’s housing market continues to remain strong, home foreclosure rates are on the rise. According to the Homeownership Preservation Foundation (HPF), approximately 2.9 million foreclosures have been initiated in the U.S. within the last five years. After two months of decreases, the rate of foreclosures in Texas jumped nearly 200% in January 2006 – a statistic I found shocking!


<snip>

Texas ranks fourth behind California, Florida, and Illinois in preforeclosures. Active foreclosures are foreclosed properties sold at auction and now in the lenders’ real estate owned accounts. Texas holds the top seat in active foreclosures. While being number one is something Texans usually strive for, in this case we’d prefer to be much farther down the list.

<snip>

Why is this happening?
One reason Texas ranks at the top of active foreclosures is our low home-price appreciation. According to the Real Estate Center at Texas A&M, Texas’ rate of home appreciation is the lowest in the U.S. While this can be good for the housing market in general, it may be bad for consumers who find themselves unable to make their monthly mortgage payment. In states such as California and Florida, homes have been appreciating at an astronomical level (hence the “bubble” talk we keep hearing about). In these states, homeowners who find themselves in stage two of the foreclosure process have a significantly higher probability of curing the default by selling – and possibly making a profit – than do Texas homeowners.

In addition, Texas ranks a woeful 45th out of 50 states in homeownership. As a result, many buyers today are first-time homebuyers who – to qualify for a loan – took advantage of the more-creative lending practices. With record-low interest rates and more-liberal underwriting criteria, many homebuyers opted for nontraditional loans, including interest-only and adjustable-rate mortgages. While a number of first-time homebuyers were able to get into homes, it seems that many are unable to keep them because of high property taxes, homeowner’s insurance, basic maintenance and upkeep, and the amortization of the nontraditional loan.

There is another important factor in the high rate of home foreclosures in Texas: valuation of new construction. <snip> Typically in the first year, property taxes for a home in a new development only account for the land the home sits on. After the first year, that property is reassessed and both the land and home are appraised. Based on the new value, many homeowners find themselves paying hundreds of dollars more each month – a change for which they are unprepared.

<snip>

Stacey Lawson is public relations manager with the Texas Association of REALTORS®.

[Warpy]

1. Foreclosures are up everywhere

and houses for sale are staying on the market forever.

The boom is over. Whether it leads to a total bust is anyone's guess. I'm hoping for a slow slide. A real bust would devastate too many people.

[bedpanartist]

2. Hey Southerners, welcome to what we rust belters have been experiencing

for 30 years now.

My county in Ohio, Montgomery, leads the nation in home foreclosures. The number of which has absolutely devastated neighborhoods everywhere.

We're all going to have to end up beating the shit out of CEOs of homelending institutions if we want anything to ever change.

[newyawker99]

4. Hi bedpanartist!!

Welcome to DU!! :toast:

[bedpanartist]

7. Howdy

why thank you very much.

[DBoon]

3. "Texas ranks a woeful 45th out of 50 states in homeownership"

so much for the ownership society

[Mizmoon]

5. When I was looking at houses in Texas

I was stunned by the choice and low costs. Their construction companies are so efficient that it's tempting to buy new rather than buy a resale. That must be hard on sellers.

[hatrack]

6. Love the way ol' Stacey puts "bubble" in quotes, don't you?

:eyes:

[Dr. Jones]

8. This article is accurate.

Home values in Texas have not appreciated very much at all. Austin is the exception, but it's still affordable compared to the bubble cities. Here in Dallas, home values have remained steady with not much of an increase at all. And yes, property taxes are high - and in some of the growing suburbs such as McKinney and Frisco, property taxes has SKYROCKETED.

One interesting thing the author didn't mention is the fact that Texas cities such as Dallas/Fort Worth have a ton of land to build on. While Austin is hill country, cities such as Houston, Dallas, Amarillo, and Corpus Christi are relatively flat and expansive. Thus there's so much land to build on, which stands in direct contrast to NY, DC, Boston, LA, etc. where there's little or no land left to build on.

[Reciprocity]

9. .

According to the Real Estate Center at Texas A&M, Texas’ rate of home appreciation is the lowest in the U.S.

Yes my school taxes are based on the on my homes value. So yes it would be to their advantage to keep deprecation of my house low.

And one other thing you see advertised all the time on tv about getting loans to pay off your credit cards. The underlying factor for these loans is you must be a home owner. It used to be in Texas this was illegal.