Texas Foreclosed Homes
Dallas, San Antonio, Austin, and Dallas-Fort Worth may be in the top ten of the Forbes list of "America's Recession Proof Cities" (announced in spring 2008), but it has not exempted them from experiencing a sizeable increase in foreclosure activity. In fact, foreclosure filing activity in Texas during the first quarter of 2008 increased between 20% - 28% from the first quarter of 2007 (based on two industry sources). There were over 20,000 foreclosures in Dallas alone in 2007. In North Texas, more than 25,000 homes have been scheduled for foreclosure so far this year.
But Texas has fared much better than other states in the country. Texas has a relatively stable foreclosure rate, with about one in every 800 households receiving some sort of foreclosure filing during the month of May (vs. California which has a rate of approximately one in every 200 households). The national foreclosure rate is one in every 520 households.
Counties hit the hardest in Texas include Rockwall, Denton, Johnson, Kaufman and Collin. Counties with the least percentage increase in foreclosure postings were Parker and Grayson.
Housing Wire, a mortgage finance insight publication, cites a unique dilemma in the mortgage crisis that coastal Texas faces: With hurricane season ramping up, vacant foreclosed properties may be ill-prepared to handle a storm. There are more than a half a million properties in hurricane prone states (from Texas to Maine) in some stage of foreclosure standing empty. Foreclosed homes that are either poorly maintained or otherwise left vulnerable to natural forces present a risk to neighboring properties. Unfortunately, during housing's extended downturn, many lenders are unwilling to invest the money needed to properly secure a property against possible hurricane damage.
Other areas in the state such as Dallas and nearby Plano face different challenges. Dallas and Plano have a high percentage of luxury foreclosure homes on the market. Several of these high-end foreclosures resulted from builders who took on more than they could handle with expensive spec homes they were unable to sell once the real estate market began to cool. While this was definitely bad news for builders, it presented homebuyers and real estate investors with multiple opportunities to buy luxury homes at severely discounted prices.
Many experts say that the Texas foreclosure properties are actually providing some immediate stimulation to the local economy by creating opportunities for investors to come in and buy homes at discounted prices. One example is Dallas. Properties in the Dallas area are selling at approximately 15% - 20% under value, but rents continue to climb. It's providing investors with positive cash flow opportunities and provides some much needed uplifting news in the overall negative housing market at this time.