Archive for the 'Texas Articles' Category

The April tax credit deadline created both a positive and a negative trend in housing markets in the U.S. In Houston, the rush to beat the deadline resulted in higher number of homes sold and higher prices of dwellings. On the other hand, post-tax credit also saw rising number of Houston repossessed homes and increasing interest rates, which are both negative developments for the residential property market.

Furthermore, the month following the tax credit deadline also produced the concept of shadow inventory, or those repossessed homes in Texas that must be sold but have not even been included in foreclosure listings yet. According to market analysts, these homes that are under shadow inventory can hold back any recovery should they be introduced suddenly in the market in droves.

Majority of real estate analysts have formed the opinion that the impact of homebuyer tax credits on the housing market is a short term negative but will likely become a positive effect before the current year ends. According to some independent housing industry analysts, a mini-collapse is evident in the short term, but the market will also experience a mini-recovery by the end of the year.

The same analysts who believe that a short-term collapse and a long-term recovery are in the works also stated that the biggest problem facing the housing market right now is getting past the imbalance created by the tax credit. According to them, the incentive resulted in a 30% increase in home sales, particularly among repossessed houses for sale. However, this development only delayed the problem of paying mortgage loans for a few months and homebuyers will have to tackle this problem eventually.

The hangover from the tax incentive is, however, worthwhile; at least, according to some market observers. They claim that the credit stabilized the housing market during its worst period and created a steadier range of prices for Houston repossessed homes. The period following the deadline gave the local residential market its first price increase in about three years.

On the other hand, some negative developments are starting to become evident which market analysts are attributing to the introduction of the tax incentive. One of these is the slow but continuous rise of interest rates. Another is that the number of banks repossessions, commercial repo homes and distress properties are also rising and are set to hit the million mark before the end of 2010.

Another negative scenario is that over 25% of borrowers owe more on their mortgages than the worth of their homes. The worst among these negatives though, have nothing to do with repossessed houses for sale or loans borrowed by homeowners; it is the lurking problem of the shadow inventory.

Market analysts believe that there are more than four million homes nationwide, including hundreds of Houston repossessed homes, which have not yet been offered for sale on the market. If these homes are suddenly released on the market, analysts are predicting that the industry would have to forget the recovery that it is hoping for.

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As the percentage of Houston repo homes for sale dropped in February this year, home prices fell, based on sales figures from the Houston Association of Realtors.

Sales of foreclosed homes accounted for only 18.7 percent of all Houston houses sold in February this year, compared to foreclosure sales in February last year. This allowed the average price for single-family houses sold in February to rise to $203,271, up by more than 12 percent compared to the average price in February 2009.

The median price for single-family homes also increased year-over-year to $147,000, an increase of 6.5 percent from the price median in February 2009. The median in February this year marked the tenth straight month that the median increased over the previous month.

Another reason for the increase in prices is the huge number of higher-cost houses sold in February this year. According to association data, the sales performance of single-family houses priced $250,000 and above improved tremendously in February. While sales of all types of homes dropped year-over-year in February by 7.4 percent and sales of detached single-family houses fell by 5.8 percent, sales of higher-cost houses shot up by a double-digit percentage.

Additionally, the sales price median for repo homes for sale in Houston in February also surge to $86,000, an increase of 7.5 percent compared to the foreclosure sales median price in February 2009.

Although total home sales volume in February this year dropped by 4.6 percent year-over-year to 3,843 units, the total dollar volume increased by more than 5 percent to $747 million from $711 million a year earlier, as the number of higher-cost homes sold increased this year.

The HAR reported that sales of Houston homes priced in the range $250,000 to $500,000 spiked by 16 percent while sales of houses priced above $500,000 shot up by 15 percent.

According to another report from Associated Press and Re/Max, the Houston metropolitan area had the biggest increase in median prices among all Southern cities in February. The six-percent median price increase to $147,000 in Houston was higher than the nearly 5-percent increase posted by Washington, D.C. The Houston median was also higher than the median price in the South in February, which was $139,600.

Local realtors and real estate sellers hope that the percentage of sales of Houston repo homes for sale continues to fall so that the average and median prices continue with their upward trend.

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Dallas foreclosed properties in the commercial sector are soaring, based on data from a foreclosure listing service in Collin County, Texas.

Over 2,000 commercial buildings have been listed for the Collin County foreclosure auction on November 3, an increase of 10 percent compared to postings for the November auction last year.

The most recent commercial foreclosure was the four-level Times Square retail and apartment complex along Collin McKinnery Parkway. Among the nearly 250 commercial buildings in the Dallas area included in the Collin County foreclosure auction, the Times Square property was the most expensive.

The development firm failed to pay its loan of $44.48 million, which it borrowed in 2006 to complete the project. The lender, Bank of America Corporation, will sell the building at the November foreclosure auction, based on legal filings.

Another recent commercial foreclosure was a 24-year-old office building along Lakeside Boulevard at the Telecom Corridor technology business center in Richardson. The owner of the Telecom building failed to pay his loan taken out in 2007 that has grown to $24.75 million.

A warehouse in Mesquite whose owner failed to pay his outstanding loan of $25.7 million has also entered foreclosure. The warehouse was foreclosed by Compass Bank.

According to the listing service, the total value of all Fort Worth and Dallas foreclosed properties in the commercial sector that would be sold off in the November foreclosure auction has surpassed $482 million.

Nearly 2,000 commercial buildings in the counties of Dallas, Tarrant, Collin and Denton have been foreclosed, according to the listing service, over 10 percent higher than last year.

Housing analysts said that if commercial foreclosures continue at current pace, the commercial sector will face a serious problem.

Based on a report from Moody’s Investors Service, the values of commercial real estate nationwide have fallen by over 40 percent from their levels in 2007.

Because of the collapse of many business enterprises, vacancy rates in the commercial sector have soared despite substantial discounts in rental rates.

According to the National Association of Realtors and Torto Wheaton Research, vacancy rates in the retail sector in August ranged from six to 20 percent in 47 major metro areas while vacancy rates in the industrial sector ranged from 8 percent to 21 percent. The nationwide industrial vacancy rate was 13.6 percent while the nationwide retail vacancy rate was 12.1 percent.

In the second quarter of this year, more Texans have fallen behind on their mortgage payments. This created fear among industry experts who said that the increasing rate of delinquent loans could boost the number of foreclosure homes in Houston.

The pace of foreclosures in Central Texas continued to increase despite federal and state government efforts to help distressed homeowners, according to a Texas-based real estate research firm.

The number of foreclosed houses for sale continue to increase in Central Texas, although an increasingly large percentage of the increase are repeat listings by mortgage lenders that have not completed the repossession of foreclosed houses for sale.