The Bad and The Ugly

Remember The Good?  If so, keep in mind that Texas looks pretty good and, when compared to the rest of the country, Texas looks pretty darn good!  If not, you'll need to read the previous blog regarding Texas' economic outlook and the greater Houston area housing statistics. 

According to Realty Trac, a foreclosure listing firm, banks took back 421,212 homes the first half of this year, down from 529,633 in the first six months of 2010.  That's a 30% decrease.  However, this decrease does not indicate a recovering housing market but merely a delay in filings. 

Lenders are taking longer to file against homeowners in order to work through the foreclosure documentation problems and allowing the delinquent homeowners additional time to catch up on their payments.  So far, lenders have been careful not to dump all of their foreclosed properties on the market at one time and they have financial incentives to keep it that way.

As the foreclosure processing delays increase, so does the backlog of homes that should have been repossessed by lenders this year.  It is estimated that 1 million foreclosure-related notices that should have been filed by banks this year will be pushed into next year.  The filings include notices for default, scheduled home auctions and home repossessions. 

Nationally, it's taking an average of 318 days to go from the first stage of foreclosure to finally being repossessed by the lender.  New York has the longest process - an average of of 966 days.  Texas has the shortest - just 92 days.  Nevada leads the nation with one out of every 21 homes receiving a foreclosure notice while Texas is one out of every 1,041 homes.

Housing experts warn that the eventual foreclosures will happen next year, extending the looming "shadow inventory" of distressed properties even longer.  Some estimate that we won't return to a normal level of foreclosure activity until 2015 - delaying the housing market recovery by at least a year.

So how does the national foreclosure rate affect Texas and the greater Houston area housing market?  With the influx of people moving into our state and the greater Houston area, they will need to find housing.  However, if they cannot sell the home they're moving from, they will not be able to purchase one here.  Likewise, with the tougher lending requirements, fewer people are able to qualify for a home loan. 

Lease property in the greater Houston area has seen a substantial increase in June of 2011 compared to June 2010.  Single family home rentals increased 19.2% and townhouse/condominium rentals increased 19.5%.  People are moving into our area but for one reason or another, it appears that many are choosing to lease.