It’s “Getting Serious” In Texas
The Dallas Morning News reports from Texas. “Dallas-Fort Worth home foreclosure postings are still growing – fueled by higher payments on adjustable-rate loans and rising consumer debt. The latest statistics show that pending foreclosures in Dallas County are 12 percent higher than a year ago and foreclosure postings are up 16 percent in Tarrant County.”
“The 1,940 homes in Dallas County and 1,274 Tarrant County homes threatened with foreclosure are approaching record highs, said George Roddy, president of Foreclosure Listing Service. ‘This is getting serious,’ Mr. Roddy said. ‘This level is getting very close to the all-time records set in 1989.’”
“It’s often because of poor consumer choices, credit analysts say. ‘Some of them got into more house than they can afford,’ said Gail Cunningham with Consumer Credit Counseling Service of Greater Dallas.”
“While many analysts are predicting that the inflated housing market will have a ’soft landing,’ Ms. Cunningham said she isn’t as optimistic. ‘In the trenches where the real folks are, they are feeling the pinch,’ she said.”
“Mr. Roddy said he’s noticed some subtle changes in the types of loans facing foreclosure. ‘I’m seeing a little pickup in home equity loans, but adjustable-rate loans still lead the pack,’ he said.”
The Star Telegram. “The last time Tarrant County saw this many foreclosure postings, it was the late 1980s and the real-estate market had crashed.”
“This month, 1,274 Tarrant County homes were posted for foreclosure. What was the previous record? In November, 1,222 homes were posted. Is 1,274 a lot? Consider this: In the 12 months ending with November, an average of 2,350 homes were sold in Fort Worth, Arlington and Northeast Tarrant County combined, according to the Real Estate Center at Texas A&M University.”
“How do foreclosures affect home values? As homes are sold back to the lender, they are put back on the market. That means more competition in a market that has already seen slower sales the past four months.”
Inside Texas Business. “Anyone who owns a home knows about the residential real estate bubble that is on the brink of deflation around the country. When this so-called bubble is talked about, it generally refers to the rest of the nation. The bubble has not manifested itself in Collin County or throughout most parts of Texas.”
“‘As prices have inflated, the real estate market ballooned up and now air is coming out of the bubble. We did not blow up,’ said (broker) Betty Magee.”
“‘The other markets are overvalued and DFW is not. The appreciation has been minimal and there is a swing of investors and relocations moving to North Texas,’ said Daniel Frank, president of DFW Real Estate Group. ‘There should be a surge in housing this year, along with refinance due to adjustable rate mortgages that are now adjusting.’”
“‘The national news pushes it [the bubble] so much. We have not escalated in value so you are going to have to stay put for a while,’ Magee said.”
“The Dallas Morning News reported a 5 percent decrease in housing sales last week. ‘The softening was due to lending guidelines changing, over-building by the builders, eagerness to not hold inventory coming into Christmas and too much overall inventory. Please note, 2007 should be an increase year and I really feel that the bubble is for other markets, not ours,’ Frank said.”
“Lenders reported 27,649 single-family residential foreclosures in 2005 in Texas, according to Dr. James Gaines, research economist with the Real Estate Center. This number reflects only the sales in which lenders reacquired properties. The actual number is greater.”
“In November of 2006, foreclosures for Dallas increased by 67 percent, according to RealtyTrac’s report. The Dallas area, consisting of eight counties, reported 4,653 new foreclosure filings during the month, a foreclosure rate of one new foreclosure filing for every 286 households, 3.4 times the national average. Dallas returned to the top spot, a place held for almost a year.”
“Collin County reported 767 new foreclosures in November, a 114 percent increase from the 359 foreclosures reported the previous month.”
“‘The foreclosures, in my opinion, are mostly due to 100 percent financing to buyers that should not have purchased. There were some builders lending 100 percent, through their JV’ed mortgage companies, plus rolling in their closing costs and escrowing ONLY based upon the unimproved,’ Frank said.”
“‘You will see pockets of foreclosures in certain new home neighborhoods and the builder in partnership with the lender had much to do with it,’ he said. ‘These buyers were in serious trouble when the taxes on their house went to improved and there was a shortfall in their escrow. Many of these folks could not refi or pay the shortfall and the effects have been disastrous. We get calls from these folks daily. In addition, 100 percent to buyers with 500 credit scores should have never been done.’”
“‘The biggest effects that we see in Collin County is people relocating to the area cannot get rid of their homes in other states,’ said David Mathews, VP for Darling Homes. ‘We’ve sold a lot of homes and when it comes down to the closing they are still struggling to get rid of the home they left.’”
“Sales and traffic are down significantly in the Dallas/Fort Worth area. Cancellations have edged up, especially for lower priced homes. Homebuilders and real estate agents noted increased uncertainty and uneasiness among buyers that they blamed partly on reports of weakness in other parts of the country. Builders have pulled back on starts and increased buyer incentives in an attempt to manage rising inventories.”
“‘I think that the builders hurt us more here because we have more space. They can go further north and buy cheap land. That is our biggest problem. We have too much land in Texas,’ Magee said.”
“‘We have felt that some of the national home builders have used Texas as a place to get their unit volume and are not necessarily that focused on profit because they are making such great profits in other markets,’ Matthews said.”
“Rural land prices in Collin County and throughout Texas are at a record highs. In 2005, land prices set another record at $1,483 per acre. Land prices are up 16 percent from 2004 and 76 percent over 2000 land prices.”
We’re still working out some hangups with the server, please bear with us.
Ben, the, the, the agony of not getting to the blog whenever I need a fix! It’s killing me! I’m suffering withdrawal symptoms!
We are going to get it fixed. It’s like working on a car; you just keep tinkering on the most likely cause of the problem.
Are black hat realtors posting comments that are escaping content checks on the comments? Causing database errors?
Remember, realtors and the surrounding industry is shady.
Yeah, talk about Jonesing.
ba dum dum
Am I the only one that panics when this blog goes down?
This most recent occasion, my mind raced with visions of black helicopters descending on a rented abode in Northern Arizona. Upon their landing, bottle-blonde, bleached teeth, 50 year old bimbettes led by Liereah descend upon the Jones house with the intent of quieting our forum.
Their $40m capaign didn’t work, so my guess was they were getting desperate.
Then I woke up.
lol that was a funny visual
No, your not the only one.
You know, if a day comes that we don’t hear from you within a reasonable time, we’re all coming to your place to check on you!!!
You can sum all the comments up with three words
“it’s different here.”
It sure is!
And not the kind of “different” you want in your life!
And it’s different for each and every person. Like the blind man trying the describe an elephant, it all depends on what part your touching.
It’s especially rich though when a Texan says that too much land is thier main problem.
They should give some of their land to one of those places where people complain there isn’t enough.
We have a local paper here in our part of SC called the Greenville Journal.
They have a story today titled “What bubble? Greenville saw residential growth in 2006 while others lagged”.
It quotes a real estate marketer who states “…amid reports about a national housing market collapse, which is something that [he] says is not true. There is no national housing market. Everything is based on the local economy. There is no comparison.”
There it is. It’s different here too!
You should hear the radio show here in Norfolk, VA. An economist from ODU published a paper saying real estate isn’t going to be so healthy going forward. You should hear the realtor slime on the radio! You would have thought the guy killed his dog. Everyone “in the know” would believe that the economic outlook paper was sugar coated. The realtors and surrounding industry had a free ride for 3 years. Non-stop newspaper articles full of one sided talk and quotes from the NAR. They’ve all profited immensly… they should take their winnings and be quiet. But no, they are going to whine till the end.
When I call in… dude works hard to spin it. It’s difficult. I’m going to have to work on better setups.
Same here in Boone, NC. We’re told that there is no bubble in the local second-home market, because a lot of people from Florida are planning to flock up here “as soon as they sell their houses in Florida.” Then we are told that there is no connection between our local market and Florida’s market. Are we being lied to, or are local realtors really that stupid to not see the connection?
you’re being lied to.
There seems to be this crazy belief that just because valuations in Texas haven’t reached the absurd levels of Las Vegas, Pheonix, California or Florida, YET, that of course prices must keep going up. Regardless of all of the evidence of declining sales, increasing inventory, etc. etc.
What on earth do they think is going to fuel all of this appreciation of home values in Texas? They have already had the ‘juice’ they are going to get from free money and relaxed loan standards. All of the ‘investors’ last year were coming from California flush with equity dollars. They won’t be back anytime soon.
Just because a place isn’t 500% overvalued doesn’t mean that prices won’t come down. By historic standards, prices are high; even in Texas.
I don’t see much appreciation. Houses are being listed for under $70sf. These are newer houses less than 10 years old in nice surburbs just north of Dallas. In fact, it seems more like depreciation in most areas.
They spend too much effort comparing housing markets, and not enough time recognizing that lending standards are universal. Doesn’t matter much in what market somebody financed 100% with a FICO of 560.
LOL. Good summary. It’s different here and the boomers are coming.
The foreclosures, in my opinion, are mostly due to 100 percent financing to buyers that should not have purchased. There were some builders lending 100 percent, through their JV’ed mortgage companies, plus rolling in their closing costs and escrowing ONLY based upon the unimproved,’ Frank said
Can the builder / mortgage company actually do this - base the tax portion of your payment on unimproved land (since that is what the current tax rolls reflect). THe next year, the tax value is based on developed land. It seems like this should be illegal.
Respectfully, your opinion is wrong.
It’s due to the advent of home equity lending, too much credit card debt, peer pressure to appear you have more than you do (a classic Texas thing) and a rather low wage economy unless you are a professional.
Oh, I’m sorry, you weren’t stating that as your opinion.
“It’s due to the advent of home equity lending, too much credit card debt, peer pressure to appear you have more than you do (a classic Texas thing) ”
SORRY - The “To appear you have more than you do” …was copywrited here in So Cal.
yea, it’s called Secretly Broke©
Man, that makes me grateful for some aspects of my schizoid type personality.
And they call this sh-t “Buying a house”? “Home ownership”?
100% financing is no ownership at all. Must be the “creative financing” that this puke clown Alan Greenspan was talking about.
Roger,
It’s a huge problem. I posted about dozens of these in the Arlington area last year. The people thought the taxes were going into escrow, too, and then faced a huge property tax hit at the end of the year and defaulted. One year and bam!
That’s terrible! To be very honest - a lot of people whom are getting into these 80/20 loans are either young or not educated or both. True there are some older professionals but many young families are being push into houses by RE agents / builders looking for the next fresh mark.
The buyers probably don’t have any clue that this is going on and really at this point - it’s up to the lender to legitimately represent the probable taxes in mortgage quote. I feel the person buying the house can’t be truly expected to know about the different tax rates.
The foreclosures are due to lack of home appreciation. When people in So Cal or Florida got in over their heads the past few years, they could always sell since their home appreciated in price. In Texas, the prices stay flat or fall. When people get deep in debt, there was never an escape hatch.
Trust me, the wages in Texas are higher than Florida or Arizona. Houston, Austin and Dallas have plenty of professional and tech jobs. My brothers and I work in the tech industry, and we’ve never had trouble finding work, even during the tech bust in 2000-2002.
There are always going to be pockets in every state that are not much effected by the national economy. But that said, “it’s different here” comes mostly from myopic commentators in the r.e.industry in whatever locale they happen to reside. What I have seen here in Fort Worth is that houses remain on the market for an extended period of time and some seem to never sell, and be withdrawn. Most of the big price increases in the past two years had come from drastic increases in material and labor costs–and to a lesser degree from land price increases. Nice size lots rose from 50k to 70/80k in many of the newer subs of north Tarrant Co . Move ups have the same problem here as most other places now–we can’t sell our existing house.
I think Ft. Worth is the best part of the DFW area too. Not the burbs but near the city itself. Far superior to Dallas.
When we moved back to Texas, the one requirement we had was that we would under no circumstances move to Dallas. TxC has iterated the many problems in that city . lol
Thank you, born and raised in FtW.
Indeed. That area around TCU where I lived was my favorite. I loved being able to get downtown (where I worked) on a bicycle, if the whim struck me — and without a car striking me, since they had decent paths. Nice downtown, too, especially compared to Dallas IMHO. I still miss FW.
Can’t stand Dallas for the fact every restaurant is either in a strip mall or in a shopping center parking lot. Suburban hell.
What…you don’t enjoy the ambience of an outdoor ’sidewalk’ table at one of those restaurants, where your knee is 3 feet from a six lane speedway??
I would like to buy in the Monticello area, or a few blocks east. But not yet.
One could argue it IS a National Market when you have Investors buying across multiple markets and states.
Here is an article I like to call “Clueless Californians keep on Investing”
http://tinyurl.com/27r5rc
there are some real gems in that article:
“The Bay Area housing market didn’t generate as much equity in 2006 as it did in 2005, so there weren’t as many dollars to play with as there were in 2005,” which is part of what suppressed the number of purchases, said DataQuick’s John Karevoll.”
Houses generate equity funny money to “play with” according to NestleQuick, ok. I’ll go on my roof and look for mine.
“We’re getting a more educated, investment-wise public,” he said. Without fail-safe company pensions or Social Security to rely on, more middle-aged people are investing individually to prepare for retirement, he said.”
A more educated, investment-wise group… that is buying up houses in Vegas and Phoenix although inventories are at or near record highs. But hey, these are Bay Area people we’re talking about, which means they know what they’re doing simply because they live there.
A more educated, investment-wise group…yeah a real bunch of idiots. Gawd knows why aging baby boomer needs to buy a second home or vacation property…the only reason to own such a thing is to enjoy with your young children when you are in your 30s or 40s; and I’ve never considered my 1980s Breckenridge ski condo as an ‘investment’.
You are dead on. The carrying cost of a $750K second home would be out of this world (PITI, maintenance, lost opportunity cost of any down payment, etc.). Now if this guy was just plain out rich and spent $750K on the second house for recreation, then that is a different story. However it is idiotic to be refeering to it as an “investment”…a better term would be an “expense” or “albatross”, etc. These are probably the same type of people who call it an investment when they buy their new Hummer or Grand Piano.
–
http://www.dallasnews.com/sharedcontent/dws/bus/stories/DN-foreclose_19bus.ART0.State.Edition1.1cbec53.html
Foreclosure lists near 1989 record
Adjustable-rate loans and consumer debt are blamed
08:08 AM CST on Friday, January 19, 2007
By STEVE BROWN / The Dallas Morning News
Dallas-Fort Worth home foreclosure postings are still growing – fueled by higher payments on adjustable-rate loans and rising consumer debt.
The latest statistics show that pending foreclosures in Dallas County are 12 percent higher than a year ago and foreclosure postings are up 16 percent in Tarrant County.
Because of weather delays and other factors, some monthly statistics prepared by Addison-based Foreclosure Listing Service were unavailable on Thursday, including figures for Collin County.
Even so, the 1,940 homes in Dallas County and 1,274 Tarrant County homes threatened with foreclosure are approaching record highs, said George Roddy, president of Foreclosure Listing Service.
“This is getting serious,” Mr. Roddy said. “This level is getting very close to the all-time records set in 1989, when an average of 2,000 postings were filed monthly on Dallas County residences.”
Back then, it was a regional recession that caused the number of home foreclosures to spike.
This go-around it’s often because of poor consumer choices, credit analysts say.
“Some of them got into more house than they can afford,” said Gail Cunningham with Consumer Credit Counseling Service of Greater Dallas.
Rising interest rates on home mortgages have also caused some homeowners to default on their loans.
Many homeowners are also swamped with credit card bills, Ms. Cunningham said.
“During the Christmas holidays, everyone gets caught up in the moment and overspends,” she said. “Now the bills are beginning to arrive.”
While many analysts are predicting that the inflated housing market will have a “soft landing,” Ms. Cunningham said she isn’t as optimistic.
“In the trenches where the real folks are, they are feeling the pinch,” she said.
The increases in February foreclosure postings in Dallas and Tarrant counties follow even bigger percentage jumps in January, according to Foreclosure Listing Service.
And Mr. Roddy said he’s noticed some subtle changes in the types of loans facing foreclosure.
“I’m seeing a little pickup in home equity loans, but adjustable-rate loans still lead the pack,” he said.
February’s foreclosure postings appear to be the highest in the current housing cycle. But based on the size of today’s housing market, the number of home foreclosures in the D-FW area is less alarming than it was in the late 1980s, Mr. Roddy said.
“Proportionately, we are not in the doghouse like we were in 1988 and 1989.”
I think the question here is how can many texas places be somewhat affordable and yet people are still in trouble? how is this possible?
They were just given access to home equity lending for the first time in 1998. That cannot be overemphasized. It allowed a kind of borrowing and leveraging that was never allowed before.
The ban on mortgaging your home for more than a purchase money mortgage was originally a reaction to the carpetbaggers after the Civil War (WBTS for you Southerners). They should call this new bunch carpetbaggers too.
When the mtge cos give loans to people who do not qualify under rational standards, you have instant trouble. They were never going to be able to stay in the house. Really,really uninformed and truly ignorant buyers are always in the market–it is up to the mtge co to say no. If the buyer were competent he would not be applying for a loan he could not handle.
“…Please note, 2007 should be an increase year and I really feel that the bubble is for other markets, not ours,’ Frank said.”
Oh, he really “feels” it. Well, I’m sold. Count me in for a half-dozen, no money-down, no-doc condos in your area, Mr. Frank. Oh, and by the way, what do you feel about the games on Sunday. Maybe I can make even more money from your talent.
He only feels because he is not capable of thinking. Typcal realtor BS.
OT, from the WSJ:
“The Year of Listing Patiently; Sales Are Slow for Pricey Homes In ‘House of the Week’ Review; 12% Cut on a Philip Johnson
“LAST YEAR PROVED to be a tough one to sell a house. In many parts of the country, sales were down, inventories were up and homes lingered longer on the market. In August, the median price of an existing single-family home fell 1.7% compared with a year earlier, the first year-to-year price decline in more than a decade, and prices continued to fall for the remainder of 2006, according to the National Association of Realtors.
“The high end of the market wasn’t immune, either, as evidenced by the lackluster sales of the homes highlighted in Weekend Journal’s “House of the Week.” Of the 46 houses featured from October 2005 and September 2006, only 14 have sold, most at steep discounts — an average of 16% below the asking price published in our column; another four are in contract. Timing was also critical: Only one house featured since June has found a buyer. (None of those featured in the fourth quarter of 2006 have sold, but they aren’t included in this survey because most have only recently come on the market.)
“Homes featured in House of the Week aren’t representative of the national housing market. For one thing, they tend to be high-end properties: the average asking price for the homes in our sample was nearly $10 million, while only one asked less than $1 million. They are also selected for other qualities — noteworthy architecture, colorful histories or singular locations — that set them apart even from other luxury homes.
“Still, their sales performance has generally followed national patterns. Overall sales volume peaked in mid 2005 and then declined steadily throughout most of 2006, according to the National Association of Realtors, and existing home sales in November 2006 were down 11% compared with the previous year. The same held true for the Houses of the Week. Of the 23 properties featured between October 2005 through March 2006 — when the overall market was relatively strong — 12 have sold or are in contract, compared with just six of those featured during the following six months.
“The properties that were most likely to find a buyer were those with the highest price tags. Half of the Houses of the Week with asking prices of $15 million or more have sold, versus just over a quarter of those asking less than $15 million. That, too, follows a national trend, according to Jonathan Miller, president of the New York appraisal firm Miller Samuel. “Super luxury” homes have continued to sell in high numbers, he says, though not necessarily close to their asking prices. In fact, one reason they tend to sell, Mr. Miller says, is because their owners can be more flexible; these deals don’t live or die over a $5 million difference. And unlike the general housing market, which is strongly affected by interest-rate fluctuations, upscale home sales tend to be more sensitive to the stock market and the overall economy because buyers are more likely to pay in cash.[...]“
Philip Johnson’s houses tend to be pretty kooky. Ever seen the Glass House? You couldn’t live in it.
I could SO live in Philip Johnson’s Glass House. Maybe a shed for storage somewhere, and that would be it for mods. Tastes for architecture vary pretty wildly. If I had enough money I would have a deconstructionist monster made of brutalist concrete elements built to serve as a home. It would be sufficiently insane as to make any person of good taste and breeding run screaming at a distance of a quarter mile or greater.
I would too. But it wouldn’t all be glass.
In one year only a third sold? Did all of these people have “competent” real estate brokers?
How could the very, very rich (of all people) not be able to determine the “right” (selling) price?
Stubborness and bad advice from the realtor.
I mentioned long ago that IMHO THE largest bell ringer of artificially inflated home prices were due to 100% financed deals where the seller jacked up the purchase price to cover closing costs paid for the buyer.
To make matters worse, some 100% borrowers were involved with multiple offer deals before they had to jack up the price to acoomodate the borrowers “qualifying loan program.” Was this a disaster waiting to happen?
Eh, what the hell does an escrow guy have to offer. I’m only on the very front lines of the madness. Good grief.
“artificially inflated home prices were due to 100% financed deals where the seller jacked up the purchase price to cover closing costs paid for the buyer.
Is this how those seminar graduates walk away from closing with cash in hand?
Also, where are you located (if you care to share) and have you seen a big drop-off in business…
“‘We have felt that some of the national home builders have used Texas as a place to get their unit volume and are not necessarily that focused on profit because they are making such great profits in other markets,’ Matthews said.”
Last time I checked most of the home builders were public companies with an emphasis on maximizing profit…I doubt there was a lack of profit in Texas!
Can someone explain to me why the builders stock KBH, DHI, CTX, LEN, TOL all keep finishing up? When is this going to hit the fan I’m sick of these pitiful price drops!!! Lets get this party started!!!
No idea - probably due to the good recent housing starts or Bill Miller. But frankly, should come down soon. I am waiting for a good entry to kick them down.
‘Some of them got into more house than they can afford,’
More likely were changer more than they could afford for less house, and more importantly loaned more money than they could reasonably repay. Credit ratings and qualifications protect both the lender and the borrower. There is a reason you do not loan someone 5 -10 times their annual salary! There is a reason for 20% down, since a person who can save the 20% and has that much interest in the deal is far less likley to default as well and has some cushion if they do get in trouble.
Glad to have found this article. I can’t speak for much outside of central Texas but I have talked to many realtors in San Marcos and its an all out frenzy of buying going on. Multiple contracts on the same house, low inventory. Its a college town that is seeing tremendous growth because of the university growth. New Braunfels is also remaining pretty balanced despite the overzealous builders out in River Chase and new subdivisions on the East side with the shaky soil. People are moving out of Austin and San Antonio because of the high prices and settling anywhere outside those 2 cites. Newer houses and cheaper prices.
Does anyone have any info on the areas like Buda, Kyle, San Marcos, and New Braunfels?