Higher job losses and growing business failures are contributing to slower housing markets in Texas, despite exceptions. New home construction and weak demand trouble markets as home sales slow.
Sales rose as a result of the federal tax credit for home buyers, but slowed as a result of the program ending. Although the losses in home values have been less severe than many other areas of the country, an increase in foreclosures is damaging most markets, and the foreclosure crisis in Texas is only projected to worsen over the remainder of the year.
Homeowners are walking away from mortgages that have become too expensive to afford at increasingly rapid rates.
Laws to protect consumers from refinancing homes at up to 150% of their value passed by state lawmakers more than 10 years ago, have shielded much of Texas from devastating home price deflation. But without more government aid Texas won’t be shielded from fall out of the financial crisis.
In Houston home sales rose as a result of government tax incentives. Houston has historically had one of the stronger metropolitan markets in the country, mainly due to lower home prices. But the worst real estate crash in the nation’s history coupled with a higher inventory of homes for sale is troubling the market, which is only in the early stages of unwinding in Houston.
Record low rate mortgages don’t seem to be enough to get buyers off the fence, troubled by a lack of consumer confidence in the economy. Houston is forecast to experience slower home sales throughout the remainder of the year on average housing deflation forecast at 6.9% by year’s end.
A market that has been strengthened by high-tech and a younger upwardly mobile job market boosted home sales in Austin as first time buyers poured out to take advantage of the government tax incentive. But sales in most areas of Austin are faltering and are expected to remain lower on forecast housing inflation of just 2.0% for the year.
In Dallas, the foreclosure crisis is pressuring home values as bankers slash prices on foreclosed properties to get them sold. The market saw a spike in sales, but tougher financing requirements and declining home prices are troubling the market place. Dallas is forecast to witness average housing price deflation of 6.4% in 2010.
San Antonio has transformed into one of the hottest markets in the country for investors looking for deals. But over-building in new home construction that led San Antonio to being one of the fastest growing areas of the country is now contributing to declining home values.
Weakening consumer confidence over the market’s recovery and higher foreclosures are hurting. A second round of foreclosures is projected to damage home prices further over at least the remainder of the year. San Antonio is forecast to witness average home prices decline 6.0% in 2010.
On the border of Mexico, El Paso is haunted by the drug wars just across the U.S. boarder in Juarez, where drug lords have killed hundreds of innocent victims over the last year. The violence has resulted in a state of fear in some areas of El Paso, where home sales have slowed as a result along with a weakening job market.
Although most of the violence is contained to the Mexican side of the boarder, fewer people are considering the purchase of a home in El Paso. Housing prices are forecast to deflate 6.7% in El Paso for the year.
The fallout from the housing crash has been less severe in Amarillo and Lubbock in the Texas panhandle. But slower home sales and more foreclosures are projected to contribute to weaker markets in both communities throughout the remainder of the year.
Amarillo should see better times ahead due to higher employment from the energy business, but is still forecast to witness average deflation of 3.9% in 2010. Lubbock is predicted to sustain deflation of 4.1%.