Consumer protection laws enacted more than a decade ago in Texas illustrate how proper governing can go a long way in protecting homeowners, and is likely to save Texas from a major housing crash.
Laws were passed by the state legislature to initially protect subprime mortgage borrowers in 1998, capping the amount on refinances for all Texans' at 80%. As a consequence when the real estate boom hit Texas homeowners weren't able to over-leverage their homes by refinancing up to 150% like in other states. The limit acted to halt some of the risky mortgage lending practices that led to the epidemic of foreclosures.
In Houston home sales grew in response to the federal government's first time home buyers' tax credit after diving for more than two years. Low interest rates and lower priced homes triggered the surge, which should last at least into part of 2010 as a result of the expansion of the credit to move-up buyers.
However, Houston isn't out of financial hard times with rising business failures and job losses. The state's biggest metropolitan area should see a better year in terms of home sales as the market tries to find a bottom in housing. Houston is forecast to see average home prices appreciate a slight 2.1% for the year.
| City |
Forecast |
| Houston |
2.1% |
| Dallas |
− 2.6% |
| Austin |
3.1% |
| San Antonio |
− 3.2% |
| Lubbock |
− 2.3% |
| Amarillo |
− 2.6% |
| El Paso |
− 4.2% |
A strong high-tech job market and first home buyers taking advantage of the government tax credit boosted the Austin market. The state capitol city may be the most stable housing market in the state as a result of its more diversified economy and has only seen a slight drop in housing values. The market is forecast to see slightly higher home prices by the end of 2010, averaging 3.1% appreciation.
Dallas new home construction eased as builders made cut backs as a result of the slumping over-built market. However, home sales saw a slight uptick even as prices fell as a result of tighter lending. But a rise in foreclosures will pressure the Dallas market, allowing bargain hungry investors a way in before the area sees stabilization in housing values. A loss of population is also hurting the local economy with housing prices forecast to decline an average of 2.6% in 2010.
In San Antonio lower home prices and low mortgage rates triggered an increase in sales with a large inventory of foreclosed properties accounting for the majority. The San Antonio area, which had seen more new home building than perhaps any other single Texas market, is forecast to sustain housing deflation of 3.2% for the year. Troubled lower priced short sales and foreclosures will contribute to the decline.
Housing prices may suffer a devastating blow in El Paso as violence associated with Mexican drug cartels overspilsl its borders. Job lay-offs are also weakening the Mexico border community, which has exploded in population in recent years. The number of lower priced home sales should rise at least early in the year due to government incentives before easing. El Paso is forecast to sustain deflation of 4.2% in 2010.
In the heart of Tornado Alley in the Texas panhandle, Amarillo and Lubbock have also been experiencing more stable markets with few consequences from the fallout of the housing crash elsewhere. Home sales are projected to remain slow through most of 2010 as the communities become more accustom to less robust economies. Amarillo is forecast to sustain housing deflation of 2.6% and Lubbock 2.3% for the year.
