Rising mortgage default rates in just about all of Texas demonstrate a state beginning to show major signs of weakness in its housing markets. Government incentives drove home sales upward only to see an increase in foreclosures pressure home prices.
Consumer protection laws enacted more than 10 years ago have shielded much of Texas from double-digit housing deflation, but without more government aid even Texas markets can’t be protected from major housing price deflation.
In Houston, which has been one of the country’s relatively strongest markets even in the midst of the worst housing crash nationally in history, the market’s excess inventory of homes and condos for sale is slowing sales. Few buyers have any real reason to get off the fence to make a decision to buy quickly. The government’s first time buyers tax credit swelled sales, but since the beginning of the year volume has slowed, and is projected to remain sluggish until at least summertime.
A younger upwardly mobile job market boosted home sales in Austin as first time buyers took advantage of the government tax incentive. But with the tax credit expansion sales slowed. However, sales should improve by spring time in Austin, aiding a market that has remained one of the stronger in the nation. Austin is still forecast to experience average housing inflation in 2010 of 3.1%.
But in Dallas over-building by new home builders combined with rising defaults is pressuring the marketplace. Although bargain hungry buyers are getting some great deals on property in Dallas, the market is projected to see a spike in foreclosures during the year, eroding home values. As the second largest urban center in the state, Dallas is forecast to see average home prices decline 5.4% by year’s end.
| City |
Forecast |
| Houston |
− 4.8% |
| Dallas |
− 5.4% |
| Austin |
3.1% |
| San Antonio |
− 5.6% |
| Lubbock |
− 3.9% |
| Amarillo |
− 3.7% |
| El Paso |
− 6.1% |
San Antonio has seen enormous growth over the last decade, but with the housing bubble bust home sales slowed. The inventory of foreclosed properties is rising as bankers release REOs on to the market, pressuring home prices. The rise in sales will have a battle to sustain in San Antonio as more and more buyers become reluctant to enter the market.
The spillover from weak unemployment levels and poor consumer confidence is projected to slow sales throughout most of the year, despite government incentives to prod home buyers. Troubled bank assisted short sales and a spike in foreclosures will pressure the marketplace, which is now forecast to experience average home price deflation of 5.6% in 2010.
A tighter inventory of properties has aided El Paso’s market, but reluctance on the part of many to purchase a home because of a weakening job market is damaging home values. El Paso has its problems these days with the drug wars escalating in neighboring Juarez, Mexico. The drug cartels bloody battle with law enforcement has many people in El Paso nervous. El Paso housing prices are forecast to deflate 6.1% for the year.
In the Texas panhandle, Amarillo and Lubbock have seen less fall out from the real estate crash. Prices have only dropped slightly as the markets hold up better than in much of Texas. Growth in the energy business is helping to produce more jobs in Amarillo, where home sales are projected to remain slow for the year on forecast deflation of 3.7%. Lubbock is predicted to sustain deflation of 3.9% in 2010.
