Texas Housing Market is Improving…Maybe

The bad news: lenders have posted 4,013 homes in the Dallas-Fort Worth area for forced sale at auction next month, according to data from Foreclosure Listing Service Inc. The good news: Home foreclosure filings in DFW are down 22 percent for April from a year ago. In fact, April marks the 14th consecutive month that foreclosure levels have declined year-over-year.

Many analysts anticipated that foreclosure filings would increase, following the agreement earlier this year between the five major lenders and 49 state attorneys general that requires lenders to make restitution for loan servicing and foreclosure abuses. The continued decline in forced sales can be taken as an indication that the housing market is finally pulling out of the slump that began in 2008 – but hints of underlying problems still exists.

Like the dashboard warning light that notifies you of an unseen issue with your vehicle, certain indicators point to potential problems in the housing market. The average home price in Texas has continued to fall – down 0.4% over the last 12 months – which is causing more homeowners to go underwater with their mortgage. In the fourth quarter of 2011, 10.2% of homeowners had negative equity, according to Core Logic, up from 9.5% in the previous quarter. That means one out of ten homeowners owes more on their mortgage than the value of their home.

Low mortgage rates and a recent dip in the unemployment rate to 7.3 percent in January means more people are making their mortgage payments and fewer homes are going into foreclosure. But, property values are still dropping, and that is not how the housing market is supposed to work. Buying a house has become like buying a car, where your investment is losing value in the long run rather than increasing in value. The trend of falling home values ultimately undermines the real estate market, which drives the economy.

“It appears the recent declines in housing wealth may be reducing consumer spending between $200 billion and $375 billion per year,” said Federal Reserve Chairman Ben Bernanke in a recent speech. He added, “That reduction corresponds to lower living standards for many Americans.”

The prolonged decline in housing prices is not getting as much press as the good news of lower unemployment and declining foreclosure rates. We all want to hear the good news, but we can’t ignore the red light on the dashboard, because it could mean we haven’t seen the end of our problems in the Texas housing market.

If you are upside-down in your house and are considering minimizing your losses by negotiating a short sale on your home, please give us a call. Our experienced short sale agents are happy to answer any questions and assist you with the process.

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