Foreclosures Abound in North Texas

Posted on October 23, 2009
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The US real estate sector is in the dumps. With unemployment reigning high, people are faltering on mortgage payments. Hence, foreclosures have become common. Now the housing market in North Texas has reached the bottom after prices declining for over a year. However, experts say that it may take a while for the housing market to recover.

The chief economist at the Real Estate Center at Texas A&M University, Mark Dotzour, says that the value of every commercial building in the US has depreciated by almost 30 per cent. The buildings of Texas have been adversely affected by the downturn.

The condition of the homebuyers is much better, Dotzour said at a real estate conference. This seems to be the best time to buy a home in Texas. Perhaps what is stopping the people is the fear of losing jobs. Home prices, Dotzour says, will not decline any further. The financing cost will also go up.

Mortgage rates have plunged and it will not be this low again. It is unimaginable that the industry will ever witness a 5 per cent mortgage. The prices already the lowest since 1970 are expected to dip even further next year. The builders are on a tight leash. There have been a decline in house construction and this is expected to continue for a while.

The stock of homes is also on the decline as builders make fewer homes than earlier. This has been happening for the last three years. The inventory of new homes is almost depleted. According to Metrostudy, there is not even a 90-day supply of new homes in Texas. Houston and Dallas-FW are the leaders in sales of new homes. The stock of new homes may have got depleted but there has been a spurt in foreclosed properties.

It may be noted that one in every four homes being sold this year is by a banker. The property is no doubt a foreclosed one.  The market has no chance of recovering unless these foreclosed properties are flushed out of the system.

The commercial real estate sector is also plagued by foreclosures. The number of foreclosures in this sector has already increased by 10 per cent. Industry experts worry that things could get even worse. There are many buildings that have absolutely lost value. The numbers are set to increase in 2010. What’s more, banks are delaying foreclosures.

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