There were 57,000 foreclosures that were completed in Texas between February 2012 and February 2013, which ranks Texas fourth nationally in completed foreclosures for the period. Out of 5,411 Texas foreclosure filings in the month of February 2013, 3,252 filings were foreclosure starts. This suggests that despite a 43.36% decrease in foreclosure notices filed in February 2013 over February 2012, the market for distressed property in Texas will continue to remain active.
Sensing localized recoveries in the Texas housing market, mortgage lenders are moving in and expanding operations in the state, particularly in North Texas. This could prove to be a boon to first time homebuyers as well as foreclosure investors looking to realize value on the purchase of distressed property, especially as interest rates remain low and inventory stays strong.
Positive Economic Indicators Support Strengthening North Texas Real Estate Market
North Texas by many measures remains the strongest local market. In North Texas, the average sale price in February 2013 was 94.0% of the original list price, a 1.9% increase as a percentage of list price over February 2012. Overall, pre-owned home sales were up 14% year over year, with prices 8% higher in February 2013 than in February 2012. The higher average sale prices are partly due to a more restricted supply, with the housing inventory falling to 3.6 months in February 2013 as compared to an inventory of 5.6 months in February 2012.
Austin is another area where the real estate market is gaining strength. Sales were up 26% year over year in February, while the median price for listed homes was up 7% during the same period, to $208,500. The competitive market resulted in a drastic reduction in inventory, which stood at just 2.6 months at the end of February. Townhouses and condominium units shared in the gains, with 31% more units sold in February 2013 than February 2012. Strong gains in employment rates as greater numbers of people relocate to Austin are likely supporting the increases in real estate activity, as Austin boasted just 5.4% unemployment in February 2013. Still, there are contracts waiting for distressed real estate buyers who know where to look.
Advantageous Markets to Pursue Texas Foreclosures and Distressed Real Estate Transactions
An assessment of the outlook for distressed real estate performed by Cole Schotz predicts Dallas will be within the top markets for distressed real estate throughout 2013. Median list prices in Dallas are at $205,000, a 5.39% increase year over year. However, in light of a 20.34% drop year over year in active listings, this increase is quite modest. The delinquency rate for Dallas mortgages also remains high, reported at 4.28% in January 2013, suggesting that more distressed properties are entering foreclosures in Texas pipeline in this market.
El Paso may be one of the most promising places to look for distressed property in Texas, with 8.79% of all sales in 2012 taking place on foreclosed homes. The average discount realized on these sold properties was 17.80% despite a 93.42% increase in foreclosure activity in the area. Foreclosure discounts in McAllen, Texas were also high in 2012, at 21.49%; however, the foreclosure activity in McAllen decreased substantially in 2012 from 2011, falling 65.90%.
The overall economic outlook in Texas is strongly positive. In February 2013, the state saw its largest monthly job gains ever recorded, with 80,600 new jobs added, adjusted for seasonal variations. The regenerating job market and the strengthening real estate market, on the whole, point to opportunities for investment gains on distressed real estate for those who buy during this recovery.