Rise in Foreclosure in Dallas-Forth Worth Area

In contrary to most of the projections last year in the rise in foreclosure, in 2009 rates of foreclosed homes has started to wean out in Dallas-Fort Worth.  However, this should not be a reason to sit back and be complacent because both economist and real estate analysts said that the real estate industry has not yet reached stability.  With the increase in layoffs in different companies, there is a possibility of increase in foreclosures this year.  Last year the foreclosed homes in the Dallas-Forth Worth area reached a staggering 21,000.

According to George Roddy of the Addison-based Foreclosure Listing Service, a big chunk of owners whose homes were foreclosed were into subprime mortgage.  With the decrease in the value of the real estate property, the banks demanded owners to pay the difference in value.  Most of the home facing foreclosures are those that have higher value ranging from US$ 800 to US$ 1.5 million.

The following areas revealed the highest density of foreclosed homes: Dallas Desoto and Lancaster.  Some suburbs like Aubrey, Anna and Oak Point were also registered high rates of foreclosure.

Government Programs

Government programs on foreclosure have heavily supported home owners facing foreclosure that’s why foreclosure rates in the Dallas-Fort Worth area only registered 1% increase in 2009 when compared to the 2008 figure.  This is seen to continue and increase from 1% decline to 5-8%  as the government programs begin to take its effects.  This is because the government programs will be fully launched in 2009.  However, it is still premature to make a conclusion as of today because as the financial crisis deepens in the North Texas area, the threat for job losses is still at bay all the time.

Root of foreclosure

Analysts attributed the rise of foreclosure with the weakening job market.  Experts are fearing that the weakening job market leading to layoffs will really blew the good start of the decline of foreclosures in 2009.

Mark Dotzour (A&M University’s Real Estate Center) projects that Texas will be hit next by the financial crisis in 2009.  He further added that the estate can register more foreclosure brought about by the layoffs in 2009.  However, Dotzour is optimistic that the government efforts will help prevent this from materializing.

Home Values

Home prices has been gravely affected with the auction of foreclosed houses.  Home prices in the Dallas area has decline drastically in 2008.  A staggering 40% of home sales in the United States are foreclosed homes.  As compared to other states, according to David Webb (principal of Hudson & Marshall), discount in the foreclosed houses in the Texas area are still lower in comparison with the West and Southeast where the prices were driven down.  Further according to Webb, the discounts (which is around 20-25%) is sometimes due to the repairs that buyers need to make in the foreclosed homes.  This creates a big blow to the home owner because properties were usually auctioned at a rate that is lower than the purchasing rate.

                                                

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