COLLEGE STATION, Tex. (Real Estate Center) - Decreased home sales, stalling prices and a rise in foreclosures suggest more rough waters for the nation's housing market. Texas, on the other hand, continues to weather the storm fairly well. But for how long?
"Prospects for the rest of the year are not encouraging for any type of major improvement for the country or for Texas," said Dr. Jim Gaines, research economist with the Real Estate Center at Texas A&M University. "But we should still continue to fare better than most of the rest of the country."
The state's February 2010 home sales data show that total sales declined about 3.3 percent from a year ago, but home prices increased. The average home price was up 4.1 percent, while the median price was up 2.1 percent.
Gaines said Texas is not immune to the economic conditions that have affected the rest of the country, but by avoiding the mid-decade home price bubble, it has also avoided the end-of-decade home price collapse.
"We started the year with better expectations for housing, but the anticipated upswing in the housing market for the first half of the year has failed to materialize," Gaines said.
He said experts predicted a pickup in activity with mortgage interest rates at 5 percent or less, prices at historically low levels, and with the expansion and extension of the tax credit.
"The expanded tax credit to repeat homeowners has not generated the level of activity hoped for," Gaines said, "and first-time buyers appear to have raced to buy last fall before the original credit expired."
Gaines said the number of homes for sale in Texas last month was down about 3 percent from a year ago, unlike the inventory of for-sale properties nationally, which increased 9.5 percent according to the National Association of Realtors.
Foreclosure activity will continue to add to the inventory of available properties, holding prices down.
"The rate of foreclosures in Texas, though still considerably below the national average, has increased as job losses have mounted," Gaines said. "The number of current sales and listings that are distressed properties, especially in the major urban markets, reportedly represents a sizeable percentage of the totals."
Foreclosures continue at high levels despite moratoriums and various government programs aimed at helping households hold onto their homes.
"In truth, the market and economic downturn has simply been so severe in the hardest-hit states that no amount of government intervention was going to help that much," Gaines said. "Most of the intervention has only served to extend the problems rather than curing them. The total equity value of all the homes in the United States has fallen by $7 trillion since 2006."
Gaines said new home sales levels will not encourage a major increase in home construction activity, and if people continue to lose their jobs and cannot find employment, the overall demand for homeownership will remain depressed.
Comments(0)