7th Feb, 2013

Shadow Inventory of Homes in Hill Country?

The Texas Hill Country home market has steered clear of foreclosures.  Most foreclosures over the past several years have been vacant Texas land.  Although the larger Texas cities like Austin and San Antonio include many struggling homeowners and distressed properties, Gillespie County real estate and our smaller communities such as Kerrville and Fredericksburg TX homeowners managed to weather the economic storm.

Seriously delinquent loans, foreclosures, and REO (bank-owned) properties being held by lenders are loosely referred to as shadow inventory.   Many large cities have been concerned during the past several years that banks and lenders would release these low-priced properties into the Texas real estate market, thereby driving down home prices.  From our location in the heart of the Texas Hill Country real estate market, we could possibly be affected if large numbers of bank-owned properties were released, especially in Austin and San Antonio.

Is there any way of knowing if a wave of shadow inventory could affect the Fredericksburg Texas home market?  We can only surmise.  Information about troubled properties and shadow inventory is difficult to obtain.  Lenders do not speak publicly of troubled loans but the Real Estate Center at Texas A&M University tracked down information from the Lender Processing Services (LPS), a company that collects loan-level data for 40 million American loans.

The good news is that compared with states such as California and Florida, Texas is in good shape.  However, “5.3 percent of loans in Texas are seriously delinquent,” explains Mark G. Dotzour in his article published in the January 2013 issue of Tierra Grande Magazine.  As of January 31, 2012 in all of Texas, there were 195,491 loans delinquent more than 90 days.  Another 100,000 were in foreclosure or bank owned.

In our Hill Country metro areas, the average number of foreclosure sales per month increased.  During 2006, the average in Austin tallied 278 and in San Antonio 215. For the first seven months of 2012, there were 363 in Austin and 390 in San Antonio.  Many of the more rural areas are helping to stabilize some of the difficulties in the metropolitan areas.

Even so, Dr. Dotzour’s research shows that the housing market is improving throughout the State of Texas.  The chief economist with the Real Estate Center concludes, “Shadow inventory in Texas is elevated but manageable and should represent little threat to the housing recovery here.”  He bases his conclusion on the strength of the Texas economy and prudent lending.”

To find out about Texas Hill Country homes and ranches for sale, please call Dale E. Cook, MBA and owner of SAGE – Premium Texas Real Estate in Fredericksburg at (830) 992-0056.

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