Foreclosures Increase in Central Texas

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Julie Parker

Julie Parker was born in March 19, 1983, in Lancaster – Los Angeles County, California. Her father is an experienced economist and businessman, who motivate her taste for the real estate market. Recently, graduated in Economics and now focus her studies in a PhD. Now she’s a consultant and webwritter of ForeclosureListings.com

Foreclosures have increased in Central Texas by 25% – according to latest reports coming in. Central Texas comprises of nine counties. Experts are of the opinion that this rash of foreclosures is not solely because of the sub-prime mortgages that many borrowers contracted to own houses from 2005 to 2006, but because of the slump in the economy. The number of foreclosures across the country had shot up astronomically largely because of the mortgages that were offered without any or negligible down payments and adjustable rates.

Residential Strategies is a firm that keeps track of the housing market According to its experts fewer than 0.1% of house owners in Central Texas who had bought houses during the years stretching from 2005 to 2007, are foreclosing because of sub-prime mortgages The reason, opines the experts, is that the capital of Texas, Austin, is still one of the most affordable places to reside in. Here house prices did not spike during the beginning of the zoom years like they did in other states like Florida and California. This region has seen less than 1% difference in the cost of purchasing a house.

Nevertheless the foreclosure numbers have affected the construction industry in Central Texas. Seventeen thousand houses had been built in 2006. But so far in 2008 fewer than 10,000 units have started to be built. Builders now do not have any incentive to continue. The fact is that 35% to 60% of those who qualified to avail of a mortgage about two years ago cannot be considered as eligible nowadays.

The reason for this is not only the foreclosure related crisis. The seller-assisted arrangement of finance was done away with. In that method the builders or the sellers could purchase down a rate of interest. But that option is no longer there. This was the opinion of Mark Sprague of Residential Strategies. The result has been a sharp fall in the number of those who could qualify to buy a property.

According to predictions of experts, the second half of 2009 will see a spurt of residential building activity. Over and above this there will be a rise in condo sales in the downtown markets – the latter not having slowed down. It is a sure indication that the economy of Austin is still strong and continues to thrive. Texas has always has a record of bouncing back because of its own resilience.