Bill Morris: Austin/Central Texas Foreclosures -- really all that bad?

Austin/Central Texas Foreclosures -- really all that bad?

Earlier today I posted an article at AustinMarketInfo.com about the increase in foreclosure postings for the February 1, 2011 auction in the Austin Metro area (Austin area foreclosures jump 14 percent in February ).  Last month I wrote about the contrast in the Austin-area foreclosure rate (10%) compared to the national average (25%), and compared to the U.S. cities with the highest foreclosure rates (27% to 54%) for the first three quarters of 2010.  (See Comparison:  Foreclosure sales in Austin vs. U.S.)

Those reported figures are the percentage of total home sales that were foreclosed properties.  That is an important point of reference for the general effect of foreclosures on home values and sale prices.  I was also interested in what percentage of households in the area suffered foreclosure last year so I did some research and calculation to find:

Total residential sales (units) -- 2010 -- MLS Data Only
19,279
Percent of reported foreclosures
10%
Estimated units foreclosed
1,928
Metro area households (2000 census)
461,039
Weighted average population growth 2000-2009
47.5%
Estimated households -- 2010
659,403
Percent of households foreclosed
0.29%

To save you that last calculation, this amounts to less than 3 households out of 1,000 foreclosed last year in the Austin metro area.

That is less than 1/5 the rate in Nevada.  Moreover, those foreclosures were concentrated in a relatively small number of neighborhoods -- largely suburban, entry level to mid-range homes sold new in 2005 to 2007.  Some local market areas experienced a much higher level of distress while many saw little or no effect.  That is likely true in the hardest hit U.S. cities, too, but when the total rate in a metro market is 2 1/2 to 5 times what we saw in Austin it is certain that distressed properties had a much larger effect on property values across the board than we saw here. 

I have not researched that data for other metro areas, but a recent review of Austin/Central Texas sale prices offers evidence that we did not see the magnitude of impact seen in markets where average prices continues to decline in most of 2010, such as Nevada, Arizona, California, Florida, and Michigan:


In a world where many news outlets seem intent on putting a pessimistic face on most market information, it is important to look behind published reports.  My objective is not to present an exagerratedly optimistic viewpoint, but only to provide context.  Today's local report about properties scheduled for February foreclosure auctions made much about the "high" level of foreclosures in the Austin metro area, but relative to metro population or compared to cities where the housing downturn hit much harder, Austin doesn't look so bad.

Bill F. Morris, ABR, CRS, CDPE, e-PRO, MBA
RE/MAX Capital City
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Comment balloon 2 commentsBill Morris • January 14 2011 10:48PM

Comments

Good information. You are fortunate to have a stable market in Austin. Best wishes for continued success!

 The colors of winter in Maryland. Life is good in Montgomery County!

Posted by Roy Kelley (Realty Group Referrals) almost 9 years ago

Thank you, Roy.  Have a great 2011!

Posted by Bill Morris, ABR, CRS, CDPE, ePRO, MBA (RE/MAX Capital City) almost 9 years ago

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