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Volume 9, Issue 1, 2009   Federal Reserve Bank of Dallas

Snapshot of Mortgage Delinquencies and Residential Foreclosures in Texas

The state's housing market has weakened as home sales and construction have dropped. While home prices have edged down, Texas looks relatively good compared with other areas of the country where values have seen double-digit declines.

The rest of 2009 is expected to be tough for the Texas economy because economic weaknesses are no longer limited mostly to housing and manufacturing but are spread across most industries. According to the Dallas Fed's Leading Index, job losses are projected to exceed 300,000, representing a 3 percent decline in employment. Despite this negative short-term outlook, Texas' economic growth is expected to strengthen in the long term.[1]

Foreclosure Rates

Since second quarter 2006, foreclosure rates across the U.S. have continued to increase. According to the Mortgage Bankers Association (MBA) and Haver Analytics, the national foreclosure rate reached 3.3 percent in fourth quarter 2008. This rate has more than tripled since third quarter 2005.

Texas' foreclosure rate has been relatively moderate and stable (Figure 1). The rate dipped to its lowest point of the past decade—0.77 percent—in 2000 and increased to its highest point—1.5 percent—in fourth quarter 2008 (the most recently reported by MBA). Before 2008, the last time Texas had such a high foreclosure rate during this time period was in fourth quarter 2003, when it peaked at 1.41 percent.

Figure 1. Texas and U.S. Quarterly Foreclosure Rates Through 2008:Q4

Median Home Prices in Texas and U.S.

From March 2008 to March 2009, the median home price in the U.S. dropped by 11 percent. The median home price in Texas also fell, decreasing by 4 percent over the same period. While prices decreased in Austin by 1.4 percent and San Antonio by 1.2 percent, they went down by 6.5 percent in Dallas, 5.5 percent in Houston and 4.8 percent in Fort Worth.[2]

Mortgage Delinquencies

Seriously delinquent mortgages are defined by Haver Analytics as those with payments 90 days or more past due or in some stage of foreclosure. The rate of seriously delinquent mortgage loans in Texas was moderately stable among all but two loan types: subprime adjustable rate mortgages (ARMs) and subprime fixed-rate mortgages (FRMs). Subprime ARMs' poor performance started to become noticeable in fourth quarter 2005, when the delinquency rate increased 1.46 percentage points from the previous quarter. Since then, it has risen steeply, quarter by quarter, to an all-time high of 21.45 percent in fourth quarter 2008 (Figure 2).

Figure 2. Seriously Delinquent Mortgage Loans in Texas Through 2008:Q4

Metropolitan Comparisons

The Federal Reserve Bank of New York's website hosts data on mortgage delinquencies by countyoff-site. The table below shows 90-plus-day mortgage delinquency rates for over a dozen Texas counties.

90-Plus-Day Mortgage Delinquency Rates in Texas, 2008:Q4

County
Rate
Change from
one year ago
Bexar
2.93%
+0.60%
Cameron
3.36%
+0.83%
Collin
2.07%
+0.45%
Dallas
3.78%
+0.52%
Denton
2.21%
+0.51%
El Paso
2.43%
+0.96%
Fort Bend
2.83%
+0.42%
Galveston
2.43%
+0.39%
Harris
2.93%
+0.43%
Hidalgo
3.95%
+1.49%
Montgomery
2.11%
+0.44%
Nueces
2.74%
+0.02%
Tarrant
3.05%
+0.54%
Travis
1.65%
+0.38%
Webb
4.22%
–0.44%

SOURCE: TransUnion, LLC and its Trend Data database.

Another website, www.foreclosure-response.orgoff-site, offers Foreclosure Needs Scores for most ZIP codes in the United States. Created by the nonprofit organization Local Initiatives Support Corporation, this score is based on a formula using the percentage of first-lien mortgages that are in delinquency or foreclosure, the percentage of subprime first-lien mortgages and the percentage of vacancies in ZIP codes with high rates of subprime loans.[3]

In Texas, the ZIP codes with the highest Foreclosure Needs Scores are in Katy (Harris County), Dallas, Desoto, Cedar Hill, Grand Prairie and Lancaster (Dallas County), Laredo (Webb County), Houston (Harris County) and El Paso (El Paso County).

—Elizabeth Sobel Blum

Notes

  1. See Dallas Fed economist D'Ann Petersen's overview of current housing conditions in TexasPDF.
  2. Source: Multiple Listing Service/Haver Analytics. Prices are seasonally adjusted, current dollars.
  3. For definitions and details on the score's methodology, see www.housingpolicy.org/assets/foreclosure-response/zipmethodology.pdfPDF.

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e-Perspectives, Volume 9, Issue 1, 2009

Federal Reserve Bank of Dallas Off-site page
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Jackie Hoyer Send an e-mail
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Senior Community Development Advisor
    Julie Gunter Send an e-mail
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Wenhua Di Send an e-mail
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    Elizabeth Sobel Blum  Send an e-mail
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Roy Lopez Send an e-mail
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The views expressed are the authors' and should not be attributed to the Federal Reserve Bank of Dallas or the Federal Reserve System. Articles may be reprinted on the condition that the source is credited and a copy is provided to the Community Development Office.
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