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Foreclosure Forecast: How Texas Will Fare When Forbearance Is Gone?

Todd Teta

HOUSTON – (By Dale King, Realty News Report) – The COVID-19 virus pandemic has already inflicted isolation, business closings, travel restrictions, dine-out prohibitions, a general malaise and lots of fear upon Texans in a very short period of time.

And while they endure at home seclusion and all its ramifications, the idea of possibly losing their abode must certainly have crossed their minds.

A report released just this week by ATTOM Data Solutions, the Irvine, Calif.-based property data company, says COVID-19-fueled foreclosures should not be a major post-Corona crisis in the Lone Star State.

The study that ranked 483 counties nationwide for vulnerability to virus-related foreclosures says the Northeast has the largest concentration of most at-risk counties, with clusters in New Jersey and Florida, while the West and Midwest have the smallest.

Texas, in fact, has 10 of the 50 least vulnerable counties from among the 483 in the report, followed by Wisconsin with seven and Colorado with five.

The 10 Texas counties projected to sidestep the worst of the virus include three in the Dallas-Fort Worth metro area (Dallas, Collin and Tarrant counties).

The list of 18 of the 50 least at-risk counties in the report is led by Harris County (Houston), Dallas County, King County (Seattle), Tarrant County (Fort Worth) and Santa Clara County, Calif., in the San Jose metro area.

Still, it’s all a numbers game. And considering the fickle nature of the China-bred virus, it’s difficult to pin the total down.

“It’s too early to tell how much effect the Coronavirus fallout will have on different housing markets around the country. But the impact is likely to be significant from region to region and county to county,” said Todd Teta, chief product officer with ATTOM Data Solutions.

“What we’ve done is spotlight areas that appear to be more or less at risk based on several important factors. From that analysis, it looks like the Northeast is more at risk than other areas. As we head into the spring home buying season, the next few months will reveal how severe the impact will be.”

The report considers markets to be more or less at risk based on the percentage of housing units receiving a foreclosure notice in Q4 2019, the percent of homes underwater (LTV 100 or greater) in Q4 2019 and the percentage of local wages required to pay for major home ownership expenses.

Rankings are based on a combination of those three categories in 483 counties around the United States with sufficient data to analyze. Counties were ranked in each category, from lowest to highest, with the overall conclusions based on a combination of the three rankings.

Houston and other parts of Texas also face the double whammy of the oil price collapse. Oil briefly dipped below $19 a barrel last week and has been hovering in the $25 per barrel range in April. As the impact of energy firm cutbacks filters into the Texas residential market, the foreclosure outlook looms like a dark cloud.

In the ATTOM foreclosure report, Harris County is ranked 479 out of the 483 counties tested, almost guaranteeing foreclosures will tiptoe through town. In Harris County, 914 properties went into foreclosure in Q4-2019 – or .05%.

Among other counties making up the city of Houston, Montgomery County listed 191 foreclosure starts in Q4-2019, or .09%; Fort Bend County, 204 were served with foreclosure papers, or .09% and Galveston County, 121 began foreclosure proceedings, also .09%.

The ATTOM report said counties where median home prices range from $160,000 to $300,000 comprise 36 of the top 50 counties most vulnerable to the impact of the Coronavirus.

Counties with median home prices below $160,000 or above $300,000 make up 14 of the top 50 most vulnerable to the impact of the Coronavirus.

Those with median prices below $160,000 are among the most affordable in the nation to local wage earners, while those where median prices exceed $300,000 have some homes with the highest equity and smallest foreclosure rates.

Forbes Magazine added a mitigating factor to help soothe both home owners and renters. A recent article noted that as many as 15 banks are suspending foreclosures and/or evictions during the Coronavirus period.

The publication said some banks have only announced they’re enacting suspensions but haven’t mentioned for how long. Other banks have specified terms ranging from 30 days to 90 days.

For those who lease, Forbes noted that rent discounts and extensions, flexible due-date schedules and the conversion of security deposits into rent payments are some of the options property owners are offering their tenants.

Ironically, the threat of a jump in foreclosure statistics spurred by COVID-19 comes directly on the heels of figures tallied for February 2020, the lowest foreclosure month ever recorded by the home buying industry, which started recording these numbers in 2005.

“Foreclosure activity across the United States hit new lows in February, yet another marker of the nation’s long housing boom,” said Teta in ATTOM’s February foreclosure report.

“However, as with just about anything connected to the housing market, the foreclosure situation is now totally in flux because of the ever-evolving Coronavirus pandemic.”

Also, Teta, said, “Many lenders have suspended foreclosure proceedings, so the numbers will most likely continue to drop in the coming months. But after that, we may see an uptick in foreclosures as a result of dramatic economic impacts, such as more homeowners losing their jobs and falling behind on mortgage payments.”

April 8, 2020 Realty News Report Copyright 2020

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