Texas foreclosure starts third in nation

Struggling Texas homeowners finding buyers, often institutions

Home foreclosures may be poised to rise in Texas, which ranked third in the nation in May for foreclosure starts, the first step in the repossession process, according to ATTOM Data’s monthly U.S. Foreclosure Market Report.

Foreclosure starts may not lead to completions, if struggling homeowners can find buyers for their properties. Texas was second-highest in starts in August, but the deluge never came. In May, it was third-highest with 2,019 starts, behind Florida, with 2,483 and California with 2,238.

“It’s interesting that there were almost 10 times more foreclosure starts than foreclosure completions,” said ATTOM’s Rick Sharga. “This suggests that financially-distressed borrowers may be finding ways to avoid losing their home to a foreclosure sale.”

Financially-distressed borrowers may not have much trouble finding buyers in Texas, which had the highest rate of homes sold in the U.S. going to big investors last year. In Travis County, 41 percent of single family homes are owned by investors and in Tarrant County, it was 52 percent.

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The fact that investors pay cash and buy homes ‘as is’ gives them a huge advantage over the typical homebuyer, says Shannon Ashkinos, president of the Greater Fort Worth Association of Realtors.

“Traditional homebuyers just can’t compete,” Ashkinos told the Dallas Morning News last month. “Anyone trying for a traditional loan is stuck, in a way.”

Nationwide, a total of 30,881 U.S. properties received foreclosure filings last month. That’s one in every 4,549 housing units — a 1 percent jump from the month before but 185 percent more than a year ago. Lenders repossessed 2,857 U.S. properties through completed foreclosures (REOs) in May 2022— up 117 percent year-over-year. Illinois, New Jersey and Delaware had the highest foreclosure rates, with one in every 2,000 housing units receiving a foreclosure filing in Illinois.

As home prices continue to rise, more potential home buyers are becoming renters, and single family rentals are growing across the major Texas metros. One international investor, Partners Group, recently picked up a $1 billion portfolio of Texas single-family rental properties.

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A photo illustration of investors dominating Texas' residential real estate market in 2021 (iStock)
Wall Street scooped up a third of Texas single family homes sold last year