New Houses Compete with Foreclosure and Tax Lien Sales in Texas in 2010

by Peter Vernon on Foreclosures

Construction of new houses improved in some areas of Texas in 2010 despite tough competition from low-priced dwellings such as foreclosed residential properties and those offered at tax lien sales. In North Texas, the increase was 12% compared with the previous period. According to industry analysts, housing starts improved during the year because builders tried to accommodate rising demand caused by the federal government's tax credit program.

Although Kingwood foreclosed homes and distressed property numbers in various areas of the state continued to increase during the period, home builders were able to start a total 16,843 residences in the North Texas area and closed a total of 15,275 in 2010. Residential property starts peaked in 2006 when the total reached 48,203 and closings were 46,766.

New home construction was up in the first two quarters of 2010 when the tax incentive was available, but started slowing down in the second half. According to analysts, residential property sales, including numbers for existing homes like those in listings of bank foreclosures in Texas, started declining in the third quarter. Home builders responded by cutting down on residential projects. However, the number posted in the first half was enough to give the area a higher figure compared with 2009.

Despite higher housing unit starts compared with 2009, closings were down compared with the same period, with 2010 closing numbers posting a 6% decline as builders tried to cope with the expiration of the tax credit and the huge supplies of distressed homes and tax lien sales. Declining consumer confidence and tighter mortgage loan qualification standards also affected home construction negatively in the last six months of the year, analysts have added.

The markets of Little Elm, McKinney and Frisco posted the largest increase in housing start activities for the year despite facing challenges from foreclosure sales. The three areas had a combined increase of 39% compared with 2009, with a total of 710 new homes constructed. In addition, Frisco was able to post an increase for closings at 22%.

Although the region had huge supplies of distressed homes and tax lien sales, it was able to post better housing start numbers in 2010. For 2011, analysts are predicting further increases that can be as high as 15%.