Denton feeling national housing slump

by Andrew McLemore of North Texas Daily

DENTON — Residential foreclosures continued to rise across North Texas this month, with Denton County's foreclosure rate 40 percent higher than April of last year, according to recent statistics.

April foreclosures rose more sharply in Denton County than any of the other 10 North Texas counties surveyed, leading by at least 17 percent, according to Foreclosure Listing Service, Inc.

"A lot of people went into home ownership who shouldn't have," said Bernard Weinstein, director of the center for economic development and research. "I think the next two years will see increases, even if Congress manages to do something."

Weinstein said many people whose homes are foreclosed move into an apartment or lease a home, which could mean trouble for students.

He said apartment vacancies in the Dallas-Fort Worth area are lower than they have ever been, hovering at about 6.5 percent.

For students, this means apartment rents will continue to rise.

"Over 162,000 people moved into the DFW area last year," Weinstein said. "We added more people than any other area in the nation."

Weinstein also said the combination of a market flooded by foreclosed homes and large growth in population and new housing means prices are cheaper.

But he added that loans are also more difficult to obtain than a year ago.

Weinstein said many people bought homes in 2006 with "teaser" interest rates. A teaser rate begins at a lower rate like 5 percent, but increases to 7 percent or 8 percent after about three years.

Weinstein said 25 percent of all North Texas loans in 2006 involved such a rate and foreclosures will rise even higher in 2009 when homeowners will face an increased interest rate.

Brad McKissack, a real estate agent, said the leasing market for homes in Denton County is "brisk" and steadier than what he has seen before.

McKissack said most foreclosures were in areas of new development along the Highway 380 corridor between Aubrey and Frisco. He said single-family homes in the $90,000 to $150,000 range are 25 percent more likely to be sold.

"It slows business down more than normal," McKissack said.

McKissack said his realty has noticed the foreclosure rate in Denton County since September 2007, but the number of foreclosures in Tarrant and Dallas counties remains higher.

"I still think we will see them in abundance over the next two to three months," he said.

Although the numbers of foreclosed homes continue to rise, the national market still lags far behind Texas, said George Roddy, the director of Foreclosure Listing Service, Inc.