Tuesday, September 7th is Foreclosure Tuesday. Here is a quick look at the Houston area foreclosure stats:
Posted Homes for Foreclosure
Posted foreclosures for the Greater Houston Area total 6,689 which is a 43% jump from last month’s 4,478. Galveston County continues to rocket forward with a 53.7% increase over August’s posted foreclosures. Fort Bend County was not far behind with a 49.1% increase in postings. Harris County and Brazoria County finished neck to neck with increases of 38.2% and 36.7% respectively. If there was a winner it is Montgomery County with only a 30% increase.
Regardless of county, the local Greater Houston Area is seeing a big leap in lenders pursuing foreclosures.
- 309 vs 226 for August – Brazoria County (Pearland, Alvin, Lake Jackson, etc.) +36.7% increase
- 874 vs 586 for August – Fort Bend County (Missouri City, Sugar Land, Richmond, etc.) +49.1% increase
- 375 vs 244 for August – Galveston County (Galveston, Clearlake, Texas City, etc.) +53.7% increase
- 4,649 vs 3,361 for August – Harris County (Houston, Pasadena, Baytown, etc.) +38.2% increase
- 482 vs 371 for August- Montgomery County (Montgomery, Conroe, Splendora, etc) +30.0% increase
- 6,689 – Total
With such a large number of postings, although not every house will be sold, the local real estate market is going to struggle to absorb the increase in foreclosure inventory. As an example let’s look at the numbers moving through the Houston Association of Realtor Multiple Listing Service.
Currently there are 54,926 properties for sale in the greater Houston area. Of this number, 4,778 are REO (real estate owned), commonly called foreclosures; this accounts for 8.2% of the market. Add in Short Sale listings for another 1,807, which is 3.3% of the market and you now have 11.5% of listings which are distressed sales. Distressed sales typically drive down prices. Especially when roughly one out of every ten homes for sale is a distressed sale. But if the market can absorb them, in other words they are selling as fast as they come in, then everything is still OK.
Let’s look at how fast the distressed sales are moving. Last month, in the Greater Houston Area, 941 of the properties in MLS sold as “foreclosures” and another 109 sold as “short sales”. That means that only 1,050 properties out of the 6,585, or 16% of the distressed sale category actually sold through. At this rate it would take roughly six months to sell through the distressed inventory – but this assumes that no new properties are listed for sale. But remember we have 6,689 properties posted for the foreclosure sale.
We’ll have to closely watch the sell through rate as well as the actual number of properties that foreclose to see if our market can handle the inevitable and eventual and likely substantial increase of distressed listings.
Foreclosures for Sale* -4,778
- 264 – Brazoria County (Pearland, Alvin, Lake Jackson, etc.) +3.2% (+0.9% MOM)
- 551 – Fort Bend County (Missouri City, Sugar Land, Richmond, etc.) +8.2% (+12.2% MOM)
- 360 – Galveston County (Galveston, Clearlake, Texas City, etc.) +9.1% (+5.0% MOM)
- 3,155 – Harris County (Houston, Pasadena, Baytown, etc.) +0.4% (+2.1% MOM)
- 448 – Montgomery County (Montgomery, Conroe, Splendora, etc.) +2.6% (+7.7% MOM)
Short Sales for Sale on MLS – 1,807
- 78 – Brazoria County (Pearland, Alvin, Lake Jackson, etc.) +8.9% (+4.0% MOM)
- 226 – Fort Bend County (Missouri City, Sugar Land, Richmond, etc.) +1.4% (-5.4% MOM)
- 106 – Galveston County (Galveston, Clearlake, Texas City, etc.) +16.5% (+8.2% MOM)
- 1,260 – Harris County (Houston, Pasadena, Baytown, etc.) + 1.8% (+1.7% MOM)
- 137 – Montgomery County (Montgomery, Conroe, Splendora, etc) -5.6% (-2.8% MOM)
Foreclosures Sold in MLS in July – 1,070
- 47 – Brazoria County (Pearland, Alvin, Lake Jackson, etc.)
- 118 – Fort Bend County (Missouri City, Sugar Land, Richmond, etc.)
- 67 – Galveston County (Galveston, Clearlake, Texas City, etc.)
- 741 – Harris County (Houston, Pasadena, Baytown, etc.)
- 97 – Montgomery County (Montgomery, Conroe, Splendora, etc)
Short Sales Sold in MLS in July – 109
- 3- Brazoria County (Pearland, Alvin, Lake Jackson, etc.)
- 15 – Fort Bend County (Missouri City, Sugar Land, Richmond, etc.)
- 3 – Galveston County (Galveston, Clearlake, Texas City, etc.)
- 77 – Harris County (Houston, Pasadena, Baytown, etc.)
- 11 – Montgomery County (Montgomery, Conroe, Splendora, etc)
Foreclosures Sold in MLS in August- 941
- 46 – Brazoria County (Pearland, Alvin, Lake Jackson, etc.)
- 91 – Fort Bend County (Missouri City, Sugar Land, Richmond, etc.)
- 54 – Galveston County (Galveston, Clearlake, Texas City, etc.)
- 659 – Harris County (Houston, Pasadena, Baytown, etc.)
- 91 – Montgomery County (Montgomery, Conroe, Splendora, etc)
Short Sales Sold in MLS in August – 69
- 3- Brazoria County (Pearland, Alvin, Lake Jackson, etc.)
- 14 – Fort Bend County (Missouri City, Sugar Land, Richmond, etc.)
- 3 – Galveston County (Galveston, Clearlake, Texas City, etc.)
- 42 – Harris County (Houston, Pasadena, Baytown, etc.)
- 7 – Montgomery County (Montgomery, Conroe, Splendora, etc)
* Foreclosures & Short Sales are combination of HAR MLS & non-MLS REO/Corporate sales, averaged over 2 months.
**MOM = Month over preceding Month
This information cries out, “Houston, we have a problem.” I find the numbers especially depressing for Harris County Short Sale Sellers.
Nearly all of the 1260 short sales listed in Harris County will NOT sell in September or October. Only 42 closed in August. These numbers seem to imply we have 30 months of short sale inventory. However, the sad fact is that we are seeing only 1 out 4 short sales actually close before going to foreclosure. Consequently, the true inventory turn for Harris County short sales is more like 7 or 8 months.
I say again, “Houston, we have a problem.” Overall MLS stats suggest that 3 out 4 Short Sellers are winding up in Foreclosure in spite of their efforts to sell short. I know from personally working with Short Sellers and Short Sale Buyers that there is considerable grief, frustration, and perhaps even rage that comes to the surface when you work for any extended period of time on a short sale that does not work out.
Is there a short term lesson to be learned from these stats? Certainly: It is very important to make sure that the people handling your short sale know what they are doing. I’m glad to say that EJ, Ron, Steven, Dan and the rest of the gang at HSC do know what they are doing. I rely on them every day.