Foreclosure starts in North Texas are running above the national average and rising faster than elsewhere the country, but experts say that one metric does not mean the region’s housing market is in trouble.
Aaron Wagner, head of data science at data analytics firm ATTOM, joined NTX Now's Ron Corning to explain why the broader picture is more reassuring.
These interview highlights have been edited for length and clarity. To hear the full conversation, click the 'listen' button above.
The Dallas-Fort Worth area has averaged a little more than 800 foreclosure starts per month this year, up about 24% from a year earlier. Nationally, foreclosure starts are up about 16%.
Wagner says the increase is worth watching, but it is not unprecedented. In 2015, a year Wagner described as not tumultuous, the region averaged more than 1,000 foreclosure starts a month. Today’s pace is roughly three-quarters of that level and nowhere near what the market experienced during the Great Recession.
“I don't think there's much reason for concern," he said. "I think the historical context is really important."
Homeowners have a stronger equity cushion
One of the clearest signs of underlying strength in the North Texas housing marker is the amount of equity homeowners have built. About 47% of mortgaged homes in Dallas-Fort Worth are considered equity rich, meaning the owner owes no more than half of the property’s value. Nationally, that figure is 41%.
At the other end of the spectrum, only about 1.5% of mortgaged homes in the region are seriously underwater, meaning the owner owes at least 25% more than the home is worth. The national rate is 3.2%.
“So, homeowners overall are still in a pretty strong equity position and that really matters overall,” Wagner said.
That equity gives homeowners more options if they encounter financial trouble, including the possibility of selling rather than losing the property through foreclosure. It also reflects the extraordinary appreciation many homeowners experienced during the pandemic-era housing boom.
Buyers who purchased near the peak face a different reality
Not every homeowner benefited equally from that appreciation, though. The Dallas-Fort Worth metroplex added more residents than any other U.S. metro area in both 2021 and 2022, bringing an unusually large number of buyers into the market while prices were surging.
Those who purchased near the peak have had less time to build equity through appreciation because prices have been flatter since 2022. Rising ownership costs, particularly homeowners insurance, have added pressure.
“That's the group I'd be watching closely are those folks that bought near-the-top,” Wagner said.
The distinction helps explain why foreclosure starts can rise even while the overall market remains relatively healthy: a smaller group of recent buyers may be under pressure, while many longer-term owners retain substantial equity.
Prices are adjusting, not collapsing
The median Dallas-Fort Worth sale price was about $377,000 in the first quarter, according to Wagner. That was up 2% from a year earlier, though still about 3% below the 2023 peak.
Price reductions have become more common as sellers adjust to what buyers can afford, but Wagner said inventory is not increasing significantly — an important difference from a market overwhelmed by homes for sale.
“It looks more like sellers are recalibrating to today's buyers rather than the market being overwhelmed by homes for sale,” he said.
Limited supply is helping support home values
Higher mortgage rates have cooled demand, but they have also discouraged existing homeowners from selling. Many owners have loans with rates well below today’s levels, making a move more expensive and reducing the number of homes coming onto the market.
Wagner also pointed to a longer-term shortage of housing construction following the Great Recession. That supply imbalance has helped prevent the kind of broad excess inventory that could produce a major decline in prices.
“I'd call what we're seeing a fairly orderly adjustment" Wagner said. "Buyers have more leverage and sellers are resetting their expectations a bit."
Ron Corning is a co-host of KERA's NTX Now. Got a tip? Email Ron at rcorning@kera.org.
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