Dire Warnings of a Bursting Real Estate

By Joe Taylor Jr.
Local Lender Columnist
May 8, 2006
Dire warnings of a bursting real estate bubble have dispelled into calmer predictions of a market slowdown. However, analysts predict that markets in Texas should remain stable or even continue appreciating at above average rates despite repeated hikes in the 30-year mortgage rate. One builder in Dallas recently told reporters that the market there is the best he's ever seen.

Though the Texas real estate market has appreciated, it has not jumped to the hyper-inflated prices of other American regions. A recent survey showed that nine of the top ten housing markets in Texas are still under-priced. By comparison, some markets in Florida and California have increased between 20% and 40% annually.

This is good news for homeowners in Texas. Though not incredibly attractive for speculators, long-term property owners will enjoy steady growth in their home equity as prices rise. With mortgage rates still hovering at generational lows, homeowners that lock in low-interest, fixed-rate mortgages now can reap the benefits of this year's market for decades.

Texas' Cooling Market Offers Hope for Homeowners

The stable real estate market in Texas will also benefit home buyers and sellers, cooling off new home production and stabilizing the market. In these conditions, buyers will avoid risky interest-only mortgages that make sense only for short-term investors. The prices in Texas should remain more true to houses' values, keeping mortgage payments affordable for homeowners with strong home equity.

Though speculators have made millions of dollars in Texas over the past five years, a cooling market puts the focus back on homebuyers with traditional mortgages. Buying in a growing market such as Texas could be an affordable and smart financial decision.

Sources:
The Dallas Morning News
The Houston Chronicle
MSNBC
MSN Money

About the Author
Joe Taylor Jr. has covered business and finance news for Financial Times Television and CNBC. He coaches beginning mortgage brokers to provide better customer service and to understand creative financing opportunities.