Valid points for sure, but this certainly doesn’t mean Texas will be immune from the distortions in the housing market
The math of payment shock means the Reuters story is the harbinger of more accounts. I only hope some of them focus on how banks and regulators made matters vastly worse for borrowers through their efforts to save their own hides.
It might come as a surprise to NC devotees, but we primitives in Texas are not experiencing this problem to a significant degree. The main reasons are threefold: –We didn’t have the absurd bubble in housing prices –The economy has been better (or “less worse”) in general here –And, perhaps most importantly, HELOC regulations in Texas state that the total value of first and second liens is not supposed to be greater than 80 percent of the fair market value of the home. While the regulation undoubtedly could be abused via inflated appraisals, it served as a significant deterrent to using one’s primary residence as an ATM.
We’re already seeing overheating markets here in Houston
If the shale ‘miracle’ stalls, then it would be reasonable to assume our real estate market will soften too. (more…)