HOUSTON -- Home prices in Houston have been rebounding, heading up for the fifth straight month. National averages have been going the opposite way, showing month after month of decline. But before you start making decisions about whether it’s a good time to buy or sell, wait until you see what 11 News found: a potential surplus supply of homes that some realtors said are "not for sale."
"There's a huge inventory of homes out there that the mortgage companies aren't doing anything with,” said Michael Weaster, a realtor with Century 21. “They're not even foreclosing on them. They're just letting them sit there.”
He said they even have a name for these vacant homes sitting month after month.
"They're calling it the shadow inventory," he said.
No one knows how many there might be. Weaster guesses there are hundreds.
There's disagreement over why it may be happening: some real estate experts believe banks have an incentive to hide foreclosures as long as possible because they can hurt a bank's financial status.
One of the biggest home lenders, Bank of America, flatly denies it's keeping foreclosures from being sold.
"We do not hold foreclosed properties off the market," the bank said in a statement quoted by the Los Angeles Times. "We have an obligation . . . to prepare foreclosed properties for market and sell them as efficiently as possible."
But what seems clear is it could take years to sell all of the surplus homes because some experts think the housing market hasn't finished dropping.
“So now what's happened is, and we've noticed this in the last two months, is home prices are now beginning to decline again," said Lance Roberts, of Houston’s StreetTalkAdivsors, a financial planning company.
He traces the decline to lending getting back to how it used to be: to get a loan, you need money for a down payment and a steady job. Those used to be the basic qualifications before so-called “sub-prime” lending resulted in homes being sold to people who really couldn’t afford them.
So now, with stricter lending, fewer people will qualify and fewer will buy homes.
"We lived in a fantasy period for the last seven or eight years because of extremely lax credit," said Roberts.
One subdivision near Pearland may be a dramatic case-in-point and a reason to question how things here got so bad.
"I thought it was going to be the best, good”, said Alfonso Garcia, a homeowner in the Cold River Ranch development.
“Oh yeah, like ghost town,” is how Jay De Leon, the president of the homeowners association described what had happened.
“There's a lot of houses just abandoned," said another resident, Jo Ella Faulkner. She describes how brutal foreclosures have been to her neighbors. "There's a woman down the street, we used to work at McDonald's together. They told her either you pay the money now or you get out of here."
Driving the streets, there are vacant lots now growing weeds. And home after home left vacant after the people who bought them just a few years ago could no longer afford them.
"These houses were originally built two, three, or four years ago for $110 to $130,000. I'm selling them for $60 to $70,000 right now," said Weaster.
Some homebuyers had complaints about the original developer of the subdivision.
Turns out the Texas Attorney General has been investigating the developer that the AG says did business in Houston and other cities in Texas under the name Casa Linda Homes.
There were allegations that the developer took advantage of first-time homebuyers with poor credit histories.
Casa Linda didn't return our calls.
Whatever happened, homeowners in the subdivision said the glut of foreclosed homes is decimating prices.
"I've lost like 25 percent value," said De Leon.
That’s been good for recent buyers like Cynthia Elliott.
"Well, I actually bought a foreclosure," she said.
The big question: will there be enough buyers like her to continue to buy up the foreclosed homes as they hit the market? Or will a lack of buyers mean that prices still have further to fall?
