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San Antonio's Foreclosure Rate Dropped Last Year

The San Antonio-area foreclosure rate dropped last year to one of its lowest levels in the lastdecade, following a nationwide trend as the U.S. economy continues to recover from the housing crisis that began almost a decade ago.

The San Antonio-New Braunfels metro area had a foreclosure rate of 0.6 percent last year, with 5,137 properties in foreclosure, according to a report released Wednesday by analytics firm Attom Data Solutions. That's down 9.3 percent from 2015, when the local rate was 0.67 percent, and 54 percent below the post-recession peak of 1.46 percent in 2010, according to Attom.

Job growth, rising home values and stricter lending standards after the 2010 Dodd-Frank financial reform bill have pushed the local foreclosure rate down, said Jim Gaines, chief economist at the Texas A&M Real Estate Center. He predicted the rate is on its way back to its historic norm of about 0.5 percent — a low rate by national standards.

"San Antonio has always been a far more stable market," Gaines said. "Lending in Texas, and particularly in the San Antonio area, never got extreme. The lenders know their market in that community very well, and they make loans that aren't as risky."

The local foreclosure rate increased by about 22 percent between 2014 and 2015, from 0.55 percent to 0.67 percent, according to Attom's data. Gaines said that was likely caused by the downturn in the oil industry, which affected local homeowners who worked in the Eagle Ford Shale area.

The local housing market is thriving: Last year was almost certainly another record sales year, with 27,147 homes sold by November, slightly below the record 27,219 sold in all of 2015, according to data from the San Antonio Board of Realtors.

Sales prices are also climbing fast as population growth causes demand to outstrip supply. Economists expect San Antonio-area home sales and prices to continue their ascent this year.

The San Antonio-area's 2016 foreclosure rate is below the U.S. rate of 0.7 percent — the lowest national rate since 2006 and a 14 percent drop from 2015.

Tight lending and a stronger housing market are reducing foreclosures nationwide, said Daren Blomquist, Attom's senior vice president. Banks are also working their way through "legacy foreclosures," or foreclosures on troubled loans made during the housing bubble between 2004 and 2008, he said. Those loans accounted for 55 percent of all loans in foreclosure at the end of last year, down from 75 percent three years ago.

"Loans originated in the last seven years are performing very well. You're not seeing those go into default at high rates," Blomquist said. "Home prices have not only stopped their free fall from a few years ago, but they've in many markets gotten back to new all-time highs."

Texas wasn't hit as hard by the housing bubble as many other states, and its foreclosure process is relatively speedy, so it has fewer "legacy foreclosures" piled up, Blomquist said. Those loans represented only 35 percent of all loans in Texas last year, he said.

Now that the U.S. foreclosure rate is at prerecession levels, Blomquist predicts it will stay about the same this year. But the administration of President-elect Donald Trump could bring big changes to mortgage lending, including the dismantling of Dodd-Frank.

"The expectations are that the rules, the regulations and the oversight on mortgage lenders are going to be relaxed a little bit, or maybe even significantly, and that's going to make mortgage lending a little bit easier to get for borrowers," Gaines said.

San Antonio has more foreclosure activity than Texas as a whole, where the statewide foreclosure rate was 0.45 percent last year. San Antonio's rate hasn't dropped as quickly as those of Texas' other major metros so far this decade. In the Houston metro area, for example, the rate dropped to 0.47 percent last year from 1.61 percent in 2010. The Austin metro area had a rate of 0.34 percent last year, while the Dallas metro had one of 0.51 percent.

The difference between San Antonio's foreclosure rate and those of other major Texas cities isn't significant, Gaines said. The booming housing markets in Austin, Dallas and Houston are reducing foreclosures there, he said — a homeowner in danger of default can escape foreclosure by selling the home and paying off the loan.

In defiance of the nationwide trend, foreclosure activity increased last year in Washington, D.C., and a dozen states, many of them in the Northeast. The biggest surge was in Delaware, where the foreclosure rate climbed 45 percent to 1.51 percent, followed by Rhode Island, with a 29 percent increase, and Massachusetts, with 21 percent. A weaker economy and a slower foreclosure process in those states are keeping rates high, Blomquist said.

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