Foreclosures rise in Texas, Florida as homeowners struggle with mortgages and a tough market

Foreclosures are rising in some Florida and Texas cities, as property taxes, higher interest rates and insurance costs are making it harder for owners to make their mortgage payments or sell their houses, Bloomberg reported.

Foreclosure filings increased by 37% in Houston in the first quarter, the outlet reported using data from property tracker Attom. It was followed by Orlando, Tampa and Miami. Two areas in California complete the top five, with the Dallas-Fort Worth-Arlington area in Texas following suit.

Foreclosure filings tend to rise with higher unemployment and weak home equity, something that isn't happening in those markets, said Rob Barber, Attom CEO.

The situation in the states contrasts with that of the rest of the country, where foreclosures are decreasing. A reason for this could be that many of the defaulting borrowers recently bought their homes, and they might not have the home equity to repay loans by selling.

Moreover, as mortgage rates remain above 7%, selling properties to pay loans is also getting more difficult.

The figures come shortly after a report from real estate company Zillow, which showed Texas and Florida to be the best states for buyers to get a home, with seven of the country's top 10 cities from the areas.

Houston, Austin and San Antonio made the list in the former, while Jacksonville, Orlando and Tampa did so for the latter.

The states' attractiveness becomes higher when considering that most of the country's 50 largest metro areas currently favor those who are selling. This is because there still is a "desperate lack of homes on the market for buyers to choose from compared to the pre-pandemic" period despite price cuts and inventory ahead, the company explained.

"So while the index is further in favor of buyers than any April since 2019, it's still in seller's territory," Zillow added. The company crafted its index based on the share of homes that go pending in three weeks or less, those with a price cut and engagement on the company's active listings in the market.

Looking at Texas and Florida, the company explained that potential buyers are seeing less competition than in the early pandemic period, as "strong construction in many of these markets has helped restore inventory levels." "Austin and San Antonio are two of just three markets with more inventory now than pre-pandemic, while Tampa, Orlando and Jacksonville have among the smallest deficits."

The larger inventory mean that three of the four "buyers markets" are in Florida. And out of the seven that are neutral, another one is in Florida while three more are in Texas. The remaining 39 are seller markets or strong seller markets, Zillow said. On the other end of the spectrum are Buffalo and coastal tech hubs like the Bay Area.