The HOA Crash

Published in the March Rex Report.

HOA foreclosures have dropped like a rock. A number of laws that were passed in 2011 went into effect on January 1st 2012. One of those made HOA foreclosures judicial sales. This means that all HOA foreclosures must pass by a judge’s courtroom before being auctioned off. This has caused a short term drop in foreclosures that may not reappear in a vengeance until after the November elections. There has been some speculation that this could put a large number of HOA associations into receivership and cause the retraction of some of the more onerous HOA practices. A more likely scenario is a greater burden on homeowners with attendant increase in foreclosure postings and auctions. We might also see HOAs do title searches on properties to go after ones with some equity. Should the State decide to reverse itself in the future and return to non-judicial foreclosures for HOA properties, there would be a large bump in foreclosures as the judicial and non-judicial pipeline of HOA postings overlap.

Lower Foreclosures and Worse Economy

One of the scenarios that has not got much consideration is having the economy get worse while the foreclosure numbers get better. These pages have suggested this trend in the past, while the Express News has reported our prediction of slightly lower foreclosure postings. While this may seem counter-intuitive, it does make sense when looking at the Fed’s monetary policy. In fact, I think this has already happened. The 2011 1st quarter raw postings of Bexar is 4,370, while 2012’s is only 3,566. The artificial drop in HOAs would only account for a hundred or so postings, so this is a very real drop. The national numbers are a little worse than Texas but the trend holds. There are all kinds of stories about the economy looking a little better, but about all the good stories are through the lens of an estimated low inflation and unemployment rate. When the true inflation of goods is counted and the real number of people who are not working is counted, the picture changes a subtle shade from rosy pink to bloody. Worse economy, better foreclosure postings. How can this happen? With much more currency in circulation, currency has to go somewhere, why not real estate? Note this does not necessarily mean a lot of new construction, since building material costs are subject to the same price inflationary pressures. Like a lot of the economy, the depression has kept some retail prices down, but any release of building demand should take building costs up in line with inflation.

Occupy Austin Forgot Travis Auction

Occupy Austin Facebook page indicated that protesters would return to the courthouse for the March auction. They did not come.

Shorter Free Workshop

We have shortened the free workshop length from 120 minutes to 70 minutes. The times are now 10:30am to 11:40 am. The next free workshop is on March 8th.

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