Texas Pre-Foreclosures Drop, but Struggles for Homeowners Persist

For many Texas homeowners, a home is not just a roof over their heads—it’s a financial foundation, a legacy, and a source of stability in an unpredictable economy. But for nearly 2,000 households this month, that foundation is on shaky ground.

In June 2024, 1,999 Texas properties entered pre-foreclosure, marking a significant decline from both the previous month and the previous year. That’s a 20.94% drop from May 2024, when 2,529 homeowners were at risk of losing their properties, and a more striking 30.22% decline from June 2023, when 2,864 homes were in trouble. For policymakers and economists, these declining numbers suggest a housing market in recovery. For homeowners living paycheck to paycheck, however, the reality is far messier.

The Faces Behind the Numbers

Take, for example, Maria Sanchez, a 41-year-old single mother in Houston. She bought her modest three-bedroom home in 2015, back when interest rates were near historic lows. For years, she managed to stay ahead—working two jobs to cover mortgage payments, utilities, and groceries for her two children. But when inflation sent food and energy prices soaring, Maria found herself skipping meals so her kids wouldn’t have to.

Then came the property tax hikes. Like many Texas homeowners, Maria didn’t have the cushion to absorb increasing costs. When a sudden medical bill forced her to choose between paying the mortgage or covering an emergency surgery, the choice was obvious. Now, she’s on the verge of losing her home.

“I did everything right,” she says, holding back tears. “I worked hard, saved what I could. And now I’m watching my home slip away.”

Are Lower Foreclosures A Sign of Recovery?

The good news is that Texas is seeing fewer pre-foreclosures compared to last year, a sharp contrast to the early 2010s when the housing market fallout sent the state’s foreclosure numbers soaring past 12,000 per month.

Texas foreclosures peaked during the Great Recession, when job losses and risky loans pushed thousands of homeowners into financial ruin. The numbers have steadily declined since the late 2010s, but the COVID-19 pandemic scrambled the trajectory again. In 2020 and 2021, widespread government interventions—stimulus payments, eviction moratoriums, and loan forbearance programs—prevented another foreclosure crisis. Monthly pre-foreclosures plummeted to just 47 in 2021, the lowest in recorded history.

However, those protections didn’t last forever. By 2022, as moratoriums expired and job uncertainty lingered, foreclosures began creeping upward again. Last year, Texas has averaged 2,354 pre-foreclosures per month, a significant increase from 637 per month in 2022.

To housing advocates, these numbers pose a critical warning: The foreclosure slowdown doesn’t mean the housing market is affordable again—it just means fewer homeowners are on the brink.

Rising Home Costs, Stagnant Wages

At the heart of Texas’ housing crisis is a brutal mismatch between home prices and incomes. Median home prices in Texas have surged over the past decade, spurred by population growth and investor speculation. Meanwhile, wages have struggled to keep up.

Houston, Dallas, and Austin—long considered cities of opportunity—are now among the least affordable places for middle-class families earning the median income. Renters hoping to transition into homeownership face steep down payments and rising mortgage rates, making it nearly impossible for many to purchase their first home.

Even existing homeowners, once financially stable, are feeling the squeeze. Many are still dealing with the aftershocks of the pandemic—lost wages, depleted savings, and mounting debt. Higher insurance costs and rising property taxes, particularly in cities with skyrocketing valuations, have pushed some homeowners over the edge.

The Emotional Toll of Pre-Foreclosure

For those facing uncertainty, the road ahead can be isolating. Pre-foreclosure notices don’t mean immediate eviction, but they signal a ticking clock. Homeowners in financial distress often experience sleepless nights, shame, and anxiety that prevent them from reaching out for help.

Jeff Warren, a 62-year-old veteran from San Antonio, thought he’d retire in his family home. After a medical diagnosis required him to stop working, his disability check wasn’t enough to cover his mortgage. Now, he’s months behind on payments and overwhelmed by predatory loan modification offers.

“I served my country. I worked hard my whole life,” Jeff says. “I never thought I’d end up here.”

What Comes Next?

For homeowners in distress, options still exist. Proactive loan modifications, government assistance programs, and nonprofit organizations can offer lifelines to those at risk of losing their homes. But resources are limited, and accessing them requires time and financial literacy—two things struggling homeowners often don’t have.

Meanwhile, Texas legislators and local governments must grapple with the real issue at hand: Long-term solutions to housing affordability. Policies that limit tax spikes for low-income homeowners, expand legal assistance for foreclosure cases, and increase access to affordable refinancing options could make a real difference.

The numbers tell a paradoxical story. Foreclosures may be decreasing, but financial insecurity remains high. For families like Maria’s and Jeff’s, the fight to stay in their homes isn’t about percentages or trends—it’s about whether they can afford to keep the place they call home.