Texas multifamily has been falling from grace since the end of 2023, but experts say it’s still just the beginning.
At a Connect CRE conference on Texas multifamily, speakers on a panel about distress anticipated a mounting wave, as $19 billion in CMBS loans tied to Texas multifamily is set to mature in the next five years.
CWCapital’s James Shevlin kept it succinct: “It’s trouble.”
As the foreclosure auction block grows increasingly crowded each month, it would appear that trouble’s already here. This month, more than $700 million in CRE loans in Texas’ largest counties were flagged for foreclosure. That’s up from about $400 million in July.
Most of the properties in question are older apartment complexes with loans from 2022. The prevailing narrative is that upstart multifamily operators amassed portfolios with floating-rate loans when debt was cheap. They planned to renovate these aging properties, jack up rents and sell the apartments at a premium. But, interest rates — and their debt service — ballooned before many of them could execute.
Month after month, Harris County, home to Houston, is hardest hit. At the September sale, 10 properties totaling nearly $350 million in debt faced foreclosure. The number includes a few holdovers from last month when multifamily operator Fercan Kalkan had 3,000 units targeted for default.
The latest Beige Book from the Dallas Federal Reserve faintly echoes these woes with a “cautious” outlook for commercial real estate in the area, noting “scattered reports of distressed property sales.” Construction and investment sales are sluggish, it reported.
Here’s more Texas real estate news from this week:
On CNBC’s Squawk Box, Federal Housing Financing Agency boss Bill Pulte refused to comment on mortgage fraud accusations involving Texas Attorney General Ken Paxton. In the same segment, he discussed similar accusations involving Federal Reserve Governor Lisa Cook. The accusations provided the basis for Cook’s ouster by Trump, who’s also been exerting his populist political style and appeal in attempts to convince Fed Chairman Jerome Powell to lower interest rates.
Houston-based master-planned community developer Land Tejas announced co-founder and CEO Al Brende died at the age of 80. Since Brende helped found the company in 1997, it’s developed 15,000 acres of land and more than 20 communities in Houston, including Sunterra, which is consistently ranked among the top-selling master-planned communities nationwide. In 2024, it came in fourth.
The top single-family sale in what’s become a buyers market in Austin was a 3,400-square-foot new build in Zilker. The five-bed, four-bath at 1001 Bluebonnet Land was asking $3.4 million. It was listed on May 8 for $3.25 million, removed from the MLS on Aug. 14, and relisted the next day asking $150,000 more. Benjamin Goudy of Texas Crossway Realty has the listing
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Pulte passes on questions of mortgage fraud swirling around Paxton
$700M in Texas CRE debt pegged for foreclosure auction this month
Land Tejas boss Brende dies at 80
