Texas multifamily real estate has faced increasing challenges since late 2023, and industry analysts believe the situation may worsen in the coming years. At a recent Connect CRE conference focusing on Texas multifamily, panelists discussed concerns about rising distress in the sector. The panel highlighted that $19 billion in commercial mortgage-backed securities (CMBS) loans linked to Texas multifamily properties will mature over the next five years.
CWCapital’s James Shevlin described the situation succinctly: “It’s trouble.”
The number of foreclosure auctions is rising each month across Texas’ largest counties. In September, more than $700 million in commercial real estate loans were marked for foreclosure—an increase from roughly $400 million reported in July. Most affected properties are older apartment complexes financed with 2022 loans. Many operators acquired these buildings using floating-rate debt when interest rates were low, intending to renovate, raise rents, and sell at higher prices. However, as interest rates climbed, debt service costs increased before these plans could be realized.
Harris County, which includes Houston, has been especially impacted. At the September auction, ten properties totaling almost $350 million in debt faced foreclosure. This included several holdovers from previous months when operator Fercan Kalkan had 3,000 units headed toward default.
The Dallas Federal Reserve’s latest Beige Book offers a reserved perspective on local commercial real estate conditions and notes “scattered reports of distressed property sales.” It also reports slowdowns in construction and investment sales.
Elsewhere in Texas real estate news this week:
On CNBC’s Squawk Box, Federal Housing Financing Agency head Bill Pulte declined to address allegations of mortgage fraud involving Texas Attorney General Ken Paxton or similar accusations related to Federal Reserve Governor Lisa Cook. These allegations contributed to Cook’s removal by former President Donald Trump and have occurred alongside political efforts by Trump urging Fed Chairman Jerome Powell to lower interest rates.
Land Tejas co-founder and CEO Al Brende died at age 80. Since its founding in 1997 under Brende’s leadership, Land Tejas developed more than 15,000 acres across over 20 Houston-area communities—including Sunterra—which ranked fourth among top-selling master-planned communities nationwide in 2024.
In Austin’s cooling single-family home market, a newly built 3,400-square-foot house at 1001 Bluebonnet Land was listed for $3.25 million on May 8 but was removed from MLS on August 14 and relisted a day later with an asking price of $3.4 million—a $150,000 increase. Benjamin Goudy of Texas Crossway Realty holds the listing.
