It’s one of the great mysteries of the mortgage crisis: Why did Texas—Texas, of all places!—escape the real estate bust? Only a dozen states have lower mortgage foreclosure and default rates, and all of them are rural places like Montana and South Dakota, where they couldn’t have a real estate boom if they tried. No, Texas’ 3.1m mortgage borrowers are a breed of their own among big states with big cities. Just less than 6% of them are in or near foreclosure, according to the Mortgage Bankers Association; the national average is nearly 10%. Texas might look to outsiders an awful lot like Sunbelt sisters Arizona (13%) or Nevada (19%)—flat and generous in letting real estate developers sprawl where they will. Texas was even the home base of two of the nation’s biggest bubble-era homebuilders, Centex and DR Horton. Texas subprime borrowers do especially well compared with counterparts elsewhere. The foreclosure rate among subprime borrowers there, at less than 19%, is the lowest of any state except Alaska. Part of the state’s performance is due to the fact that Texas saw nothing like the stratospheric home-price run-ups other states experienced. On average, the 20 metro areas in the Case-Shiller Home Price Index saw their home-resale prices peak in 2006 after more than doubling since 2000. In Dallas, one of the 20, they went up just 25%, gradually, and have barely declined.

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