First, although too many subprime loans were approved for homebuyers with poor credit, the truth is that most of those people are still living in the homes and making payments. If the foreclosure rate is 10%, then 90% of the homes are still occupied.

Second, now is still a good time to buy a home in Texas.

James Gaines, Ph.D., a research economist with the Real Estate Center at Texas A&M University, is the state’s foremost authority on residential housing. When asked if now is still a good time to buy a home in the Lone Star State, he says yes and cites four reasons.

Reason No. 1. Availability of mortgage funding.
Contrary to popular belief, there is still plenty of mortgage money available at low interest rates. But, he notes, homebuyers will have to qualify for a loan under the traditional underwriting standards.

The Federal Home Loan Mortgage Corporation’s 30-year, fixed-rate loan interest rate was 6.37% in August. Remember the early 1980s when mortgage interest rates were more than 12% for five straight years? Home loans are still a good deal.

Reason No. 2. Wide selection.
There’s a large inventory of homes for sale, so buyers have a wide selection of homes to choose from. Builders are lowering prices or offering other incentives to reduce inventories, and buyers have somewhat more negotiating power today than in the past several years.

Texas had a six-month inventory of unsold existing homes at the end of August. That’s 15.4% more than a year ago. The national inventory was 9.6 months, up 27.8% from 2006.

The National Association of REALTORS® reports inventories of unsold single-family homes nationally rose to an 18-year high in August. That’s a seasonally adjusted annual rate of 5.5 million.

At the end of September, nearly 49,000 pre-owned single-family homes were for sale in North Texas alone, up 4% from a year earlier. In Houston, a home builder describes the market as a “glut” because of declining sales. He said his inventory of unsold new homes is at an all-time high.

The median price for an existing Texas single-family home in August was $151,800, up 2.5% from 2006. Nationwide, the median price is more than $228,600.

In North Texas, the median home price in September was $147,500, up 3% from a year earlier.

A recent study released by PMI Group predicts there is less than a 10% chance Dallas-Fort Worth area prices will fall during the next two years. Nationwide, the odds of a drop in home prices are more than 30%. The San Francisco-based mortgage insurance company analyzes housing price trends in 50 U.S. metropolitan areas for its quarterly report. Major Texas cities in the study are considered among the least likely in the country to see home-price declines.

If you have any expectations of waiting until later to buy – in hopes of getting a home for a significantly lower price – that’s not realistic, says Gaines.

According to the Coldwell Banker Home Price Comparison Index released in late September, the average four-bedroom, 2½-bath home costs $2.21 million in Beverly Hills, California. That’s the highest in the United States. So where was the most affordable average home? Killeen, Texas, with an average of only $136,725.

Reason No. 4. Home appreciation.
“Medium- and long-term housing prospects for Texas are very favorable,” says Gaines. “Home-value increases are likely to continue above the national average – but you better plan on staying in the home for several years if you want to recoup any significant price appreciation.”

Texas avoided the overly speculative housing markets that we read about in California, Nevada, Florida, Arizona and much of New England. While Texas sellers in recent years did not cash in on 30% median home-price increases that sellers in some U.S. markets scored, they have seen a steady 4.3% per year increase in home prices.

Gaines predicts the median Texas home price will rise to nearly $184,260 by 2015 and more than $208,620 in 2020.