All across the country, the headlines are saying: “Now is a bad time to buy a house,” “The ‘subslime’ that ate Wall Street,” “How low can Florida sellers go?” and “House sales dive 39% in Treasure Coast of Palm Beach.”

It’s enough to make you want to turn off the television, cancel your newspaper subscription, and retreat into a box of Moon Pies.

But not here.

Although the real estate market is depressed in many parts of the U.S. (notably the east and west coasts), right here in the center is one state that continues to buck the trend and defy the naysayers predicting a big bust.

That’s right. In Texas we’re still seeing gains in the market at all levels, from home appreciation in nearly all areas of the state to active buyer’s and seller’s markets in many communities. Sure, the overall market’s slowed down a tad, but not nearly to the degree of the rest of the country.

In fact, according to recent figures from the Office of Federal Housing Enterprise Oversight, home prices in Texas increased 6.9% during first quarter 2007, well above the 4.3% national average.

“Despite the national slowdown, Texas is still strong,” says James Gaines, Ph.D., research economist with the Real Estate Center at Texas A&M University. “There’s no reason prices shouldn't continue to rise despite the increase in foreclosures and the slowdown in transactions, construction, and new-home starts.”

Buyer’s or seller’s market?
Though applications for building permits have slowed down a bit in Austin, Dallas, and San Antonio, Texas still has good home-price appreciation, and the housing market in general here is still positive. But are we experiencing either a buyer’s or a seller’s market?

It all depends on where you live. In ever-popular Austin, for example, sellers still rule the roost. As of April, 3.2 months of inventory ranks the city as one of the tightest markets in the country. But there are ways to tell which market your city is in. According to Austin REALTOR® Roselind Hejl, a seller’s market is defined as “less than six months of standing inventory” in that particular market.

Real estate experts determine “standing inventory” by dividing the number of homes available by the sales rate of the past 12 months – where the demand for homes is greater than the supply and buyers compete for the homes that are available.

In a buyer’s market, there are fewer buyers than there are homes for sale – essentially there’s less demand for what’s available. The result is that sellers are often forced to lower their asking prices, especially if they really need to sell quickly (as in a job transfer). And those who are buying can often get much better deals on homes. But it all depends on the market and area.

“You really need to look at a particular area and price range to make an accurate determination,” says Hejl. “In Austin, under $500,000 is a seller’s market, but over $500,000 is a buyer’s market. Once you’ve determined the market, it’s a very useful tool.”

The danger of foreclosures
The “subslime” market – as the subprime market has been referred to lately – is the one worrisome spot in an otherwise healthy Texas real estate economy, especially for homes priced at under $200,000.

Relaxed lending practices and adjustable rate mortgages (ARMs) resulted in many people buying homes that may not have been able to otherwise. During the past few years, most Texas cities reported record sales and price levels, and the overall number of first-time homebuyers increased.

But now, with those ARM rates rising, some homeowners could be in trouble. Mortgage payments could get harder to pay each month for some, especially those who really can’t afford to lose.

“Relaxed lending standards have increased the number of homeowners dramatically,” says Mark Dotzour, Ph.D., chief economist at the Real Estate Center. “Consequently, higher levels of foreclosures are to be expected.”

Equity appreciation means ‘inner investing’
Mortgage rates have stayed near all-time lows for the last several years, fueling the real estate boom across the country that spawned new businesses like flipping, more home renovation businesses than ever before, and more real estate agents opening their own shops to take advantage of buyer and seller fervor.

And, because of the big appreciation gains in real estate, many people in Texas and elsewhere are now taking advantage of the considerable equity in their homes to do the renovations and remodeling they’ve always wanted.

Call it “inner investing,” but in Texas, it’s just another way homeowners are benefiting from the still-thriving housing market here. And that’s good news for everyone who makes a home in the Lone Star State.