If you are upside down on a new construction home you bought in North Texas between 2020 and 2024, the math is not a surprise and it is not going to fix itself in a year. You paid a premium on a builder contract, the appraisal district taxed you on land only at closing, the full structure assessment landed the following year, your escrow went negative, and the resale comps around you now price your house below what you owe.
Chastin J. Miles, a Dallas-based agent who runs teams across five Texas markets, is spending his days on exactly these listings. He puts buyers from that 2020-2024 window at five to seven years from an equitable position, and he is the one on the phone with lenders asking for short sale approvals and forbearance.
This article lays out the timeline that creates the equity hole, what the current North Texas market will and will not do for a seller with a deadline, how lenders are actually behaving, and the point in the calendar where your options narrow to one.
Key takeaways
- Buyers who closed on new construction between 2020 and 2024 are looking at roughly five to seven years to reach break-even equity; buyers at today’s prices are closer to three to five. Refinances and forbearances extend both numbers.
- Your home’s value is set by what sold around you in the last six months, not by your purchase price. An agent will price it off those comps regardless of what the builder charged you.
- New construction tax bills spike in year two because the initial assessment covers land only. When the structure is added, escrow goes negative and the lender demands the shortfall in a lump sum or a higher payment.
- Good-quality North Texas homes are taking 70 to 80 days to sell. If a foreclosure date is 30 days out, listing is no longer a realistic exit.
- Lenders are running thin on forgiveness. Credit unions holding their own paper may decide case by case at the branch level, so no agent can promise what the bank will approve.
From the Real Estate Pros Show
This article draws on an interview with Chastin J. Miles of Power Unit Coaching on the Real Estate Pros Show, hosted by Dylan Silver.
Why Recent New Construction Buyers Are Underwater
Anyone who bought in North Texas in roughly the last five years paid at a premium, and in many cases above it. Miles is direct about what that means: you bought the house at the price it should be three to five years from now, which is why you owe more today than it is worth.
The valuation mechanic is what catches owners off guard. An agent prices your home off what comparable homes around you have sold for in the last six months. Your purchase price is not part of that calculation. If your neighbors are closing below what you paid, that is your value, full stop.
On timeline, Miles splits it two ways:
- Buying at today’s prices: roughly three to five years to reach an equitable position, depending on rate and purchase price.
- Bought 2020 through 2024: closer to five to seven years, because you started on the wrong side of the curve.
- Either group, with a cash-out refinance or a forbearance layered on: longer still, since both add principal or arrears back onto the balance.
Miles does not expect a quick reversal. His read is that the market may give short breaks here and there, but the correction to this is at least a couple of years out, not a couple of quarters. That matters for anyone deciding whether to hold through the pain or exit now. If your plan requires appreciation inside 24 months to rescue the position, you do not have a plan.
The compounding factor is supply. North Texas still has a large volume of new construction inventory competing with resale, and builders have been pricing it at a premium throughout. A seller is not just fighting their own purchase price; they are competing against a builder down the street with incentives to offer.
The Tax and Escrow Shock Nobody Priced In
The single most common distress trigger Miles is seeing on new construction is the second-year tax bill. The sequence is mechanical and predictable, which is what makes it frustrating.
- You close on a new build. At that point the appraisal district has only assessed the land, because the structure was not there on the assessment date.
- Your lender escrows based on that land-only figure, so the monthly payment looks manageable.
- The following year the structure gets assessed and the full tax bill is generated.
- The escrow account goes negative because it was funded against the wrong number.
- The lender comes back asking you to make up the shortfall, either as a lump sum or spread into a sharply higher monthly payment.
Miles’ point is that the lender did not prepare these buyers for what was coming. The number in the payment estimate was never the real number. He describes it as a steady stream of horror stories from people who bought new construction in the last year or two.
Taxes are rarely the only hit. The owners landing on his desk are usually absorbing two or three of these at once: insurance premiums climbing, an insurance claim that raised the renewal, and North Texas foundation problems, which Miles calls horrible in this region. A foundation repair on a house you are already stretched on is not a maintenance item, it is a solvency event.
A lot of people are one repair bill away from not having anything.
That is the practical threshold. If you have no reserves and your escrow just went negative, you are not in a cash-flow dip, you are in a countdown. Owners who recognise that in month one have options. Owners who recognise it in month six usually do not.
If you purchased anywhere from 2020 to 2024, you purchased where the home should be three to five years from now. And you owe more currently than what it’s worth.
— Chastin J. Miles, Dallas-based real estate entrepreneur and CEO of Power Unit Coaching
The Market the Seller Is Trying to Exit Into
A distressed owner’s instinct is to list and get out. The problem is the current market will not move on their schedule.
Miles puts days on market at 70 to 80 days for great-quality homes. Not distressed homes, not overpriced homes — good product. That is the baseline clock before you add pricing mistakes, deferred maintenance, or a foundation disclosure.
Three things are stretching that timeline:
- Rate shock on the buyer side. Buyers seeing 7% or 7.5% are sitting out. Miles hears the same line repeatedly: I’ll wait until the market calms down, I’ll wait until rates come down.
- New construction competing with resale. There is a lot of new inventory in North Texas, and builders can discount, buy down rates, and throw in amenities in a way an individual seller cannot.
- Price point versus location. The average in the areas people actually want to live runs around $400,000 to $450,000. Miles can find buyers something cheaper, but it is far out, and once they drive it from their job, the appeal evaporates and they go back to waiting.
There are buyers, but fewer of them, and the ones who are active have less disposable income than they did two years ago. Inflation outside of housing is eating into what they can carry.
For a seller with a deadline, the conclusion is unavoidable: you cannot plan around a normal timeline. If your listing has to close by a specific date, build the plan backward from 70 to 80 days of market time plus 30 or so to close, and price accordingly from day one. A price reduction in week eight is a different outcome than the right price in week one.
Short Sale, Forbearance, or Foreclosure: How Lenders Are Behaving
Banks are less flexible right now than Miles is used to. He has spent more time this year negotiating directly with lenders on clients’ behalf than at any point in his career, and he is blunt that this is outside his normal role as an agent. His read: there are so many of these situations happening at once that the banks are running thin on forgiveness.
When a seller is underwater, the conversation goes one of two directions:
- Short sale. The owner cannot cover the gap, so the lender has to agree to accept less than the payoff. These are tricky and they are slow, and approval is never guaranteed.
- Forbearance or a workout program. Buys time, but adds arrears back to the balance, which pushes the break-even date further out.
A third scenario shows up often: the seller has to bring money to the table at closing. Miles is frank that many sellers in this position will not make a profit and will instead need cash to close. That is a hard conversation most agents avoid having.
Who holds the note matters more than it used to. A lot of buyers took credit union loans over the last few years for the attractive rates, and credit unions holding their own paper make their own calls. Approval can come down to a branch manager. There is no published matrix to work from.
That inconsistency is why Miles will not promise an outcome.
His honest position is that he cannot tell a seller with certainty what the bank will approve or that the house will sell in 60 days when the seller wants one price, the bank insists on another, and the payoff sits above both. What he can control is marketing and exposure. Everything else is the lender’s decision.
The Window Where an Investor Offer Still Helps — and When It Closes
The owners who end up with the worst outcome are almost always the ones who said no to a reasonable offer three months earlier.
Miles describes the pattern precisely. He typically gets these sellers a couple of months out, in panic mode, but not yet ready to take an investor offer. They are still saying the home is worth more, look at the neighborhood, people are still moving here. They are not entertaining an offer they view as pennies on the dollar, and they do not believe they need out next week. Then the date gets set, and they take less than they were offered.
Work the calendar backward and the window is obvious:
- Six months or more from a likely default: you can list at market, absorb 70 to 80 days of market time, and still close normally.
- Four to five months out: list immediately at a price that moves, and open the short sale conversation with the lender in parallel, not after the listing fails.
- Two to three months out: an investor offer or a cash buyer is probably the realistic exit, because there is not enough runway for a retail timeline.
- Thirty days with a sale date set: there is very little an agent can do. The decision has effectively been made for you.
On the buy side, Miles points to an unusual source of inventory. North Texas is seeing an exodus of foreign nationals who lost jobs and decided to go home rather than downsize, leaving furnished homes and cars behind. Thousands of properties, he says, are being pushed into foreclosure and auction. For investors monitoring foreclosure and auction flow, that is a real pipeline.
The Financing Workarounds Keeping Deals Together
With fewer qualified buyers in the market, Miles and his team have moved toward lenders offering non-conventional products to owner-occupants — the kind of paper that used to live almost exclusively on the DSCR and investor side.
What he is actively using:
- Rent-to-own programs
- Lenders accepting lower credit scores
- Bank statement loans
These matter to a distressed seller for one reason: your buyer pool is bigger if your agent knows which lenders will write these. A seller on a deadline cannot afford to wait for the perfect conventionally-qualified buyer to show up.
Self-employed buyers are a specific gap. Plenty of them earn enough to carry the payment but write off so much that their tax returns do not support a conventional approval. In Texas there are still homes at and under $200,000 in parts of the state, but affordability is not the binding constraint for these buyers — documentation is. Bank statement loans with around 10% down are the common workaround.
The rental side is tightening at the same time. Miles notes that multifamily property management companies have gotten extremely strict on qualifications. Communities that used to grant exceptions or reconsider a borderline application are doing far less of that now. The result is more households pushed into rent-by-necessity — unable to buy and finding it harder to rent well.
For investors, that is two signals at once. Demand for well-priced rentals in North Texas is being reinforced by people who cannot qualify to buy. And on acquisitions, a seller whose buyer pool depends on non-QM financing is a seller whose retail exit is fragile — which is precisely the seller who should be taking a clean cash offer seriously.
Frequently asked questions
How long does it take a new construction buyer to get back to a break-even equity position?
Chastin J. Miles estimates roughly three to five years for someone buying at today’s prices, and five to seven years for buyers who closed between 2020 and 2024, because that group bought at or above premium pricing. Rate, purchase price, and the specific submarket all move the number.
Any cash-out refinance or forbearance taken since purchase pushes that date out further, since both add to the balance you have to outgrow.
Why does a new construction property tax bill jump so much in the second year?
At closing on a new build, the appraisal district has typically only assessed the land, because the structure was not standing on the assessment date. The lender funds escrow against that land-only figure, so the first year’s payment understates the real cost.
Once the structure is assessed, the full tax bill lands, the escrow account goes negative, and the lender requires you to cover the shortfall — either in a lump sum or as a significantly higher monthly payment.
How far ahead of a foreclosure sale date does a distressed seller need to list?
Start at least four to six months ahead if you want a retail exit. Good-quality North Texas homes are taking 70 to 80 days to sell, and closing adds roughly another 30. A 30-day runway with a sale date already set leaves almost nothing an agent can do.
If you are inside that window, open the short sale or forbearance conversation with your lender at the same time you list, not after the listing stalls.
What are days on market running for good-quality homes in North Texas right now?
Miles puts it at 70 to 80 days for homes in good condition, up meaningfully from what the market was doing a few years ago. That is the clock on quality product, before any pricing or condition issues.
The drivers are buyers sitting out at 7%-plus rates, heavy new construction inventory competing with resale, and less disposable income across the buyer pool.
What financing options exist for a buyer who can’t qualify for a conventional loan?
Miles’ team is working with lenders offering rent-to-own programs, loans with lower credit score thresholds, and bank statement loans — products that were previously more common on the DSCR and investor side and are now being written for owner-occupants.
Bank statement loans are especially relevant for self-employed buyers who earn enough to carry a payment but write off too much to show qualifying income on tax returns. Terms and availability vary by lender, so confirm specifics directly.
The bottom line
If your escrow has gone negative and you have no reserves, treat today as the start of a 120-day clock and get a current comp-based valuation plus a payoff figure in hand this week — the one decision that determines whether you still have four exits or only one.
