A bright spot in an otherwise dismal year for Texas boarder communities
COLLEGE STATION, Tex. (Real Estate Center) – Housing remains one of the stronger components of local border economies, particularly in Brownsville and El Paso. Multiple Listing Service sales in those metros during September reached record highs, according to the latest Texas Border Economy report from the Real Estate Center at Texas A&M University.
“Shrinking inventory, however, pushed metro-level median sale prices up considerably, chipping away at gains in housing affordability from historically low mortgage interest rates,” said Research Economist Dr. Luis Torres.
“On the bright side, single-family building permits increased for the fifth straight month, supporting a more optimistic housing supply outlook heading into 2021.” Both border home sales and single-family building permits surged 8.3 percent in September. An upward revision in August numbers brought quarterly growth to 39.2 percent.
“El Paso passed 1,000 sales for the first time ever as sales of homes priced between $100,000 and $400,000 increased by about one-fifth,” said Torres. “Brownsville home sales reached an all-time high, climbing 7.9 percent as sales in the $200,000 to $300,000 price range doubled year to date.”
Permits for single-family housing construction rose for the fifth consecutive month to their highest level since the Great Recession. Permit issuance rose all along the Texas border from10 percent in El Paso and 8.4 percent in Brownsville to 6.5 percent in McAllen and 7.4 percent in Laredo.
Strong September sales and a dwindling supply of active listings sent the months of inventory to historic lows. The inventory of homes for sale hit 3.8 months in Brownsville and only 1.7 months in El Paso. McAllen recorded 3.4 months. A growing supply of active listings pushed Laredo’s inventory to 5.6 months, still less than the six months the Real Estate Center considers a
Home-price appreciation accelerated along the border, bolstered by shrinking inventories and record sales. Brownsville’s median home price increased to $184,500, up 13.7 percent year over year.
Home prices in McAllen and El Paso posted solid gains to $177,900 and $182,800, respectively. Laredo was the border’s exception with a median price dropping for the second consecutive month to $180,900, said Torres.
Historically low interest rates supported increased housing affordability in Texas’ border metros during the third quarter, but elevated home prices slowed the upward climb established within the past year.
The report notes El Paso was the most affordable border locale with an index of 1.8, meaning a family earning the median income could afford a home costing 80 percent more than the median sale price. Laredo’s metric inched up to 1.7, while the Rio Grande Valley recorded indexes of
1.6 in both Brownsville and McAllen.
“The economic recovery along the Texas-Mexico border slowed in September as labor-market conditions backtracked,” said Torres. “Employment declined in the metros except for in Laredo,
where the increase was modest. Joblessness rose, the number of residents in the local labor forces decreased, and construction values fell behind the pace of activity set in the first three quarters of last year.”
Mexican manufacturing and maquiladora employment posted gains in August as U.S. manufacturing production and border trade values stabilized after the United States-Mexico Canada Agreement reaffirmed North American commerce, and the initial shock of the pandemic lessened.
“COVID-19 remains the greatest headwind to the border communities,” said Torres, “as the recent surge of virus-related hospitalizations in El Paso has prompted another round of local shelter-in-place recommendations. These types of challenges are a persistent threat to public health and economic activity.”
The Texas Border Economy gives an overall view of many economic indicators on both sides of the Texas-Mexico border. Funded primarily by Texas real estate licensee fees, the Real Estate Center was created by the
state legislature to meet the needs of many audiences, including the real estate industry, instructors, researchers, and the public. The Center is part of Mays Business School at Texas A&M University.
Cover image: Matthew Lejune, Unsplash