The city that started as a private ranch in the 19th century has become a thriving hub for the region’s economy. McAllen real estate trends show steady growth over the last decade, because of its importance to international trade and tourism. In this article we’ll look at noticeable trends entering summer 2019 and forecast what you can expect in the future.
Economic Factors Impacting McAllen Real Estate Trends
Industry in McAllen is driven by health care, education and retail. Food services also has a large share of employment relative to the rest of the nation.
Around 20 percent of McAllen’s workers are in the health care sector, working places like McAllen Medical Center and Edinburg Regional Medical. In 2016, the University of Texas Rio Grande Valley School of Medicine welcomed its first class, which will continue to spur healthcare industry growth.
McAllen’s retail industry is thriving because of its location on the United States-Mexico border. Around 14.3 percent of workers in McAllen are in retail. Tourists come to shop from all over the region on both sides of the border, and the dollars they spend strengthen our economy. Between 30 and 40 percent of shoppers come from the Mexico side, driving from as far away as Monterrey. The remaining 60 or 70 percent travels from across the U.S. to purchase imported goods and local products.
That means economic growth. Entering summer 2019, The Texas A&M Real Estate Center released a report showing McAllen’s labor market improvements on a seasonally adjusted annualized rate (SAAR) at 8.4 percent.
Demographics That Affect McAllen Real Estate Trends
McAllen’s population is much younger than people in towns of similar size across Texas. The average age is 29.2 years old, compared to an average age of 34 statewide. Younger people buy different types of homes than adults closer to middle age or retirement.
When adults are in their late 20’s, if they’re purchasing real estate it’s often their first home. If they have a college degree, they’ve been out long enough to have paid off a portion of any student loan debt, but they’re not where they’ll be financially in their 30s and 40s. If they started practicing a trade right out of high school, they’re becoming established in what they do. They view home ownership as part of building long-term wealth, something most people that age don’t have a lot of.
For the most part, people in their 20s are still building credit, and they don’t have a lot of extra cash to put down or spend on high mortgage payments. They want quality, affordable housing, but they’re also focused on their jobs and their families.
McAllen residents have more children compared to people in other metros. The average is two children per family compared to 1.4 children across Texas. Family is a priority, which affects the type of home buyers choose.
Booming Employment Opportunities
During the first quarter of 2019, the Texas border metros added 6,900 nonfarm employment jobs. More than half of those jobs were in McAllen. Most of the additional 3,800 McAllen employment were opportunities were in education and healthcare. Jobs in those sectors tend to pay higher, since they require more skills and education. Earnings are up 5.3 percent year-over-year (YOY).
Unemployment rates are extremely low. For the first quarter, McAllen posted an almost unprecedented low unemployment of 6.3 percent. Higher wages and low unemployment translates to a strong housing market.
Continued Growth Predicted
McAllen is just going to keep getting better, with steady economic growth and a growing number of job opportunities. The La Plaza Mall opened a 245,000 square-foot expansion in late 2017 and continues to draw high-end retailers.
Also, the McAllen Economic Development Corp. partnered with the City of McAllen to raise funding for medical research, which indicates future growth in high-paying health service positions. Transportation has grown an astounding 19 percent since 2010. This emerging industry will continue to grow since McAllen is the third busiest border crossing in Texas.
McAllen and First Time Home Buyers
Home ownership might be more accessible to first time home buyers in McAllen than in other parts of the nation. Wages are rising, the job market is strong and cost of living is still low. According to online real estate search engine Trulia, the average listing price in McAllen is $165,066, with a three percent week-over-week rise in average listing price.
Renting costs on average $1,495. First time home buyers weigh the cost of a mortgage payment against continuing to pay rent and realize they’d be better off building equity instead of throwing away that money month after month.
In comparison, the average home cost in the rest of Texas is $196,700. Renting still costs an average of $1,570. Homes are more expensive in other parts of the state, but there’s not a significant difference in what it costs to rent. Housing is more affordable and rent is expensive. To first time home buyers, purchasing in McAllen just makes sense.
However, the price of homes in McAllen is climbing. Quarter-over-quarter sales for homes priced above $200,000 shows an upward trajectory, with an 11.8 percent boom in the first quarter of 2019. Now is the time to buy before home prices become less affordable to people with an average income.
McAllen Property Taxes
People are moving to McAllen from other areas for employment opportunities, and when they purchase a home they find they also benefit from lower property taxes. Marketplace tells the story of real estate investor Amira Kalifa who moved from McAllen to Austin, then came back.
In Austin, the average home price is a whopping $350,000. As much as she enjoyed the state capitol’s quirky vibe, what it offered didn’t make up for the high cost of living.
She and her husband moved back to McAllen and bought a home for $125,000. Not only was her home more affordable, but her property taxes were also so much lower she calculated it’s five times less expensive to live in McAllen than it would have been to stay in Austin.
Other McAllen Real Estate Trends to Know
Housing sales numbers are trending upward in McAllen. During the first quarter, the area showed an 11.8 percent quarter-over-quarter growth. Along the border, metros issued 1,800 single-family housing construction permits this quarter, a 9.2 percent increase.
Existing homes are selling faster than they were even last year. The average number of days on the market (DOM) in McAllen is two weeks shorter than it was this time last year.
Months of inventory is a real estate term that reflects how long it would take to sell all the homes currently listed if no sellers listed any more homes. If the months of inventory number is four months or less, it’s a seller’s market. There are fewer homes than there are buyers, so homes sell quickly and for top dollar.
With between five and eight months of inventory, the market is balanced. Sellers can expect to receive fair market value and buyers have a little more time to make informed decisions. With a higher months of inventory number, there are a lot of homes for sale and buyers have more negotiating power.
McAllen is currently a balanced market, but the months of inventory number is falling. It’s an excellent time to buy a home in McAllen because of housing’s affordability and the growth experts predict will continue.
Buy a New Home Near McAllen
We’ve been following McAllen real estate trends for more than two decades. We build the types of homes Rio Grande Valley residents want–luxurious, affordable homes built for growing families.
We start with high-quality new construction that’s extremely energy efficient. It’s not just affordable to buy a WestWind Home, it’s affordable to live in one. We place those homes in areas near top employment, schools, entertainment and attractions. Then we add extras to every master planned community, things like wide walking paths, sports facilities and community parks.
There’s never been a better time to buy a house in McAllen. Search homes in the following vibrant communities:
- Hibiscus Hill – Located in north McAllen, with one and two-story homes starting in the $180s.
- La Floresta – This upscale community has quick access to I-69 and US 83, for easy access to McAllen’s best.
- Las Arboledas – This beautiful community is just 15 minutes from La Plaza Mall and Las Tiendas shopping Plaza. You could own a home here for as little as $1200 a month.
- Plantation Gap – Live in the heart of McAllen where you’re close to everything, with homes that start in the $140s.
We even help buyers with less than perfect credit issues. Contact us today to find out more.