With a close proximity to the Mexico boarder, the McAllen economy has seen a lot of growth in the form of international trade. Consumer goods, in particular, have really helped local business thrive. The McAllen real estate market is perhaps one of primary beneficiaries of this strengthening economy. In fact, experts are confident that McAllen real estate has a bright future.
According to Realtor.com, who collects data from the MLS, the average home price in the McAllen housing market is $449,320. Surprisingly, that is a 260.1 percent markup from actual average sales prices. The average sold price in the same city is considerably less, at $124,761. Of course, these numbers suggest that McAllen is a soft buyers market. Good values on homes are still available, as the number of homes listed for sale is greater than the number of homes being sold.
The housing experts at Zillow claim that homes in McAllen have appreciated by as much as 0.6 percent in the last year, which is considerably lower than the national average – but still an improvement.
For as soft as the buyers market is, the renters market remains competitive. Rental properties continue to receive a lot of attention, and availability continues to diminish. Rent prices, not surprisingly, have neglected to change for three consecutive months now. At $1,528 a month, the average rent in the McAllen real estate market is 2 percent lower than the county average of $1,556 and 14 percent lower than the state average of $1,739.
The entire state of Texas was largely able to avoid the foreclosure crisis that swept across the country during the last recession, and McAllen was no exception. With an economy that was not susceptible to volatile turns, the McAllen real estate market has remained below the national average of foreclosed properties. According to RealtyTrac, the McAllen real estate market has about 57 properties in some state of foreclosure (default, auction or bank-owned). As you may have guessed, that bodes well for the entire community.
Foreclosures, for as low as they are, actually increased 42 percent in the last month. Over the course of a year, they have jumped an impressive 127 percent. Of course, it is important to note that a market with this level of volume will see drastic percentage changes even with a few properties. Nonetheless, foreclosures have been on the rise. The biggest increase can be seen in bank-owned properties, or those that have been repossessed and are now serving as non-performing loans for the institutions that took control of them. Bank-owned foreclosures now represent 52.9 percent of today’s distressed property market. A majority of the remaining foreclosures will be placed up for auction in the near future. Regardless of the scenario, savvy investors should find plenty of opportunities to acquire deals.
The McAllen real estate investing community, on the other hand, is probably more interested in the discounts these properties offer. According to RealtyTrac, the average sales price for a distressed property in McAllen, TX is $104,266. That rate represents a considerable discount over non-distressed properties, and should benefit investors.
Most of the distressed properties in the McAllen housing market, surprisingly enough, have positive equity. In fact, at 74.7 percent, the ratio of distressed properties in McAllen with positive equity is not unlike major players in the realty landscape like Denver (84.1%), Austin (82.5%), San Jose (76.9%) and Honolulu (76.1%).
“Resurfacing equity does two things, it allows more people to move, which drives market energy and snowballs steady growth,” said Mark Hughes, chief operating officer with First Team Real Estate. As the number of equity rich homeowners grows in the McAllen housing market, consumer confidence will increase. Confidence, while tuff to measure, is absolutely critical to a market’s success. For all intents and purposes, confidence in the McAllen real estate market is fueling optimism for a bright future.
As recently as 2012, McAllen was one of the fastest growing cities – proving that it was not subjected to volatile market shifts like the rest of the country. Fast-forward to today, and McAllen still boasts a growing economy. Local jobs have prevented many college grads from having to look elsewhere for work. In fact, much of the city’s population is young and many couples have been starting families.
Unemployment in McAllen has remained one of the city’s most promising indicators. At 4.6 percent, unemployment is less than the county rate (7.5%) and the rest of the country (5.4%). However, for as low as it is in McAllen, it is still higher than the state’s average. Texas has an unemployment rate of 4 percent, on par with some of the best markets in the country. Still, McAllen’s unemployment rate is nothing to scoff at. When you combine it with the area’s low cost of living, it is not hard to see why young couples and first-time homebuyers are drawn here. At $52,100, the cost of living in McAllen is 5.2 percent lower than the rest of the state.
Of course, like nearly every metropolitan area around the country, McAllen is not without concern. Even with a strong business presence, McAllen has very few high-tech jobs. The jobs that are available have resulted in high poverty rates and a low per capita income.
The area’s low cost of living should negate some of these issues, but they are still worth keeping an eye on. For now, population growth, low unemployment and high affordability are getting the job done. The McAllen real estate market, as a result, is expected to keep progressing.
McAllen Real Estate Market Summary:
- Current Median Home Price: $449,320
- 1-Year Appreciation Rate: 0.6%
- Unemployment Rate: 4.6%
- Population: 136,639
- Median Household Income: $35,098