Blog

Howdy! My name is Ace Palomero. I am the younger and handsomer half of the duo, that is the Palomero Realty Team. Welcome to the blog.

 

I am here to educate, create and entertain my readers. 

 

The launch of my first post, is to give you my thoughts on the current housing market here in the Greater McAllen Area in South Texas. I will be using data that can help clients have a better understanding of what maybe happening in your area.

 

Before starting I would like to add a disclaimer, that I am not a financial advisor. And before we have any substantial discussion about a specific property, we will have to sit down and discuss representation.

 

Below you will find the monthly housing report for May and April for the McAllen-Edinburg-Mission MSA (metropolitan statistical area, provided by the Greater McAllen Association of REALTORS®.

For month-to-month and year-over-year data, both the median price and the number of active listings have increased. Average days on market for houses sold from April to May 2023, had a negligible increase. For the month of May, the days on market is 15 longer compared to the same month last year.

 

The number of home sales has increased from the month of April. While the number of sales this past May decreased compared to May of last year, the months of inventory stayed the same. Months of inventory (a measurement of housing demand) is calculated by dividing the number of active listings, with the number of houses sold. This measurement stayed the same from April to May 2023. However, if you compare that with the 2.2 months of inventory in May 2022, it has almost doubled. This is suggesting that demand is going down.

 

One of the benefits of being a REALTOR® is that we have access to the data of our local MLS. Check out the charts that generated from the GMAR MLS for median sale price, average CDOM (cumulative days on market), with the number of new listings, and number of sales in Hidalgo County for the past 5 years. The data points are grouped by month.

The number of sales and number of new listings are back to pre-pandemic levels. The cumulative days on market (CDOM) are up 60% from last year, but not quite where they were in 2019 and 2020. From May 2019 to May 2023, the median sale price of a single-family house has increased over 62%. Remember that mortgage rates are also higher this year than they were last year. And while there was no increase to the federal funds rate this month (the first in ten consecutive months of rate hikes), there was a lot of ambiguity in the Fed Chair’s statements on to what would happen next month and the rest of the year (Neil Irwin, 2023).

 

During the Great Recession of 2008 and 2009, the house price index for the McAllen-Edinburg-Mission MSA dropped from 2008 to 2009, and did not really start to recover until after 2012 (All-transactions house price index for McAllen-edinburg-mission, TX (MSA) 2023). According to rentdata.org, median rent for the MSA at the time period went down in 2008, before going back up in 2009, from which it continued to increase (McAllen-edinburg-mission fair market rent FY 2023 McAllen-edinburg-mission, TX MSA Rental Data).

 

Home prices and rent are closely tied to together. The price-to-rent ratio is often used by financially-savvy and level-headed potential homebuyers as a benchmark to help decide if it’s better to rent or buy (Hargrave, 2022). The ratio can also help indicate whether the median home for sale in a metropolitan area is fairly valued, or if the area is in a bubble.

What does this all mean? And what is my take on it? I agree with content creators like Travis Spencer and Orlando Miner (who are both full-time REALTORS®) that at the national level, we hit the peak last year. Data from Redfin backs this up (United States Housing Market & Prices | Redfin). On the local level, the data that I pulled from the MLS shows the highest median home price for our county to date was last month at $243,000. It might go up in June and July. But this cannot last. Homes are already sitting on the local market longer than they did last year. Our local inventory (621 new listings last month) is also up. And that isn’t even accounting for the new construction that homebuilders have not put up on the MLS.

 

Again, I am not a financial advisor, and I cannot and will not give you financial advice. If you want specific real estate advice, we may need to sign some papers first. However, I will happily share with you some general thoughts that can help you with your next buy.

 

Firstly, real estate like many industries, is cyclical. They have ups and downs. We see this in the seasonality of the housing market. At the national scale and on year-over-year terms, I believe we’re on the way down. On the local level, we will likely see that turn this year. The massive runup in property value in the past couple years was wildly abnormal, and we are already seeing the correction begin in some metro areas. I believe we’ll see the correction in our area this year as well.

 

Secondly, there are things that are out of our control, and that is fine. Don’t worry! The mortgage rates are out of anyone’s control. So are the expectations of the average sellers and buyers. Yes, if you wanted to sell at highest price and the shortest timespan, the best time to sell was probably last year. But people buy and sell houses for reasons like new jobs and growing families, not just because it’s a “seller’s market” or a “buyer’s market.”

 

 

Finally, there are things that we have control over. We can choose the financial decisions that shape our futures and when to make them. I am hoping that whatever your long-term goals you may have, the actions you take, are done with this in mind. If you are planning to invest in real estate in the next few years or even next few months, start cutting your expenses, getting rid of debt, and finding ways to increase your income. If you are looking at properties here in the Rio Grande Valley, maybe we can work together soon!

 

There’s more that I want to say (like about the growth rate in jobs and construction locally), but I told myself that I would finish the first blog post before the weekend. I’m also getting hungry. So I’m ending the post here. Comments and criticism are welcome! I would love to hear what you have to say. 

References

All-transactions house price index for McAllen-edinburg-mission, TX (MSA). FRED. (2023, May 30). https://fred.stlouisfed.org/series/ATNHPIUS32580Q

Hargrave, M. (2022, October 2). Price-to-rent ratio: Determining if it’s better to buy or rent. Investopedia. https://www.investopedia.com/terms/p/price-to-rent-ratio.asp

McAllen-edinburg-mission fair market rent FY 2023 McAllen-edinburg-mission, TX MSA Rental Data. 2023 Fair Market Rent in McAllen-Edinburg-Mission | RentData.org. (n.d.). https://www.rentdata.org/mcallen-edinburg-mission-tx-msa/

Neil Irwin, C. B. (2023, June 15). Fed’s rate hike campaign may be at a pivot point. Axios. https://www.axios.com/2023/06/15/fed-rate-hikes-inflation

United States Housing Market & Prices | Redfin. (n.d.). https://www.redfin.com/us-housing-market