Why is the El Paso housing market so hot right now?
The Texas border town of El Paso, the state’s westernmost city with a population of less than 1 million, has experienced an enormous uptick in home purchases since March – the month that COVID-19 began shutting down businesses, forcing people to stay indoors, and eliminating jobs.
But the virus has had anything but a negative impact on real estate in El Paso. According to multiple real estate agents and mortgage brokers, low interest rates and a high percentage of “essential” jobs in their town has kept the housing market and local economy strong.
Per Realtor.com, the average price of homes in El Paso was around $188,000 in May. Combined with interest rates that began around 2.5% and the rising price of rental properties, it made sense for incoming and current residents to buy.
“Property managers are renting places that would usually be $800 a month for $1,200, so people figured if they’re paying that much, they might as well own their home,” said Tom Torres, an El Paso-based real estate agent and former president of the El Paso Association of Realtors. “Interest rates were so low, at 2.5% at the beginning of COVID-19, and they’ve only really fluctuated between 2.5% and 3.5%. Everyone is trying to dive into buying a home out here.”
That’s even with home prices jumping to an average of $226,000 in September – an 18% jump from September 2019. Nicole Murphy with Realtor.com also said homes in El Paso are only staying on the market for an average of 53 days – down 20% from last year.
Greg Ratiu, Realtor.com senior economist, pointed to a solid economy, a business-friendly environment, and no state income taxes as especially attractive during uncertain economic times.
“The city’s housing dynamics point to strong buyer demand, which fueled a 16.8% year-over-year gain in listing prices during the week of Nov. 7,” Raitu said. “While about 50% of the metro area’s buyers are local, an additional 17% of buyers come from other Texas cities, like Dallas and Houston. Moreover, 30% of El Paso shoppers are looking at local homes from out-of-state, with top views coming from New York, Albuquerque, and Los Angeles.”
A Redfin statistical study of the El Paso housing market showed a 2% year-over year rise in new listings (936 from September 2019 to 956 in September 2020) and a gigantic 40.3% rise in houses sold in the same timeframe – from 670 to 940.
Inventory has been depleted, Torres confirmed, with most Realtors in El Paso estimating the city has about three months’ worth of homes on the market – down from seven months’ worth in March. A close look at the city, however, reveals why.
El Paso’s economy seems to have suffered less than that of other cities, thanks to a high number of essential jobs that haven’t disappeared due to the pandemic. Texas Governor Greg Abbott sent 75 health workers to the city in October to aid the 169 workers that were already stationed there in response to COVID-19.
The unemployment rate in El Paso has recovered somewhat from May, when it hit a high of nearly 15%. Now, unemployment hovers around 9%.
“It’s really amazing – I’ve been with Century 21 for 27 years and I’ve never seen a housing market like this,” said Jennifer Viescas, vice president of Region 16 Texas Association of Realtors and a real estate agent for Century 21. “Even the crazy market we had in 2005 and 2006, it was nothing like this. Right now our current absorption rate is 2.68%, and in El Paso, that’s unheard of.”
Viescas added that, in El Paso County, there were 2,520 active Realtors as of Nov. 1. Most of them are extremely busy, Viescas said, even during a usually dormant fourth quarter of the year.
“We were not allowed to do anything in April and May, and we still have insane numbers in only eight months,” she said. “People still need to live somewhere. Thank goodness Realtors were deemed essential.”
El Paso is also home to the 1.12-million acre Fort Bliss, home of the 1st Armored Division and thousands of soldiers and civilians. On Nov, 6, the United States Armed Forces declared a health emergency at Fort Bliss, and 60 airmen were sent to aid the three El Paso hospitals treating base residents. For housing purposes, that was another 60 looking for a place to live – and the current population on base that wasn’t leaving the area or losing a job.
“There’s not a ton of housing on base, so even people who come to Fort Bliss for 18 to 24 months need some place to live,” Viescas said. “And long-term military personnel, like a four-year-term, they’re buying.”
Torres said that developers in El Paso are in the midst of planting “a ton” of new housing expansions that will most likely be scooped up in early 2021.
“[The hot housing market] was a culmination of, I think, new home expansion, military move-ins, a huge medical professional base, and of course, border patrol and law enforcement,” he said. “These are jobs that people don’t leave and have actually added to during the pandemic.”
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