Local estate market recovering, but will it continue?

McALLEN — Hidalgo County’s rejuvenated housing market continued showing signs of recovery through the early summer, suggesting the worst of the recessionary woes are behind.

Some real estate experts argue the county has already reached the bottom, while others say it’s too premature to say for certain that the market will continue improving.

Home sales are down considerably from 2008 and have fluctuated month to month, but the trend seems to be pointing upward so far this year. And despite a continued onslaught of foreclosed properties entering the market every month, the supply of homes for sale is stable, as are home prices, according to the latest data from the Real Estate Center at Texas A&M University.

“It’s on the upswing for sure,” said Dick Henry, president of the Greater McAllen Association of Realtors. “Everybody has a little bit different attitude.”

In November 2008, the number of homes sold in Hidalgo County fell to 103, the lowest level so far this recession. Since then, home sales have generally increased. In June, the number of homes sold was 182, according to the center. That’s the highest June sales volume since 2006.

“Our bottom was November 2008,” Henry said. However, he disputed the sales figures from A&M, saying June 2009 sales were just below those of the same month last year.

Jim Gaines, a researcher with the A&M center, said it’s too early to point to a specific date for the bottom. He predicted, however, that the state of Texas will reach the bottom of the housing collapse this year.

There still are a number of variables that could further saddle the market, he said. In the first quarter of 2010, a glut of adjustable-rate mortgages, or ARMs, is scheduled to reset to higher interest rates — similar to the harsh interest rate increase with subprime ARMs that precipitated the crisis and dragged the nation into a recession.

“That’s going to go through 2012,” Gaines said of the ARM reset starting early next year. “We don’t know what else is going to happen.”

He said he was skeptical of an optimistic report the National Association of Realtors released Thursday stating the U.S. housing market is on the mend.

Home sales were up from April through June, but that’s what normally happens in the spring, Gaines said. In the year to date, however, home sales nationally are still down by 14 percent, as they are locally in McAllen.

“That was such a (junky) article. It was nuts. It was a ‘So what?’” Gaines said. “Economists all over the country are falling all over themselves trying to be the first one to call the change and say, ‘We’ve hit bottom and now we’re going to get better.’”

The report also state that both foreclosures and the supply of homes nationally have declined. Locally, the foreclosure rate remains unchanged, according to anecdotal evidence from real estate agents.

The supply of homes this year has been stable in McAllen. At the rate of sales in June 2009, it would take slightly more than 13 months to sell off all the existing homes on the market. That compares to a 15-month supply of homes in June 2008.

Financing, however, continues to be a problem.

While it is available, Realtors said, finding buyers who qualify is difficult. Consequently, most loans are now insured by the Federal Housing Administration, a wing of the U.S. Department of Housing and Urban Development.

While traditional loans require upward of a 20 percent down payment now, FHA-insured loans require 3.5 percent. The FHA loans are designed for people with bad credit, first-time home buyers or those who don’t have enough money to put down for a traditional loan.

“The market is pretty decent,” said Connie Fielder-Norton, a McAllen-based real estate agent. “The problem is getting things financed. That is still the biggest hurdle people have.”

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Sean Gaffney covers business, the economy and general assignments for The Monitor. He can be reached at (956) 683-4434.